All Forum Posts by: Joe Cassandra

I don't disagree that overleverage is bad for investors...

At the same time though, it depends on what your goals are. 

--> If your goal is 'long' and to build up wealth over the next 30 years, it doesn't make sense to overleverage and just cash-out refi up to 70%. 

--> If your goal is to quit your job and scale up your business...at some point you have to 'go hard' and take a leap because then you're using the velocity of money to create more money. 

--> Overleverage becomes bad when Airbnb hosts plop down 5% on properties they're getting at 95% ARV...rent them out cashflowing $2,000 per month...think they're rich... and they use that money as a piggybank for 5-star restaurants and trips.

You can overleverage and build up cash reserves. 

Do the hard stuff now. 

Because when times are better...it's a whole lot easier. 

...raise money when everyone's tightening...

...buy stocks in industries people (even in this post) claim are going away for good...

...start a business (some of the best businesses were started during a recession...Disney and Microsoft being some)

...spend on marketing while no one is...your local brand will be remembered.

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I graduated college in 2011...while the economy was still in the dumps and just starting to recover. Many of my friends moved back home. I stuck it out. My (now) wife did too. 

The rejection...discipline...hard work calluses we built up made us much more successful today than if we were handed high 5-figure cushy jobs out of school during a boom. 

Now, we are self-employed.

 Did you change any of your approach or copy, Anson? I saw response drop significantly (not go up).

EDUCATION: I'll go out on a limb and say many colleges will be bankrupt in 5 years. Everyone knows college is overpriced...this is only going to shine a bright light on how unnecessary it is paying 100k to an institution. Some colleges in CA have already moved to online only for the fall. (I think RE student landlords around some...not all...colleges could get hurt.)

WORKING: I think you'll see a short-term trend to work from home...but as someone who has worked from home for the past 5 years (self-employed), you must be DISCIPLINED. And, unfortunately, most people aren't. I'm not disciplined, but I make my own schedule. If you work a 9-5 job, you can't take 3 hours off during the day to help your wife take care of the kids, or go to the grocery store. 

Many bosses will see how less productive their team is working from home. Back to the office they'll go. 

I heard an interview about this 2-3 years ago (some online guru, can't remember). This guy let his sales staff start working from home. His very best salesman for multiple years in a row completely fell off a cliff in sales. Fired her.

Not to mention...many bosses like having subordinates around them. What good is being the boss if you can't order the 20-year old intern to get you coffee!

I only own traditional rentals and haven't dipped into STR...

All I hear is how STR (as OP mentions) is 3X more lucratives than traditional.

I've never seen at STR P&L to back this up, but curious why you see it as higher risk? Simply because it's reliant on travelers instead of dwellers?

What's the downside of an Airbnb vs. a traditional? 

The only extra expense Airbnb might have vs. a traditional (capex is same, repairs are same, vacancy % to reserve is same,dep. same): 

- Furnishing the house (can be very expensive depending on size)

- I'm assuming a PM is more expensive for Airbnb than traditional

- I thought cleaning, but many bookings the guest pays for cleaning.

Maybe someone else has thoughts. 

I do know AirBnb hosts that are overleveraged and/or their mortgage is $1k, they make $2k in bookings and spend the 1k difference as 'cash money.' But wouldn't a traditional landlord who does the same have the same issues?

If this pandemic lasts until the election...then we're in even BIGGER trouble. 

The top greediest banks in the world (think Goldman Sachs..Wells Fargo) are hoarding RECORD credit reserves because they believe a wave of defaults is about to hit. (on mortgages, car loans, credit cards).

Banks making multi-billions...armies of thousands of analysts and data to base their projections on...

They're taking precautions because this is an unprecedented event.

One not ever seen in the past 100 years.

But you must know a lot more than them about the future... :).

(fyi, there are 33M unemployed people. Over 15M more than during 2008. Once the economy is open again, it's not employers are kicking open their doors like the opening of Walmart on Black Friday..."everyone come on back." It'll probably take 12 months minimum for all those people to get their job back.)

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We likely won't see any troubles in RE (if it even happens) for another 6-12 months. 

RE lags the markets. 

RE didn't bottom until 2010-2011...two years after the major stock crashes and unemployment.

I do what Bob does...$200 nonrefundable deposit PER pet, plus $25/month pet fee. (max 2 pets). 

Never had any pushback. 

Although, I do not have restrictions on breed or size, so bigger dog folks are happy to pay it as they get turned away from other places.

Every investor has different preferences which can make it tricky. 

For what we do, we get the investor in at 8% returns with plans to refinance in 6-12 months, so they know when they're getting their money out. (we're doing SFH, but looking into multi right now).

Nothing is worse for an investor if they don't know when they get their money back. 

If you're doing buy-and-hold multi, depending on how good the deal is, you'll need to sit down with them, and who you'd refinance with to get a time table for when they will get their money out. 

That way you can get it in writing and you're not suddenly having investors pinging you "hey, I need my money out." 

This will also depend on how experienced these RE investors are. 

New? They may think it's like the stock market. In and out in a whoosh. 

Experienced? They may not care how long you hold their money as long as you keep them updated on the properties.

There are some good REO agents to reach out.

Auction.com and Hubzu will sometimes have okay deals. But you'll need to submit an offer multiple times as they lower the price. 

Still a seller's market...

Easiest foreclosure deals are off-market.

 Well..yes, most top producers end up in the luxury market because they make the most there...a la niching. 

You won't see top luxury producers selling $100k junkers because: 1) It's bad for their brand...i.e. the luxury niche brand and 2) It's not worth the time/effort

If they're a top producer, they're likely then opening their own brokerage and thus taking on a different role than simply being a realtor...thus generalizing again. 

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If you inherited a probate house, who would you rather sell it? 

The RE agent with the cheesy smile in all the magazines promising to help you buy or list...and looks credible. 

Or, the RE agent that markets as the "agent that sells probates for a living" and has dozens of sold listings to back it up. 

Niching always works because it's easier to market and attract your ideal client. Most are afraid to because they don't want to miss out on business. 

Your top luxury agents are turning down $100k houses all the time...because they know their time is better spent finding more luxury listings.

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I know this firsthand. Not in RE. But my own business. I work in marketing and started off offering services in every niche imaginable --- travel, software, financial, one client was a passport consultant for immigrants (ugh...). 

It was a struggle. They'd go to my website and see nothing that spoke to them..."does this person understand me?"

Right when I niched down to just financial, the money tap flowed on. Because that's how I market myself so they know I'm an expert in the space vs. the 'everything' marketer.

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A niche doesn't have to be hyper specific like probates. 

Maybe it's just "I only list homes in North Georgia. I know how to sell houses." 

Can you help me buy?

"No, I only list."