All Forum Posts by: John Kunick

@Arn Cenedella, while the title of this thread is provocative, I honestly think it's misleading.  Perhaps Cash Flow is King IF the goal of the investor is to build cash flow to replace W2 for whatever reason.  In my case, Cash Flow was my #1 objective as I wanted to build up enough cash flow so I would have the choice to leave (or not) my W2 corporate gig..  Fortunately, after several years of buying cash flowing properties, I did get to point I could make that choice.  I still kept working for a couple more years, but ultimately did retire and now spend my time managing my various real estate holdings.

I've had the honor of mentoring several others, several that I've met on BP, as they were getting started in their REI journey. I always tell them the #1 thing they need to define is "what are your goals".. Depending on your goals, your strategy will be different. To your point, those in their earlier years may decide capital appreciation is king. But, it all depends.

Quote from @Ankit Gupta:

Hello,

Having delved into the informative realm of the Bigger Pockets podcast and other materials, I've learned that, optimally, a long-term rental investment might generate a monthly profit of $100-$200 per property. To attain a passive income of around $5,000 per month, one would need to possess a portfolio of at least 25-30 properties. However, acquiring such a substantial number of properties necessitates a considerable amount of upfront cash for down payments. As a newcomer, I find this goal unattainable without substantial initial funds. If lacking cash, the time required to achieve this objective remains uncertain. What's the best way to understand this?

Thank you!

Ankit Gupta

Hi Ankit, there are many ways to attack this, but the key is to build cash flow long-term (I like the stone wall analogy).  I was able to do this and totally replaced my medical device income to the point I was able to retire and have complete financial freedom.

Similar to what @Bill B. did, I bought my first rental in Tulsa while also working full-time. I put 20% down so I was cash flowing every month. I then bought house #2 a few months later using both cash flow from property #1 AND the excess from my medical device job (BTW, we lived well below our means so had extra cash each month to invest - all I did was invest all of it in real estate instead of what I normally did in stock market). Houses #3+ (I eventually built up to 20) happened in orderly fashion.. Once I got to 10, I started paying cash for the houses both by converting my 401k to a Self-directed IRA and then using those funds to buy houses out right and then also using all of the excess cash flow from the first ten houses plus my medical device job excess income.. Having those houses with no debt allowed me to pay off the first ten loans in a disciplined and timely fashion. Once I had no debt... that was financial freedom and gave me choice to continue to work - or not!

Get started and then build it..  It doesn't all have to be done at once.

Hi Kobi, I exclusively use Jerry Banker of Banker Heat and Air..918-695-3118

BTW, I had used several HVAC and was not happy for various reasons.  Jerry has been my go-to guy now for ~ 10 years and I couldn't be happier with him..

Quote from @Leon G.:

I just sold my Duplex in TX and still have a SFH waiting for the tenant to leave. With the super high valuations and 2.1% tax rate I was just renting to get maybe 7 or 8% return. I finally decided to sell my assets and move my rental business to Oklahoma. I am just browsing places to buy, I have been looking at Tulsa, Durant and Oklahoma City.

@John Kunick, do you have a Real estate agent you can recommend? How much should I pay for a 3/2 for rental? Other than the property taxes of about 0.5% are there any other payments I need to make. I wont buy into an HOA.

I am just a bit hesitant because I don't live in Oklahoma but could move there if I start growing my RE portfolio.

Thanks!

Hi Leon, yes, I can refer you to a real estate agent that I've used in past to buy these types of houses.  But, I have not bought a house for a few years as I've diversified into other things.  Therefore, I can't really give you too much insight into current valuations or costs..

I have properties in 74008 (Bixby), 74133 (South Tulsa), 74011 and 74012 (Broken Arrow)..  I focus on 3/2's in B/B+ neighborhoods in top school districts.  Have had these for many years and they've performed extremely well.

@Christine Goodwin, quality properties go quickly here in Tulsa.  I listed one of mine this week and had 40+ inquiries within a couple of hours and had it re-rented within 24 hours.  Something certainly doesn't seem kosher based on what you reported..  Feel free to PM me with the addresses and I will do a little research and perhaps give you "on the ground" feedback.
I would like to understand the situation with the garage..  Does the garage go with one or both of the properties?  Should the garage be removed?

@Leon G., totally understand why you are wanting to get out of dealing with tenants and being a landlord.  I did the same thing several years ago, but for very different reasons.  I put most of my funds into syndications and couldn't be happier!  I actually am making better returns with almost zero headaches.  I don't miss all of the tenant and property maintenance issues, but have more $ coming in than ever before.

Ashcroft and Rise48 are two really good multi-family syndicators, but there are many others.  Reliant is a good self-storage syndicator. PM me for any follow-up questions.

I know this doesn't specifically answer your question and many may not appreciate my input, but I would really look at investing in geographies that don't have these types of legislation and regulations.  This is also one of the key reasons I don't and never have participated in government housing programs.  I don't want government as a partner telling me what I can or can't do with my properties.

Having said that, I do wish you the best of luck in your situation!

Quote from @Troy Green:

Yes the rental market should experience a surge in occupancy which in my opinion is why companies such as Blackstone and Vanguard have been focusing on buying up residential homes. The one caveat is owning rentals in non desirable areas. With recessions typically comes layoffs, and if people cannot afford rent then occupancy rates rise. This is why I feel buying in more desirable areas lowers your vacancy risk. 

@David Mathews, I tend to agree with @Troy Green in a lot of ways.  His market and mine (Tulsa) typically share a lot of similar dynamics..  I do think rentals will continue to be a great way to make money in this economy as the less people can buy, they more they will have to rent..  The key questions then become what types of houses will do best..  In my experience, the sweet spot will continue to be "B" class..  The C's will try their best to climb up to B's while A's will come down to B's to save $..

It would seem, as Troy mentioned, that C's could have some occupancy issues.  What might become more concerning is not just occupancy but also collections.

In closing, I still see high demand in B's.  However, I  am not having much turnover with most tenants proactively renewing their leases before they expire.  The few openings I've had have either been rented very quickly or being filled from waiting lists.

@Van Tran, I echo a lot of what was said by @Jill F. and @Richard F..  First, what type of property is it (poorer neighborhood where lower credit scores are norm or nicer area where higher credit scores are norm)?  Second, "why" is their credit score low?  I've found, with "aspirational" tenants, where they had legitimate reasons for a lower credit score (instead of this is just a way of life), they will do almost anything they can to improve their credit scores if given a chance.  The only way to know is to dig into it via the application/screening process.  I usually advise them, when they ask to fill out an application, that they need to divulge anything that might come up on the background check (I use simplescreening.com).  If they do so and it matches what comes back, then I say "let's talk more about this"..

Bottom line: I've had some of my best tenants over the past 15-20 years of doing this were those that I would not have rented to them if a low credit score was the reason why I didn't rent to them.  However, I put most of them on a "6-month probation" lease up front and let them know I'm taking a chance and please prove the credit score wrong.  Yes, it took a lot more time up front as I would check in on them every couple of weeks to see how they were doing, but they seemed to really appreciate that someone believes in them and is rooting for them..  Many of those tenants have been incredibly loyal (and grateful)..