All Forum Posts by: JJ P.

My feeling is that a 30% drop is pretty steep. That's what it would take to break even on your 1031. 

We just forge ahead with purchases and hope for the best, making informed decision based on the data that's laid out in front of us.  Long term RE investors are like long term stock market holders, you gotta ride the dips and soldier on.  Could Covid fire sales be right around the corner?  Sure, but who really knows?  Maybe foreclosed houses will flood the market in 2021, but you never know.   At some point you jump in.  I'd take the sure thing of 30% tax savings and buy something now. 

  Do you have any prospective properties identified?  It might be a bit rushed if you haven't found them yet.  

I think any given tenant is allowed one chance to get shown how to light the fireplace on your dime.   That could have/should have been done at move in, and perhaps was.   Now you know to give the management company a check list of things you want reviewed in person at the time of move in.    The second time, and being invoiced for it on your bill, seems a bit tacky.   Did the tenant not understand the instructions the first time?  What did you pay for that?  

I'd suggest that you tell the management company to 1) call you to discuss and approve any expense over $200 and 2) Charge the tenant for the service call if they continue to have confusion over the issue.   This can be done kindly and gently, and will like prod the tenant to remember the procedure instead of haphazardly calling for assistance.  The tenant probably has no idea that there was a fee for that.  They tend to think there's a handyman roving around waiting to work on the Property Managers houses.  

@Darius Ogloza,  some easy research is to 1) drive the area late at night, weekday mornings, and on Fridays after work.  See who lives there.  Who's walking around? People with dogs or kids, or people that look like they're up to no good?  Do the cars look beat up with taped up windows?  Do they have to pop the hood to start the car?

2) Look up the crime log for the area.  I use SpotCrime to see exactly what arrests have been made.  It works nationwide.   

It does appear that we are poised for a downturn, but it hasn't happened yet.  Real estate is a big lumbering elephant compared to the nimble stock market, but it's still a gamble to wait to time the market for downturns and upturns.  

 If you know your market inside and out... what's a good deal; what the micro-neighborhoods are like; which streets bog down during rush hours; etc, then you already have the tools for swooping up a good deal.  Good deals and motivated sellers happen in all markets, the person who makes out is the person who has done enough homework to know what a good deal looks like.   Knowing your market area allows for safer purchases based on knowledge, not so much market timing.   It's like getting to home base one base at a time, instead of waiting for the home runs.   The home runs are the funnest, for sure, but investors look for opportunity on the doorstep in every market.  

@Uwe G., thanks for the explanation.   We just invested in the Oregon South Coast, and so far are very pleased.  The houses are attractive, already rented with nearly no vacancy time,  and the cash flow is good.  But we are looking for very long term buy and hold.  In other words, we can sit back and see if/when/how much the area appreciates (or not).  I can see that anyone who needs to scale up in volume might hit the limitations of the area.  

 I think the regional airport OTH is  a huge potential draw.  Tourism is the natural economic growth area for the region,  and so not much can be expected until Covid runs its course, and then the whole world will be trying to get back on its feet and the competition for tourist dollars will be stiff.  

I'm curious to know why you experienced Oregon investors don't invest more along the coast or other scenic, if somewhat rural locations?   It seems like there are bargains to be had and perhaps vacation rental opportunities.  

@Klemens N., please clarify: How does the WY LLC not do business in California if the properties are located in California?

You could pay off your property and then start to snowball the remaining debt with your extra $300 a month.   I would NOT take cash out (debt) of your primary to pay off or pay down rental mortgages that are at 4%.   You're just moving debt from one place to another, and the interest rates on the rentals are low enough to not be worth the trouble.   Debt snowballing allows you a little bit a flexibility-- slow and steady, but it's definitely the turtle in the turtle/hare race of becoming debt free.   We tackle the long term hold rentals first, even if the debt amount is higher.  But that's just us.   It's nice to pay off the lowest one because it happens faster.    Financial Mentor has my favorite debt snowball calculator.  

You guys are posting the Case Shiller index... it's an APPRECIATION chart.  So it showing year over year increases for four years of a whopping 13% appreciation in Seattle, a respectable 6ish% appreciation in LA and then dropping to about 1% appreciation for the final Jan 19 tally.    Let's look at LA, since that's the most modest.  That means in LA houses went up 5-6% between Jan 2015 and Jan 2016, another 5% from 1/2016 to 1/2017, another 7% or  more in '17-18 and 1% or so from '18-'19.    My way of looking is that you got compounded interest for all these years (the Jan value is higher than the year before).  If we don't compound it and take the very lowest numbers for Los Angeles, it's still impressive, just add 5%+5%+7%+1%=18% in 5 years.   That's about right... 20% or so in 5 years in LA.   And in Seattle, they're smiling even more.   And in SF, the numbers were so high to begin with that they've been smiling for years.  

I agree with you on the whole Left Coast thing.   We are southern California based and decided to invest in the Coos County area of Coastal Oregon.   I spent months looking east of the Mississippi, which is definitely less expense then most locations east of the Mississippi, but we decided that culturally, we're more familiar with the way the West Coast works, and that was actually a deciding factor.   Price points in Southern Oregon are very investor friendly, the rental market is tight overall, and it's easy to get to from where we live by plane.   I'm aware of the Idaho migration, and I have no doubt it's a great and beautiful place to live, but I think the Bay Area residents will tire of the winters.  They simply aren't used to that much winter weather.   I think Oregon and Washington state both have great potential for flippers targeting the new Tech work-from-home markets.  They will be looking for very nice, safe places to live and raise families with a nice vibe for young, healthy, active professional people.  There are lots of low cost flights along the west coast also, making it relatively easy to come home to see the family.

  I think these states are less sweet for buy and hold landlords, because they are tenant friendly states.   But we are quite a long ways down our land lording careers, and opted for rentals in spite of the less friendly landlord regulations.