All Forum Posts by: Joe Edwards

@Andrew White

Is this area in a flood zone? I see the river is not that far away

@Tom Wagner

Hi Tom I'm local to the area as well. The puchase/rehab numbers you layed out with the ARV you mentioned seems very very tight. I know your betting on appreciation. Just keep in mind that New Jersey property taxes can swing on you in a heart beat once you complete this $460k renovation.

If you want to chat feel free to PM me.

Good luck

@Bill F.

AMEN brother!!!!!!

You said it perfectly. Leverage is ok but it can also be the death of you and your investing strategie as well.

@Chris John

Chris I hear you loud and clear. That's why it takes different strategies in different markets.

In regards to investing during COVID I'm going even heavier. My calculated bet is if everything melts down in 2021 I have enough deals in the pipeline in motion that will stay in play. If the market goes bad lending will get tight and lenders tend to lend to investors that have a track record of making money in so called good and bad economy's.

I feel as tho the less experienced investor is going to have a hard time getting funded and deals are going to be much hard to find/ put together given the market correcting.

Also keep in mind unlike 2008 there are huge equity fund waiting for the market to crash and they will be using there large portfolio to grab up tons of troubled assets. Give the area I am located I personally know this is a fact. Friends in investment banking telling me there firms have war rooms set up full staff for about a year now and they know all about the 6+ million houses that took the forbearance and they have all kinds of computer models of who will be defaulting on there debt based on all the information they are collecting from the social media and appt providers.

So in short things are going to be way way different when the market shrinks so deals will very difficult to find. All these financial institutions learned from the gains that Black Rock made buying up tons of distressed assets pennies on the dollar for cash.

So if I was you keep looking for deals and if a good one comes. Close it

Obviously, this is just one mans opinion in this massive money making pond

@Ty Kashmiry

Awesome!!!!! Way to crush your goals. I wish you all the best with your 4 plex. Keep pushing

@Joe Villeneuve

Joe we arent talking about the same thing. I'm talking multi family not single family.

Number on a deals in my high priced market

Example:

▪︎I buy distressed multi @ 250k

▪︎Full rehab @ 150k (i own a construction company so I control cost no profit in there)

▪︎I'm into property for $400k, buy and rehab plus some additional cost for closing

▪︎The ARV on the house will come in conservatively at $680k

▪︎The medium rent on this Duplex $ 66,000.00 year

▪︎I then refi the property pulling $475k out which is all my money, purchase & rehab, plus a additional 75k. I always try to leave 30% equity in the deal.

▪︎So now that I'm in the deal with a infinite return plus up 75k my carrying cost on this duplex will be roughly $42,000 a year. If you subtract my cost from the medium gross rents I have a Net Profit of $24,000 a year minimum. That's $1000 a door

▪︎So I own a property producing $24,000 a year in net profit before depreciation write offs. I have $200k in equity, I have no money in the deal.

Why would I sell it?

I'm taking my initial investment cash and rolling it into 1 or a few more deal like this one if I chose to leverage my cash.

All I was saying is in my opinion this is not possible in low cost markets. I'm my market I dont have to have 50 doors to have life changing CF. You can have 10-15 doors and never have to work a day in your life again.

That was my point in a nut shell.

But I also agree with you locking up 400k for a 4:1 doesnt make sense if your CF is only 12k a year

@Young S.

Patients is the name of the game.

I would say try not to need the money and be into 2 deals at a time to shack that feeling off.

If you did all the work up front in analyzing the deal the price reduction might not be the answer. It may just be timing.

I know for me I have held house back from listing because of timing in the market in my area

@Craig Eby Jr

Welcome to Bigger Pockets! Theres a wealth of information here at your fingertips.

@Joe Villeneuve

Why would I want to sell something that is CF extremely will that has amazing appreciation that I can leverage for more gains.

Please explain how selling it would help me greater.

It's all about the gift that keeps given in my eyes. What am I missing

@Joe Villeneuve

I would agree with you CASH FLOW is very important!

However, my point was he is speaking to the issues he is having due to the current COVID situation in his market. My message to him was what is happening now with COVID is a temporary thing dont not get to emotionally high or low just try and figure out how you weather the current storm.

In my approach selling should never be your 1st opinion when you are in a strong market and have a little bit of a bumpy patch. Strong markets with great appreciation you will always be able to liquidate your asset if need be.

I see quite a bit of the investors here on BP saying invest in out of state markets like Ohio, Illinois etc because the entry cost is low and to stay away from New Jersey, DC, Seattle and California etc markets because it's to expensive. I respectfully disagree with that philosophy.

Those low entry markets give you decent cash flow but almost no appreciation. Here in New Jersey where I am I get both. Great appreciation which adds to my personal net wealth and allows me to leverage more. It also has me in super strong rental markets where rents only go up and allows me to average $1000 NET each door a month after all expenses. That kind of cashflow is not possible in those low entry markets.

With that said I stand by my original statement he shouldn't look to sell because once he adapts to the current COVID climate he will be good to go and cash will begin to flow in again.