All Forum Posts by: Jon Q.

Quote from @Jon Q.:

Quote from @Eric James:

In the last year I have bought vacant land and built 10 apartments. Goal is to o build another dozen or so in the rest os 2023.

I never heard of Malakoff, but checked it out after I read your post. A cool little lakeside town. Is your development there or another area of DFW? 

 I have rentals in several towns in the area about 1 1/2 hour drive East of Dallas. 

I have not purchased since Dec 2021.  I believe in the power of leverage and the rates have doubled.   This would require a near 50% decline in selling price to balance.   My market is barely down in value, so the returns on financed properties are down significantly. 

There are numerous investment options other than RE.  RE is not always going to be the best investment option.  I believe we are in one of those periods where better investment options exist.  

Good luck

Quote from @Jon Q.:

Quote from @Jay Hinrichs:

well for me I was 40% through my 90 home project in PDX metro and sales slowed way down Q4 .. Not much in Jan 2023 then feb hit and we have been on a tear sold all but two of my 6 specs that were standing and have 7 pre sales so 13 sales Q 1 and into first two weeks of April and tons of activity and showings so looks like I will hit my goal of 20 to 22 homes built and sold in 23.  We expect things to get better as time goes on.. Lumber came WAAAY down and my prices are at all time highs so my profit on the 7 pre sales will be record profits ..

As for my out of state BRRR funding that I do .. things have slowed a little the major change is my clients are keeping many more homes than they have in the past thereby reducing available inventory of nicely refurbished rentals. Wholesale prices have come down so that the numbers will all work. I am out in the mid west this week meeting my clients.

I wanted to buy a commercial property for my portfolio in 22 but with rates rising and sellers wanting low caps that did not work.. we are seeing caps coming down so will probably land something this year.. I had one almost there that would have been cool with owner finance but they backed out before I could get it closed.

I am not in the MF game other than some investments with other companies those seem to be doing just fine.  I know BP is mostly rental talk and I have some rentals but they are A class and paid for so not much to talk about there. 

Jay,
Great to connect again with you after so long!

Where are the homes / development you sold? The Portland area? With sky high prices and okay rates, 2020 was a good year for new development sales!  

Yes, lumber prices experienced some crazy swings (way up then way down).

Yeah, people who have investments @ low rates don’t see many alternatives of where to put the money, so they’re holding.  That coupled with asset inflation across the board, not just real estate. 

Are you still in the Charleston Area?

Still holding that Richmond lot in the Bay Area?

Where else are you buying land?

yes project is in Canby Oregon called Ivyridgeestatescanby dot com if you want to check it out..

we got priced out of Charleston nothing was making sense vis a vi lot prices we could get.

we did some new builds in northern FLA but the return was small and not worth the risk so we stopped at 4.  

Richmond lot is long gone my Brother in law actually bought it to store his construction company equipment.

We have options on larger parcels in Oregon one hoping to come on line in 2025 that will be 160 houses.. and other is 120 acres that is trying to come in for semi conductor manufacturing its in Hillsboro value on that will be astronomical 200 million or so and we are in it 5 mil. . May not be in my lifetime though but my kids and grand kids will have generational wealth.

As I said my mid west BRRR funding model is on track for 150 deals this year with my teams flipping probably half of those to west coast turnkey buyers and keeping half.

So all in all cant complain. what started out for me in middle of 2022 as a ( here we go again moment) has not materialized.  But again I am not in high finance and MF and such so I like what Brian did remove the risk cash out and live to play another day or just hit the links  :)

Feeling small here sharing space with Brian and Jay, but I qualify on your 10yr+ experience ask. I purchased 1 quick close duplex in '21. 

I sold all my MF and 1 LTR last year.  MF was sold with seller-financing to spread out the tax hit and take advantage of rising rates.   CF improved with 100x less headaches.  I self-managed for 20 yrs. 

I staggered or laddered the balloons for waterfalls every few years.   I'll then be able to reassess and hopefully effectively redeploy back into RE, but ok if not.

Going forward I am trickle selling a small or 2 each year.   Specific paper equity issues and etfs with healthy  dividends are on my radar. Kind of. Mostly revisiting old hobbies. 

I still have some specific MLS and other platform searches that alert me to new listings every now and then. LOL You've got to be kidding me.

I'd love to see the new mortgage origination requirement for every purchase get turned on its head. LTVs of less than 80% (maybe 85% OO) or similar should be assumable. CDOs and MBS should be based on the collateral, not the borrower. Then people that want to sell and repurchase could. Inventory would loosen and velocity skyrocket. Can you imagine?

In the last year I have bought vacant land and built 10 apartments. Goal is to o build another dozen or so in the rest os 2023.

Quote from @Jon Q.:

Quote from @Jay Hinrichs:

well for me I was 40% through my 90 home project in PDX metro and sales slowed way down Q4 .. Not much in Jan 2023 then feb hit and we have been on a tear sold all but two of my 6 specs that were standing and have 7 pre sales so 13 sales Q 1 and into first two weeks of April and tons of activity and showings so looks like I will hit my goal of 20 to 22 homes built and sold in 23.  We expect things to get better as time goes on.. Lumber came WAAAY down and my prices are at all time highs so my profit on the 7 pre sales will be record profits ..

As for my out of state BRRR funding that I do .. things have slowed a little the major change is my clients are keeping many more homes than they have in the past thereby reducing available inventory of nicely refurbished rentals. Wholesale prices have come down so that the numbers will all work. I am out in the mid west this week meeting my clients.

I wanted to buy a commercial property for my portfolio in 22 but with rates rising and sellers wanting low caps that did not work.. we are seeing caps coming down so will probably land something this year.. I had one almost there that would have been cool with owner finance but they backed out before I could get it closed.

I am not in the MF game other than some investments with other companies those seem to be doing just fine.  I know BP is mostly rental talk and I have some rentals but they are A class and paid for so not much to talk about there. 

Jay,
Great to connect again with you after so long!

Where are the homes / development you sold? The Portland area? With sky high prices and okay rates, 2020 was a good year for new development sales!  

Yes, lumber prices experienced some crazy swings (way up then way down).

Yeah, people who have investments @ low rates don’t see many alternatives of where to put the money, so they’re holding.  That coupled with asset inflation across the board, not just real estate. 

Are you still in the Charleston Area?

Still holding that Richmond lot in the Bay Area?

Where else are you buying land?

yes project is in Canby Oregon called Ivyridgeestatescanby dot com if you want to check it out..

we got priced out of Charleston nothing was making sense vis a vi lot prices we could get.

we did some new builds in northern FLA but the return was small and not worth the risk so we stopped at 4.  

Richmond lot is long gone my Brother in law actually bought it to store his construction company equipment.

We have options on larger parcels in Oregon one hoping to come on line in 2025 that will be 160 houses.. and other is 120 acres that is trying to come in for semi conductor manufacturing its in Hillsboro value on that will be astronomical 200 million or so and we are in it 5 mil. . May not be in my lifetime though but my kids and grand kids will have generational wealth.

As I said my mid west BRRR funding model is on track for 150 deals this year with my teams flipping probably half of those to west coast turnkey buyers and keeping half.

So all in all cant complain. what started out for me in middle of 2022 as a ( here we go again moment) has not materialized.  But again I am not in high finance and MF and such so I like what Brian did remove the risk cash out and live to play another day or just hit the links  :)

Real estate investors should take comfort in knowing that markets are still competitive and opportunities still exist. While it may not be as easy to find a great deal or secure investment capital, the market is still open for those who have done their research and know what they're looking for. Although we can't say how long this recession will last, there are forecasts that suggest an upswing could start as early as the second half of 2020. It's important to stay confident in your real estate investing strategy and keep an eye out for new opportunities. That way, you'll be ready when the market starts to recover from the current economic downturn.

A lot of people are still doing deals. The market is still competitive for the good deals and investors see opportunities in all of the uncertainty. They're probably doing fewer deals than before, but I would bet many are still looking at new opportunities all the time. 

A lot of places are already seeing price drops and rent decreases. This is the recession, we're in it now. How long will it last? Hard to say. A lot of people think it will start to get better in the second half of this year. Some are saying "survive til 2025".

I think the most important things are to be confident in your rent assumptions when you analyze deals, to make sure you're getting a documented discount compared to comps that sold a year ago and to not rely on an aggressive exit valuation in the next 12-18 months (such as for a BRRRR or Flip). If the cash flow looks good to you, you're probably not overpaying.

Quote from @Jon Q.:

Of the ones you’ve sold, were they heavily equity partner owned or fully owned by you?  In other words, based on your strategy, it appears that you believe prices will drop to an attractive point where you think you’ll be able to acquire similarly attractive deals again at similar prices?

For many reasons, many believe that this drop will be nothing like 2008.  I suspect that pricing though will come down over the next 12-24 months and we’ll see the bottom, prices likely won’t come down to where most savvy investors expect.  Therefore new ways of adding value or making major tenants may be necessary to provide the returns we’ve generated over the previous 10-20 years (ex 20-40% returns).

My sell discipline is pretty strict. As in, I don’t like to sell unless there’s a change in things I can’t control (like crime in the neighborhood).  The reason is that in all the markets I’m in, I don’t think I’ll ever buy property at the prices ever again… prices in the string population + job growth markets are sideways “s” curves with increasing trend lines.  Therefore I think investors strategies over the next 10 years will have to evolve in order to generate similar returns we’ve been used to… or we simply expect lower returns going forward.

 

I sold a few thousand units of Multifamily.  All large apartment complexes and all syndicated.  My sell discipline is to get out if I get a big pop and get out if I think values will decline.  In this case both were in play.  I bought stuff that doubled in value in two years (big pop) and I thought prices were about to fall.  And fall they did. My broker called me after doing a BOV on two properties I sold. 18 months after selling they aren’t even worth the buyer’s loan amount.  I suspect that’s the case for all that I sold. I think those values will fall a bit further. We’ve only seen the tip of the iceberg thus far.

But they will rebound.  I’ll try to get in before that happens, or shortly after it turns, and ride the wave up again.

I have not purchased since Dec 2021.  I believe in the power of leverage and the rates have doubled.   This would require a near 50% decline in selling price to balance.   My market is barely down in value, so the returns on financed properties are down significantly. 

There are numerous investment options other than RE.  RE is not always going to be the best investment option.  I believe we are in one of those periods where better investment options exist.  

Good luck