All Forum Posts by: John M.

Yes I agree if the HOA is well managed then the fees should go to maintaining the property and keeping it nice which also helps with keeping property values up.

One benefit for me is it allowed me to buy a newer property in a great area with top schools, where a SFR in the same area was beyond my budget. The tenants I have are great, they are on their second year and pay their rent early every month, take very good care of the place and don't cause any problems. I can't complain!

@Andy Mackey  This is good info for just about any market that someone is investing in townhomes, although I have a good PM and since I am OOS I leave it to them. 

I actually prefer townhomes to SFR's as rentals for a few of the points you had made in your post. Although I do distinguish between condos and townhomes.... condos I am not a big fan of because of more common walls and potential problems and expenses.

One thing I am curious about, you said:

Townhomes can appear in a pro forma to show a lower return, but holding long term returns are much higher than a single family home. 

Is this a fact that townhomes outperform SFR's over the long term? Most would point to HOA fees as lowering the returns.

@Account Closed 

You can add my vote to the price is the problem group.

This doesn't seem very complicated to me.....

The size of your home and the bedroom count is much higher than the surrounding neighborhood and area, plus your remodel is for a very specific taste .  So my guess is while buyers are willing to look at it, the price is so much higher than the general area (like most past sales in the area are 140's-160's) that unless someone has a large family or loves that style of remodel, the house isn't going to be right at your price almost 60k above the general area.  Now, at $180k?  Maybe a buyer with a smaller family or someone who is lukewarm about the remodel will step up and make an offer which is still quite a bit higher than the general area.   And I am not saying you should lower it to $180, but if you are looking to get it sold and you lowered it to $189 that would probably stimulate a lot of interest. 

 (I'll add a disclaimer I am a very "time is money" person so rather than take baby step price reductions over weeks or months I would rather just rip the bandaid off and take one big dramatic price reduction and get it sold.  However I realize not everyone thinks the same as me).

P.S.  I personally love the remodel but it's a bit on the masculine/dark side which is why I love it.  Women?  Maybe not so much.  Staging with color, flowers, etc should help.

@Eric Fernwood Excellent analysis and thanks for posting!   

I really like the time lapse shot of Vegas over time, it really puts it into perspective.  As a Southern California native in the early 90's I would drive out to Vegas often for weekend getaways and I remember driving up 15 when the Hacienda was literally the only structure south of Tropicana down there all by itself, aside from a random motel/gas station, and that was the beginning of the wide open desert.  Other than Whiskey Pete's casino at the California border it was all desolate empty desert for hundreds of miles.  Now that same area is pretty much the center of LV, and it's kind of shocking to me having that first hand knowledge of what it looked like before, in such a short time span.

I agree with everything you posted, in fact Vegas right now reminds me of LA in the 1980's when it was actually affordable to live there and places like Hollywood and the Sunset Strip were areas of blight and crime and poverty and basically a wasteland other than the nightclubs.  There were hookers everywhere, drug deals were done openly on the street, there were boarded up buildings, squatters, etc., you almost couldn't give away the real estate in that area. But as LA continued to grow outward and become more crowded, location became more important and people started realizing what a prime central location that area was.  It was slow at first, but the more it improved the more desirable it became, and eventually It turned into a land gold mine that today that is some of the most expensive real estate in LA.  Not saying that will happen in Vegas but it's like watching the same pattern of the evolution of a city that is experiencing high growth decade after decade.  So that's why I plan to buy more in Vegas over time rather than look in other markets that investors seem to be running to like Indy, KC, Cleveland, Memphis, etc.   I think it all just comes down to being in the right place at the right time, and seeing opportunity where others don't, I suppose.

@Frank Boet 

There used to be a saying "Don't fight the Fed".  Well we all know the Fed is tightening, so unless something has changed eventually the stock market will capitulate.  Will that be tomorrow?  Six months?  Two years?  Who knows?

I am not going to stop buying real estate because I am trying to build a portfolio, but as a hedge I am starting to short interest rate sensitive areas of the market, namely REIT's.

There's another saying "Trend is your friend".  For long term real estate investing the trend for appreciation and rents is up.  If you believe that trend will continue for years or decades to come (and I do), then dollar cost averaging by buying over time regardless of the shorter term dips in the market, I think is a good strategy.  As long as you buy properties in high demand locations, don't over leverage and have cash reserves you have a much better chance of riding out any downturn in the market or economy and will come out ahead in the long run.  That's my philosophy anyway.

I provide newer washers/dryers but I also have better quality B+ tenants that pretty much expect them and are willing to pay more for them.   And they take care of them, i've never had any calls.

I really think this depends on who your tenants are and they type of property. Mine are nicer townhouses which appeal to renters who don't want to live in or deal with apartments or even a condo and can afford a nicer place, and will pay more. But for a SFR or C or D property I may not... SFR's may be more for families that have their own appliances and C or D.... well then you're dealing with tenants that might be more likely to trash them.

@Antonio Jones I think it's great you are asking those types of questions, I think new investors can get overly excited in the beginning and end up jumping right in blindly just to get their first property.  I think that's a huge mistake, you don't want to end up in 6 months with a post in the BP "investor horror stories" section ;).   

One thing that has helped me is I stick to the rule that I won't buy something that I wouldn't feel safe living in myself.  Life is uncertain, and if something happened to my income and I had to move into one of my rentals that could always be an option.  Urban areas of mid sized cities are my preference for that because they are close to jobs, shopping etc but I also need to get a feel and vibe for the area so I don't end up in a high crime neighborhood where nobody is safe leaving their home just to get the mail or walk to their car.  So that's why being familiar with the area is so important.  You are your own best judge so the less you have to depend on Realtors, property managers etc (who are pushing you to buy to make a buck) to make those judgements for you, the better off you will be.

For me personally first hand knowledge of an area is absolutely vital.  Real estate is a major investment to me, and it can be risky (contrary to what some people seem to think), so making a mistake can be costly, not to mention stressful if it is long distance or on the other side of the country.   The only way I know how to mitigate the risk and avoid mistakes is know my market, in person.  That means not just having physically been there so I know the in-person vibe, but everything I can possibly know about the general area, the demographics, the rents, the history of an area going back several years, any planned development or investment in the area, etc.  In fact I decide on an area first based on my research, then be patient and wait for the right property in the area I like.  Some people might do the opposite, find the property first, then decide on location second, based on 1% or 2% rule or 10%+ cap rate properties in multiple geographically large markets hundreds or thousands of miles away, maybe look at a few photos, get a Realtor's opinion of the neighborhood and after 10 minutes they are ready to write an offer sight unseen, and "maybe" they'll bother to see the property at close of escrow if they can squeeze in a 1 or 2 day trip.    I honestly don't know how anyone can invest like this, if they can do it all the more power to them but I wouldn't be able to sleep at night!

@Travis Raila I invest in Las Vegas.  I decided on that market for a few reasons, 

1. I know the market well so I know where to buy and where to avoid based on my criteria

2. I love the demographics and future potential... high growth, lots of development going on, sports teams, etc

3. It's close to California for visits

4. Good rental market

5. The city itself is a brand which I think helps draw people to it.  Not too many cities outside of places like LA, NY, etc have that.  I love that

Of course like most markets in the US right now it has run up quite a bit so the yields have come down and may not be as good as some other "hot" markets around the US right now.  But long term I plan to buy more there, I think you get a good balance of both cash flow and appreciation.  Many markets seem to be either one or the other, but not necessarily both.

@Jerome Hawkins  Well as you get further in your research if you find the Bay Area isn't going to work Sacramento might be an option for you.   Sacramento is getting a lot of the outflow from Bay Area people looking for better pricing which has pushed up demand quite a bit over the last few years.   I think you can still probably find deals here, and not quite as expensive as the Bay Area.