All Forum Posts by: Joseph Snyder

I think it makes sense to sell a property is when it becomes a pain in the a$$. And I use $$ because if it is causing money issues, get rid of it. There is a 80/20 rule that says you spend about 80% of your time on 20% of your business. Get rid of the 20% and you will free up lots of time. 

If you have lots of your time back, you can go make lots more $$.

Don't forget that you "recapture" that depreciation, it's a delay not a gift.

What Is Depreciation Recapture?

https://www.investopedia.com/terms/d/depreciationrecapture.a...

Usually  a 1031 exchange is beneficial. The best, in my opinion, is generational transfer done properly.

https://www.forbes.com/sites/whittiertrust/2019/04/02/3-ways...

The real issue is hanging onto the property long enough for that to happen. It costs money to hang onto a property.

@Joseph Snyder

Love this post — appreciate the real numbers and experience backing it. I’m still seeing cash flow, but it’s tighter than before, especially with debt service eating into margins. I’m finding 70–80 cents on the dollar deals in markets like Dayton and Cleveland, and making them work through value-adds and self-management.

Biggest wins lately come from being selective and staying local with contractors and PMs. Are you leaning more toward scaling again or keeping it lean and optimized?

My view is if you pay retail without a value add, the cash flow on a traditional LTR using conventional financing cannot justify the work and risk of residential RE in the near term.  With patience virtually all RE purchases look good.   I am not that patient.

So how do you purchase RE to achieve a decent return sooner than holding 10 or more years. One or ideally more of the above must not be the case.

- buy below retail.  This implies off market purchase.  In general off market purchases have elevated risk levels.

- have a value add.  Create some sweat equity.  Realize value adds typically require work and have risk   

- use a rent model other than traditional LTR. STR, MTR, rent by room. Each of these require more effort than a traditional LTR.

- alternate financing: assumable, owner financing, sub to, NACA, lease to own, etc.

- be very patient.  Wait for the cash flow to improve and the appreciation to add up.

good luck

I purchased my first property in January 2023.  A duplex in New Orleans.  Brand new 6 bed 6 bath up and down layout.  I have both units rented on section 8 which has been fine.  The only real problem I ran into was it being a poor build by the builder in ways that dont show in an inspection.

This in the long run is more of an inconvenience than anything as the state has home warranty mandates that is covering all this long term.

Since then I have completely revamped my buy box with my little more than 2 years of experience.  Pushing me to mid west cities with single family and multifamily homes in that 50-120k range.  Now that I know how to better and more efficiently navigate the section 8 landlord process and work within their rent price guidelines.  It makes finding properties and still turning a profit easy'er.

There's 2 avenues to invest (to me personally at least):

1) Equity capture at the buy 

2) Favorable financing that allows you to cashflow

Regardless you'd have to buy well under market (that's what investing is anyway, right?). So you can cashflow with traditional financing if you buy at a cheap enough price or if you get some below market financing terms (seller financing fixed at 4-5% and negotiate a balloon payment or IO for a period)

If you can't cashflow enough then you need to capture enough equity to be able to flip relatively soon or break even with cashflow. The equity capture at the buy would essentially be your return as opposed to a CoC return. So your net worth increases but you don't cashflow much.

My equity capture scenario - I bought a house for 160k, put ~7k into it, and it's easily a 200k house. It cashflows after property management about $150/month. New roof/hw heater/AC/flooring/paint so low CapEx for the next 10-15 years.

My cashflow scenario - bought a duplex in 2021 - total mortgage was $616/month. Rented for a total of $1350/mo. Mortgage has increased over the past few years (primarily due to insurance) to 889.96. Still rents for $1350/month. So nearly a 50% increase in the mortgage payment over the last 4 years. Has a good bit of deferred CapEx coming up in the next few years as well. It's tough

Also labor has gotten A LOT more expensive - borderline unaffordable. Plumbers used to be $85/hour and I'd get a discount down to $65/hour. Now? $135/hr with one company and $175/hr with the other. Insane. So rehabs have gotten more expensive? What does this mean? That you have to buy at an even further discount 

That's the two sides of the spectrum for me anyway - I've been able to increase rent on one house from 1200 to 1350. Although I suspect the $1200 was a little low to begin with. Mortgage there is ~750/mo. 

Small multifamily are really the way to go - ideally 4 units. The cashflow is higher overall, it's affordable so there will always be demand, when there's vacancy it's only 1/4 of the property as opposed to a house that is 100% etc etc

Are things that bad in Va, you are netting $4.5k a month from 6 rentals?, here in Phx,Az my bro gets $10k a month for just one 1acre comerical property.

He paid cash for the property.