All Forum Posts by: Justin R.

Do you believe active investments have no risk, and pay an exact return each month?

Yes, paused distributions cause frustration amongst investors, but it is reality. If you start seeing these big syndicators losing investors capital, then that is what most would consider the benchmark for failure. A paused distribution not so much. 

I wouldn't lump Open Door Capital into this same group. The general partners of ODC are more conservative underwriters, and the assets they invest in are less likely to endure large fluctuations than the other two Syndicators you mentioned. 

I believe branch managers at the bank still get paid even with rates are low or zero, as management doesn't stop because of the cycle.

I respect your opinion, and you may be correct on a few of your points. Just offering my view.

Cheers!

Living in California I started investing out of state in 2010. At the time, an investor could invest almost anywhere in U.S. and pencil out a good return. I chose Texas due to what I felt was going to be an appreciating market (DFW), and extremely good rent to price ratio. In 2010 I was able to buy houses for 80-100k in Solid B class areas, and rent them for 1200-1400 a month. 

The cash flow here was about as good as anywhere, yet the market was strong and vibrant.  Then, the Texas property taxes started showing its face. 

Throughout the course of the next 8 years home appreciation went rampant, doubling in values in my area. Although this would typically be a good thing, it takes its toll in Texas. At the time my effective property tax rate was a staggering 2.8% of the property value (Keller ISD.) In Texas there are no statutes which limit the growth of property taxes for non-homesteaders. Even with decent rent growth year over year, it just couldn't keep up with property tax increases. 

The result - DECREASING ANNUAL NET OPERATING INCOME & DECREASING RETURN ON EQUITY

I am not saying investors should not invest in Texas. I actually did quite well by selling my Texas portfolio and 1031 into another location. Texas has a lot to offer, and I truly believe it is a great state that will continue to strengthen. But, if you are from out of state, and already pay a state income tax, you are virtually paying double taxes when investing in Texas (Texas garners a lot of their state revenue off property taxes.) 

There is plenty of opportunity in Texas, just make sure you account for current, AND FUTURE property tax growth.

Justin Rick

 Sorry your experience has been so bad. What part about ODC has been terrible, and why are you writing it off? Is it just because of the paused distributions? 

No (legitimate) syndicator has ever guaranteed the preferred return every single month. As any real estate investor knows, there are highs and lows, so its really hard to guarantee a monthly/quarterly return to an EQUITY investor.

If you are still with Open Door Capital then I truly feel you will come out OK. They have a knowledgable and ethical core group of partners, and are NOT based upon high leverage deals that drastically increase the risk of capital calls, or sinking of the ship. I think you will be good. 

 Yes, I have used "The Property Exchange" for management since 2017

A Fire needs 3 things to burn - Fuel, Heat, and Oxygen 

A Successful RE investment also needs 3 things - Time, Money, Knowledge

If you possess the time or knowledge, find a partner that can bring the 3rd element.

Best of luck!

Im not an agent/broker and don't know the most updated conforming guidelines. I do suggest you reach out to your local banks, credit unions, because they are more likely to work with your, and DO NOT need to follow these guidelines when lending from their portfolio. 

Cheers

I use a company out of Statesboro. They are great. 

The Property Exchange

https://www.exchangeboro.com

I personally really like investing in Main, and even Portland itself (albeit Portlands lopsided rent control BS.)

I live in CA and have invested in the Midwest, and the South for cash flow. I invest some in CA which has given me a lot of appreciation. About 6 years ago I started investing in Maine which I felt was a great combination of cash flow and appreciation. 

I feel the golden ticket for that area is 3-4 unit properties. The barrier to entry is high (500-800k) but the gross rents are equally high at $2300-$2500 per unit on nice properties.

Live in one unit and rent the other two or three.

 Awesome man! Thanks for your service. I was in the Army and stationed in Fort Benning and Stewart (your neck of the woods.)

I live in California now but still invest in your area. Send me a direct message with your email and I'll get back to you. I fly out to Savannah several times a year to check on my properties. Next time I fly in, I would be happy to link up with you and show you around my projects, and even introduce you to a few of my contacts.

Congrats on not only having your own home at that age, but piling up that equity!

 I would highly suggest a credit union or regional bank. I have used big box banks, credit unions, and regional banks.

Walking in to a local branch and speaking with someone that knows your name and your business is priceless. When a bank knows you are there in the community, and creating a service/product for its community, they just treat you better. They want to say "yes" and will try harder to say "yes" when you need something from them. 

One of the negatives with regional banks and credit unions is the software/tech/websites. They are closing the gap, and usually offer bill pay, online transfers, mobile deposits, and the other things you would expect.

I do highly suggest Amex for business credit cards. It runs smooth. Great rewards. Credit limits are based on past purchase history. Plays well with Quickbooks.