All Forum Posts by: John Barrett

@Ryan Mccarthy congrats on owning a free and clear property. That provides you security and a solid foundation to build from. I agree with your assessment of your rental that it is not providing the highest return on your money invested and that is before factoring in things such as cap ex. My investing focus is on multifamily properties so I’m biased towards them as an asset class. Right now the multifamily space is extremely hot and as such the returns are depressed. That said, with interest rates rising I believe the market will gradually start to cool off. I haven’t invested out of state but there are a lot of folks doing that right now. My advice is start attending local meetups (there’s one in Marysville) and networking with people investing out of state. Also, I would continue to look at all the deals you can and run numbers. Go into this knowing most are going to be over priced but the experience will help you in the long term. Finally, keep building your cash reserves so that when you come across that deal you can move quickly. Best of luck with your investing.

@Ryan Mccarthy,

I agree with @Thomas S. In just looking at the rough numbers listed if you make $500 a month you would make over 15 years of that cash flow by selling now and not have to deal with the cap ex, vacancy or the time value of money.  

I completely understand your sentimental attachment to your primary residence, that's totally normal.  However, if you are going to move into investing you will need rely on what the math is telling you.  At the end of the day, what you want is to get the highest return on your money and the math is pretty clear.  

Just do your due diligence on what you will move the money into as it's easy to over pay at the moment and I think ultimately you will be happy with whatever your next investment is.

Best of luck.

@Lance Barnett I haven’t done any probate properties myself but I am not surprised by your assessment. Right now the market is still hot. It is cooling off from insane levels but well priced inventory is selling. This means that anyone who needs to get out of a propety can still easily list the property on the MLs and get near their asking price. My suggestion is to find a mentor to partner up with. If that’s not appealing or not possible switch up your tactics for finding properties and come back to probate sales at a later time. Best of luck with your investing.

@Jason Hunt this is a really tough question to answer as it totally depends on your goals (build wealth or reduce debt). In your post you lay out some of the common things that lead to low returns when converting a primary residence into a rental. Your choice will depend on your level of risk tolerance (holding in a cooling market) and willingness to make additional investments in the property. Only you can determine if this is something you are willing to do. Your interest rate is very attractive and you are getting multiple benefits from owning the property (income, tax break, mortgage pay down, appreciation, and leverage). Personally, I would probably find away to hold on to the property unless you had a more attractive investment opportunity. Paying down debt is a great goal but just recognize you are giving up a lot to do that. I would start with life optimization hacks first. Good luck to you.

@Marty Houghton check out meetup.com for a number of local groups. My wife and I try to attend the Cacasdia Investor Aaliance at Bob’s Burger up in Marysville on the 4th Monday of the month. It’s a good group of people and will give you the opportunity to meet and ask questIons of investors using different strategies. I think there are also other meet ups in Mount Vernon but I haven’t attended that one. Best of luck.

@Ian D. Eviction can be a stressful but they don’t have to be. Hire an eviction attorney to make sure everything is done properly according to the law. Your attorney will be able to get all the information and take the necessary steps. While it will cost you some money, these are the areas where spending money actually saves you money overall. The fact you don’t have a lease shouldn’t be an issue as it is treated as a month to month tenancy. Just make sure you do not accept partial payments once you start down the eviction route. Best of luck.

@Ivan Xiong I would recommend contacting an agent for the area and getting their input. The market is not as crazy as it was a few months ago but new construction is still in demand. Worst case scenario is you have an agent write up your offer and they say no. If they are not willing to budge on price you could ask for credit towards your closing. While there is a cap on the amount that can be credited to you, it is not an inconsequential amount of money. That said, I would recommend having all your documentation and financing in order so they know you are serious. Best of luck.

Scott Hildebrand is a lawyer in our area and attends our local meetups each month.  We haven't personally used him yet but others in the group recommend him highly.

Best of luck.

@Kyle Maluy

Multifamily properties are a great way to get into owning rentals.  Just be aware that many people are using the same strategy and as a result the prices of small multifamily properties have dramatically increased over the last few years.  There are still areas where you can find deals but it really depends on what you are trying to accomplish (house hack, seller financing, etc). 

There are a lot of meetups for local investors so I would strongly encourage you to start attending whichever is most convenient for you.  The meetups allow you to talk to people about what they are doing and ask questions.  There is no one single way to invest in real estate and networking with many different investors may give you additional ideas for achieving your goals.

Markets are changing all the time. We are continuing to work on improving the operations and profitability on our existing portfolio. While we are continuing to look for value add options but they are really hard to find. I’m hopeful that the fluctuations in the market will produce new opportunities.