All Forum Posts by: John Barrett

@Michael File I would suggest starting in the areas within a 30 minute drive of Bellingham.  There are number of sub-tier markets in the area where you should be able to find properties that make sense as a rental.  I would be looking at Sultan & Mount Vernon specifically.  While prices have risen in the last few years, I do still see properties listed that look interesting.

With regards to market selection, that will really depend on what it is you are looking for with regards to entry price of property, location (jobs & demand) as well as ease of management.

Best of luck,

John

@Brian Powers I would suggest you continue save money, narrow your focus to a specific strategy and build your network.  None of these things are revolutionary ideas that will allow you to start immediately, but they will lower your risk and help you to be as successful as possible once you get started on a project.  You need to take action in order to be successful, but taking action can be as simple as consistently saving money, building up your credit score and reaching out to other investors, lenders & banks.

Networking will allow you to get to know other investors who you could potentially bring you a deal, financing or partner with on a project.  We all seem to struggle with being patient but I think that is ultimately what leads to long term success.  Don't forget this is a marathon not a sprint and your focus must remain on doing the actions that will bring you long term success.

Best of luck,

John

@Jack B. It is really difficult to predict what's going to happen as there are so many factors affecting the economy.  I do not expect a rise in foreclosures as demand for properties remains strong and people are still willing to pay high prices for distressed properties.  Until demand falls off or additional supply becomes available there will continue to be upward pressure on both property prices and rent.

I have been refinancing my properties that I intend to hold to capture these historically low rates.  While it does lower cash flow, it does lock in gains that you can redeploy into other investments.  Many are arguing that rates will remain low for a long period of time, I would rather lock in very attractive rates for the long term.  I am not convinced it is possible to accurately predict where rates will go given all of the unusual actions that have been taken to support the economy.

Best of luck,

John

@River Luce Thank you for sharing your experience.  I am glad to you are taking everything in stride.  Your post is a great reminder that while we can't choose what life throws at us, we can choose how we react.  I know this situation is not ideal, but the learning & resilience you are developing will serve you well in the future.  While I don't know what industry you are working in, there are a number of cities in WA (not Seattle) that could offer you the opportunities you are looking for.  For example a lot of investors have been looking at Spokane and the surrounding area.  The cost of living is lower and property prices are lower as well.

As for what I have learned from investing during this time of COVID-19, it has just reinforced the need for savings (regardless of the inflation risk).  COVID-19 shows that we really can't predict the future and should always be factoring in a margin of safety for the unknown event. Finally, people should have multiple exit strategies for their investments should things not go according to their plan. While uncomfortable, that could mean taking a loss on a project or investment to avoid experiencing a larger loss. 

Best of luck,

John

@Brandon Bielas I grew up in Edmonds and really like the area, but it's a difficult market for the properties I like to invest in. Depending on what area/strategy you decide to focus on a another alternative could be to do a live in flip.  There are a number of older homes in the Edmonds area that would work well for this strategy as well as the ability to capture the gains tax free.

Best of luck.

John

@Salman P. While I understand your desire to get your family into a house you own, I do not agree you are wasting money renting.  You are buying flexibility right now by renting. Given the economic uncertainty, having a lot of flexibility and options is a good thing.

As for where to start, I would recommend contacting a mortgage broker or your current bank / credit union to understand what you qualify for given your specific financial situation. Based on the information you have provided, you should qualify for a very attractive interest rate. However, debt to income will also play a big factor as well. Just remember to account for PMI into your monthly costs as your down payment will be less than 20%.

Above all, just don't feel desperate to get into a house.  You are in a great position and you can take your time to make the best decision possible for you and your family.

Best of luck,

John

@Laura A Walters Yes, your lender should include the rents as part of your projected income when calculating your loan amount.  Some of the challenges you will need to be aware of is that they will use the current rental amount (could be problematic if rents are below market) and they will discount the rental amount.  The effect of this is that you will get credit for the income but at a lower amount than you would expect. Once you own the property, anything you do to increase income will have a dramatic impact on your reducing your out of pocket expense.

Best of luck,

John

@John Morgan Our current longest tenant is one we inherited from a previous owner at 18 years.  We have kept his rent close to market value.  He's a great tenant and it's worth having someone onsite keeping an eye on the property and neighborhood.

Across the rest of our portfolio, we have a lot of tenants that stay with us for multiple years.  The key is to ensure you are keeping their rent close to the market value.  If you fail to do this, you are basically trapping them in your unit as they will be unable to move if and when they need to.

John

@Mary Arobaga-Reardon I can't speak for working with the Section 8 program in your area but my experience with the program in WA state has been mostly positive.  The program does have some additional requirements that you need to account for (annual inspections) and some paperwork.  That said, I have found the case managers are helpful in resolving tenant issues / addressing concerns.

The tenants who participate in the program need to be screened just like any other tenant and you should expect all the normal tenant related issues.  That said, I have no problem working with these programs and find the tenants that pass the screening workout at roughly the same rate as any other tenant you might pick.  Hope this is helpful and best of luck.

John

@Steven Yang I would spend some time thinking about your strategy of purchasing the property all cash.  While leverage does add risk, I feel it gives you a lot of flexibility, especially given the historically low interest rates at the moment. In crazy times having cash in hand will allow you to take advantage of opportunities others cannot.

Additionally, just from a risk mitigation standpoint, a fully paid off asset can be a target for litigation.  You could achieve a  similar level of low monthly payments with a substantial down payment.

Just some thoughts to consider.

John