All Forum Posts by: Jay Hinrichs

As one who had never heard of the 2% rule or 1% or any of the other terminology that floats around BP,, I just became aware of the 2% rule. I was talking with a fellow from Oregon who was lamenting that there are no 2% rule properties to be had in Oregon when I asked what is this 2% rule he said if a property cost 100k it needs 2k in rent.. Well that's not going to happen anytime soon around here. But I told him it happens in the Hood's of America fairly regularly. Mainly because you need those kinds of margins to make 1% or less when the missed rent increased maintenance etc etc of owning them comes into play.

So then I got to thinking well heck if everyone is running around wanting the 2% rule and if that is the only way folks will buy the lower end rentals then the values will never go up. As values could only rise if rents rose.. And we know rents may rise a little bit and HUD stays fairly stable year in year out.. And so many of these properties rely on hud to get some kind of consistent cash flow. So if one is buying in these areas and uses the 2% rule then justifies their investment because historically real estate rises this just won't happen if all your buyers use this rule... The values will just remain the same the neighborhoods do not turn around for the better they get worse as more renters move in etc etc. Your forever stuck with a value that is 2% no matter the condition of the house history or lack thereof of rental rolls.

@Account Closed 

  Agreed that's why 10% of all Agents and Brokers make 90% of the commission income.

@Jon Lafferty 

  What do you do when they are out of business, or the partners choose to do something else very few TK companies stay the same for any length of time... Life happens.. So think about it.. Your thinking your going to own a C class asset that admittedly has all these draw backs  1. you pay too much in the first place  2. tough neighborhood no liquidity to speak of unless you have the same marketing team that you bought from 3. tough tenants

inconsistent rents big maintenance bills because of tenants and underlying quality of the home.

And now your left on your own to find a new PM and do it all yourself... this type of investing while promising for those that live and work it in my mind should not be offered as a turn key we will take care of you until the cows come home investment.

I think investor really need to look at the what if's  What if I am in the SF Bay ARea and my team disbands what then... And like this company was promoting rental insurance well that company is out of business.. NO way you can sell rental insurance and make it work in the C class Insurance company would lose their behind which they finally realized and pulled out of the market.

those are just some thoughts , I am glad you spent the time Jon to come to the same conclusions.

@Shaun Reilly 

  thanks Shaun,   its like those letters you get in the mail that look like  a Faux fed ex package or priority mail package... Or I have seen many of those lined paper direct mail pieces in different colors for different types of products.

when I did sub too and foreclosure rescue  before it became illegal here in Or and WA.. ( not Sub too) but sub to if they are in foreclosure.... we just door knocked we never went with post cards  door knocking was the way to get the deal...

@J. Martin 

  Of course many probably have 700 month car payments for lease and we WEst coast folks own our Prius free and clear   LOL

@J. Martin 

  your causing the BP nation to go apoplectic with thoughts of 700 a month negative. :)

@Marcia Maynard 

@Account Closed 

This is counter intuitive.. The gurus say that you should work for yourself so that you can have the life you deserve I think the bullet points are.

1. you deserve to spend more time with your children ( not sure this is realistic kids have their own agenda and don't want parents bugging them)

2. you can take all those wonderful vacations.. ( except when you have a project that needs your attention or a tenant from hell and you need to be there)

3. You can be your own boss ( expect when you have a problem self motivating yourself)

so on and so forth.. the reality is as all have posted full time RE investing is NOT a licensee to the good life its a license to work your butt off take huge financial risks and hope and prey your right and if the market goes against you like happened in 07 to 09 your screwed. Or you buy crap properties in Ghetto war zones. either way its tough.

On the flip side you hit it right your that one in 50 who can actually pull it off and its a great lifestyle and income reward can be super for those without formal education like myself.

@Joshua Springer 

  This is exactly how the foreign investors have been duped into buying junk Ghetto War zone us properties.. your words verbatim

@Anil Samuel 

  agreed.. the only time we did that was when I had business in Oregon and CA. NO sales tax in OREgon so buy a 50k car and save 8% right off the get go as opposed to buying same car in CA. Also license it for 4 years for 120 bucks.. CA would be 2 to 4 k.

@Curt Davis 

 in part thank BP for all these folks running around thinking they can be in the bizz and wholesale properties when they have not a clue.

A true wholesaler has CASH buys the asset then resells it.. any one flipping contract is just a bird dog and lowest rung on the totem pole in the investing world.

But hey got to start somewhere.  I think a lot of these wholesaler wantabees would just get a RE license and act as RE agent to get started would get a better feel for the bizz and wasting peoples time.