All Forum Posts by: Jacob Pereira

@Héctor Fuentes, I'm not sure that I'm qualified to answer that question. My Roth IRA is the standard style. I do occasionally borrow against my 401k for real estate, but again, it was a standard employer plan (back when I had an employer).

If you're just starting out, I'm not sure that I'd go that route. You should at least own your own home first to maximize the advantages, and if you don't have family responsibilities you're much better off moving into your acquisitions to get the subsidized loans rather than being limited to investor rates. Certainly talk to a tax advisor and a sophisticated financial advisor before you take the plunge. 

@Nick Gerli, you would think that it would be enough to get to a decent facsimile of actual appreciation, but the problem is that that hasn't proven to be the case. I'm only familiar with my own market, but if you look at the MLS which doesn't use any estimates, only true reported data, the Austin/Round Rock metro area appreciated just under 20% last year. I realize that there are other issues with this method, but it's about as close as we'll ever get to getting a true number.

I have an anecdote that I'll share that might point to why Zillow's estimates are so poor in non-disclosure states: In the last few months I've helped clients offer on three Zillow-listed properties (by that I mean FSBO, not on the MLS). In each case the owner clearly had no idea what it was worth. One had an asking price that was about 25% higher than it was worth, and the other two were low, one excessively so. We lost out on one of the low ones, but got the other one; the owner later told me they had 26 offers, and most at asking or 20-30k over asking. Ours was still well below market, but was closer to 45k over asking. In the other low one a similar thing happened, and I later found out through the grapevine that it went for almost 100k above asking! We got the high one, simply because we had seen it was up for half a year, so we threw in a lowball offer that was accepted. During our option period we were also able to negotiate it down a bit further because they let slip that they needed to get rid of it soon. Zillow has no idea about all of these things. I don't know how their algorithm works, but seeing as they can only use the data that was self-reported, I'm assuming that in these three situations their numbers are way off.

@Katie Greenman, I congratulate you. When I was your age, I couldn't even think of putting close to 20k a year into retirement. The question really comes down to the tax consequences. Considering you're saving that much I have to assume you're a fairly high earner, so you might want to look into more tax advantaged investment opportunities...cough, cough.... Real estate... Or at least a traditional 401k.

If you're a low earner and just scrounging to max out, relax a bit and spend some money on yourself. You're only young once, and money gets easier to make the older you get.

@Shiloh Lundahl, I'm probably one of those self-righteous investors. I have a personal trigger when people use poor math or research to justify their point, and I can't help but post facts when I see it.

Just the other day there was a video posted here with a kid who was super excited and was predicting 30% appreciation in the Austin market over the next three years. Last year the Austin market appreciated almost 20%, and even if it hadn't, the stock market historically appreciates more than 30% over three years (before inflation).

Anyway, I'm sure it's annoying to a lot of people when I do that.

Adding one more thing now that I've completed the survey. It only allowed an exact numerical answer to how much I would pay for the report, which I found frustrating. With a few caveats this report could be quite valuable, but as it stands it's not worth that much for my personal purposes. I ended up putting in 0 because I didn't want to deal with the parameter issues, but if the raw data and, say, an hours time with the analysts was offered it would be easily worth a few thousand dollars to someone in my situation. Even as is it's probably worth a bit of money to someone like me as an interesting read that would allow me to cherry-pick top-line numbers for clients.

@Dave Meyer, as someone who used to publish very similar reports (albeit about the utility industry, not housing) I actually think this is a pretty decent report. I haven't done the survey yet, but I find they usually lack the granularity to really get a good picture of what you can do to improve.

First of all, what is the goal here? Are you releasing these reports as marketing towards your consulting services? Are you selling these to large organizations for a premium price? Going mid-level to brokers and other real estate professionals? Or, as most of the respondents seem to assume, are you selling to individual investors? If it's the latter, I'd agree that it's too long and too dense, but for any other group it seems like a report that could provide real value.

A few things that I would personally like to see:

A better explanation of your data sources and methodology. Right now your methodology page reads to me like a thinly veiled way of saying, "we pulled some random data off the internet and fed it through our opinion-based model." I'm not saying that's what you did, but that's how many people will interpret what you have there.

Access to the raw data. Back when I was doing what you're doing for a living, most of my clients were much more interested in our pivot tables and spreadsheets than our book (yes, we used to actually publish physical books of our reports). That would be true for me as well if you ever released such a report in my home market (Austin).

Muuuuuch more explanation of your projections. Projections are always suspect, because anyone who is a fully accurate prognosticator can make so much money that releasing forecasts simply isn't worth their time. However, if you can make a detailed and convincing case, I might still be able to justify your projections for myself and my clients. I'm not a developer or larger real estate organization, but I imagine anyone who is trying to find actionable information would also need more information in order to act upon what's outlined here.

Overall a very interesting read. I wasn't able to go through it in the detail I'd like to yet, but it's great bedtime reading.

Since I became an agent I've helped a number of people become financially independent (like myself), and seeing all the different ways it happened it got me wondering about how other people on BP are making it happen. No wrong answers here, whether you're just starting out, or about to sell it all to go live in Bali, I'm interested in all your stories.

@Ujwal Velagapudi, to be clear, I'm talking about a rent by the room situation, not a short term rental. I actually own an STR in the city of Austin, and the regulations involved are quite onerous.

As far as the rent by the room model goes, it essentially follows the same rules as roommate rules, which are much less strict. Usually in that situation you'll have to worry more about neighbor complaints than any kind of occupancy or zoning issues.

Plenty of properties that meet the simple criteria you've outlined. I think if you fine-tuned your requirements a bit you might get a more useful response. For example, what's your max price point, and what are your cashflow and rehab expectations? If you're looking at $500k, a negative cashflow, plus rehab, there are plenty of spots in Austin. If you're looking at $250k, less than $20k rehab, and positive cashflow, you might want to look in Austin suburbs like Round Rock, Pflugerville, Cedar Park, etc.

Great question. Both are looking good for growth, and seeing as it's a very generalized question there's no right answer. Personally I'm mostly investing on the North side, but I'm definitely looking all over.