All Forum Posts by: Kenneth Garrett

@Jonathan Bombaci

Are some of you saying you would charge your parents to use your STR. That's seems completely heartless. If you want to charge your brothers and sisters that's up to you. It depends on your own philosophy. I make enough money for my family to use it occasionally.

@Jonathan Bombaci

It’s good to start think about this now.  I don’t charge family to use it. Close friends I give a 50% discount.  I try to only let them use it in the off season when guests don’t book that often. I’m in a beach vacation market so I have an off season.  When I bought I always wanted to share with family. It’s only been a couple times when family wanted to use it.  Not a problem for me.  

@Abby S.

I tend to shoot for way higher on my CoC. I typically invest in BRRRR projects and although I would like to say I get 100% back upon refinance that is not always possible and in general difficult to do. I have been able to recoup all of my money into the projects generally in 12-18 months. So CoC on those are over well over 50% annually. On a more typical investment such as a small rehab or no rehab and rent it out, I would shoot for 20% or better. Times are tough right now so 15% might be worth it. If the numbers aren't in my favor, I generally prefer to wait for the right investment versus taking 10 years to recoup my money (10% CoC).

@Caimon Bistis

I invest in a lot of BRRRR projects where I use private lenders and they will fund 100% of purchase and rehab. I then refinance with a small local bank. A little different strategy then if your scenario, but the end result is similar. Congratulations on your success. Nice Job, keep it going.

@Ryan Friend

I don’t agree about schools not making a difference because you don’t live there. A 3/2 will attract families and schools do matter to them. I mostly buy in C+/B neighborhoods. I have bought in C-/D. A tremendous difference between the two. The C+/B neighborhood has way better quality tenants, higher rents and less crime. I self manage all of my properties. You definitely want to invest in appealing neighborhoods. Neighborhoods that are in transition where improvements are being made and moving from C-/D to C or C+ or good investments as well.

I do agree sometimes we have to start somewhere and that might mean not the best neighborhood, but I would shoot for C or better.

@Christopher Bunge

In my 4 unit, I installed submeters.  I had each electrical panel in the same location in the utility room and installed 4 meters.  I then took the bill, calculated the total kw for the billing cycle and divided up the use of each meter.  Whatever was left over was the the common area useage or my use.  

@Qui Van

Those rules of thumb are for beginners to do a back of the napkin calculation so they don’t make a big mistake. I quickly learned when I started, those rules of thumb only work for a very small percentage of the time. Like all investments, the only thing that matters are real numbers. Does the property cash flow. Who cares if it meets the 1% or 2% rule. The rule you should use is does the investment cash flow. The amount of cash flow required is your own criteria that you determine is worth the investment.

Don't listen to people who say $100 cash flow is a good deal. One major expense will eat up all of your cash flow for the year and you may be negative. The minimum cash flow criteria I use for LTR is $300 for a SFH. Hopefully you can be at $400-$500.

It might be tough to find investments that meet this criteria, but as the saying goes, sometimes the best investment is the one you don’t make.

@Christian Ehlers

The typical going rate is around 12% plus a point or two. Still less expensive then hard money and the LTV could be 100% depending on your relationship. The first time I used private money, it was 12% plus 2 points. I was able to fund the purchase with the private money and I funded the rehab costs. After the first BRRRR, I was able to secure 100% funding of my BRRRR and flip projects which included purchase and rehab. Relationship building is the key to this type of funding.

Quote from @Lucas Hunt:

Quote from @Justin Manley:

IMHO, It's best to stop buying until the fools have run out of money and prices have come back to reality.

There is no indication that appreciation will happen for the next 10 years. Appreciation is gravy. Come back to this post in 5 years. I bet the %95

will be looking pretty terrible.

I am ready to expand but have decided to place everything on hold, look for good other investments and keep liquid and wait for them to start dropping

over the next three years. Winter is coming. I plan to do my best vulture imitation as carrion eaters are the only ones who will be getting fatter over the midterm. Just my two cents. Don't try to place a square ped into a round hole.

P.S. -2.5%? I would rather be electrocuted. :)

It was around 2.5% (it was positive). This post will definitely be ear marked to look back on! 

I never count on appreciation as it’s fluctuations are unpredictable.  I make investments based on cash flow.  If I get appreciation that’s a bonus. Historically appreciation occurs over time, but remember you do have markets where appreciation is flat.  If your COC return is to low as you mentioned 2.5%, I would wait for the next opportunity.  Some of the best investments are the ones you don’t make.

@Victor Matias

Comps are definitely difficult in this market. If you have the same model in the same neighborhood and maybe even on the same street that is an excellent comp. If I'm a flipper and I updated everything and my comp is not updated then you need to provide an equivalent for the updates. In doing so, be conservative. Don't over estimate to make your ARV better then it really is.

In general appraisers like to have multiple comps, but in this crazy market it might be hard to find. I just sold a property. If I was three months earlier I would have made 10K-15K more, but the market changed. It’s always evolving. At this point a 6 month comp will probably be adjusted down based on market conditions. Once again it is market specific.