All Forum Posts by: Kai Van Leuven

I spent a few years in the mid west in little towns that mined lead. At one time, the real estate investors there probably thought “we use lead for everything, no way it could fail as a commodity. If I hold onto this real-estate...” The same could be said for a host of other industries (travel agencies, taxis, news papers, ect.).

What will hurt real estate in the future?

My thoughts

1. Stagnant incomes- incomes are the driver for real estate valuation. You can show appreciation but if incomes are not increasing it doesn’t mean anything.

2. Virtual Work- All my investments are tied to suburbs of major/regional metro areas. If folks could live in Montana and have the same job, who would want to pay Seattle housing prices.

3. Basic Income- I try not to be negative but I fear a “race to the bottom” theory is pretty real. A lot of folks are finding it harder to make ends meet and Real Estate prices/rent outpace inflation. Our government will let any company merge or be acquired, creating super companies (antitrust laws). I am not for basic income but see it as a viable solution to some long term problems. That will make coastal areas prices fall and the Midwest and south to remain the same.

4. Transportation- the idea of self driving cars makes a commute not as daunting to many folks. Just sit/sleep in your car. Does the commute really matter?

These are all independent from a Real-Estate/rent bubble. If you got something, chime in!

@Lyman DeAnn-Gaines II

I have always felt like I have nothing to lose. I started investing really young and have always felt like if “crap hits the fan” I will go and live a boring life like everyone else.

“Yeah, it's overwhelming, but what else can we do?

Get jobs in offices and wake up for the morning commute?”

-MGMT, Time to Pretend

—————-

What I know is that I have been in jobs where guys have worked 40 years in a job they hate surrounded by people who are indifferent towards them. THAT TO ME IS A BIGGER RISK THAN BETTING ON MYSELF!!!

@Scott V.

You can have one nice thing! Go for it.

I wanted a nice tractor. It is worth more than my car and truck combined. That Kubota only chugs along at 2mph but it always puts a smile on my face.

@Jon Hill

Goal #1: Head Wrestling Coach at local middle school. My application is pending school board approval

Goal #2: Improve processes within wrestling club as far as gear, travel, advertising, coaching, ect.

Goal #3: Leverage contractors and start to train my replacements. Pretty much acknowledged that I can do better work but am only one man.

Goal #4: Five state participants as freshman at the high school level from club in 2024.

I know that this is an investing website but after FI you gotta focus on the stuff you love, aka wrestling.

@Roc Pilon

Gotta echo the advice you have been given...

My thought on appraisals... they are a box you need to check for the bank. I don’t look to them for any indication of “value” of my property. Every investor, appraiser and bank knows “just let it come in at purchase price”. Anything higher creates issues. If there is a ton of equity the bank may not see it as an “arms length transaction”.

You pay for the appraisal but it protects the bank. They don’t want it to come in low.

What I do... once my lender tells me the property appraised, I don’t even look at it in my email. If they send it to me in hard copy, I shred it.

@Dennis M.

This is why when someone markets “rents are under market” I always cringe. There is a reason why landlords don’t just raise rents. It can really destabilize a portfolio/property.

I bought a large (for me) project a few years ago and turned over 100% of my clientele. What a pain. I raised the rents 30-50% but it came with a huge amount of headache.

@Michael Fundaro

I truly enjoy the hunt. Every house, financially, has a story. When you have looked at enough assessors websites, public documents, mls, ect.

It becomes pretty easy to pick some winners. I like the idea of getting a deal of a lifetime, finding value, and making a place perform at its highest use.

Maybe it’s because when I was a kid I used to buy baseball cards and look up the value. RE investing just has bigger numbers.

@Jonathan Greene

I am about to geek it up on Real Estate:

I firmly believe in the EMH (efficient market hypothesis). As in those OOS markets were already efficient! The market that was set in those areas already worked. All driving up prices does is shrink your returns and everyone who comes in after you.

These assets probably are poorly performing if you look at an IRR metric and when they go to sell it there is little, no, or a negative gain against inflation. If you look a how like a discounted cash flow works... you need something like this...

You need either:

High appreciation and low cash flow

Medium appreciation and medium cash flow

Low appreciation and high cash flow

I am sorry, if you are making $48 a month on a depreciating asset you are at low appreciation and low cash flow.

@Jonathan Greene

1. People don’t want the truth- these areas are suppressed for a reason. The jobs have been outsourced, urban decay, ect. They want to be sold on something they don’t understand.

2. No Big picture- they don’t understand that depreciation is great until you have to pay the recapture. That when the value of the property does not outpace inflation and or replacement cost, it is not a good long term result.

3. Ego- they want to tell people at work “I own 10 homes” aka I am smarter than you and I know it.

4. Ego 2.0- they are much smarter than the locals that have been dealing in that market for 25-50 years. The ones who talk with all their buddies and say “can you believe this yahoo from California paid XXXX for that house.”

5. Turnkey- they like buying investments where all the “meat has been taken off the bone” and they have a “pretty” product. Aka your agent, lender, contractors are raking it in and you are making $48 per month.

6. “The world is Mine”- they want total world domination. I am going to “scale” this business so that I own 1/2 of (insert midwestern or southern town). They don’t realize that their are headaches associated with every business and growing compounds those exponentially.

That’s what I got off the top of my head...

@Scott Trench

I gotta echo what you are saying.

I have a house that had a few broken down cars, dogs chained up, and the inside was completely trashed. It was that way for 4 years. The tenants were good people who just lived a certain way. Always paid on time, pleasant to deal with, and just good folks. When they moved out... you could eat off the floor and the yard was immaculate.

Let sleeping does lye. Don’t get fired up over the future because it will cause you headache for a problem that you don’t even know will exist.