All Forum Posts by: Kevin Uzelac

@Stephen Brown I would have to say buy and hold real estate for long term cash flow. Specifically, using the BRRRR method. Nothing creates passive cash flow quite like real estate. The beauty of holding good rental property is that as long as you have renters, you're cash flowing no matter what the value of the property is.

Dividend income from high yield dividend paying stocks is another method. Although, depending on your life style, you might need to have at least $1mil invested in dividend stocks to earn enough passive income to live comfortably. 

@Caio Ferreira Torres I would say definitely put up to the company match into your 401(k). Based on your age, a Roth 401(k) would be the best choice if the company has this option. If the company matches up to 5-6% it's only a small portion of your income. You could definitely save a significant more than that for real estate if you're living at home. 

The beauty of the Roth 401(k) is that it grows tax deferred and it can be transferred into a Roth IRA if you leave the company or become an investor full time. Also, the Roth IRA allows you to take a loan out up to $10,000 for a home purchase. This means if you use an FHA loan for your first investment you could use the IRA for the down payment.

Another reason I would recommend investing at least up to the company match is for diversification! The stock market moves much differently than real estate does and it's always good to spread out your risk. Also, since the stock markets inception the average return has been 6%. With compound interest and starting right out of college, you could see some serious growth over the years. 

@Christina Karabas it depends on the lease agreement. Although, there is no rent control in Pennsylvania so you can raise it as much as you deem necessary. According to an article in the Philadelphia Inquirer, "Unless the lease says otherwise, your landlord can only increase rent at the end of a lease term. So, for example, they can’t raise your rent six months into a yearlong lease, unless your lease specifically says otherwise"...

When it comes to how much notice you have to give your tenant, "Pennsylvania doesn't have any laws on this, though many leases will provide terms." For Philly its 60 days notice if the lease is 1 year or 30 days notice if its less than that. So, I would recommend giving the tenant at least 30 days notice of his options and the rent changes. I hope this helps!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Philadelphia.

Purchase price: $219,000

This is a Temple student rental that is tenant occupied until the end of July 2021. My investor bought this with 100% cash and is looking at $2400 a month in gross rental income. The property is right near campus and is a no brainer for students looking for a cheap rental. There is 4 units each renting for $600 a month.

What made you interested in investing in this type of deal?

My investor liked this because no work is really needed to continue to rent this out immediately. Right off the bat he will be cash flow positive and can continue to build his passive income portfolio. He also believes the property will continue to appreciate and will be doing a cash out refi in a year or so for another rental.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Philadelphia.

Purchase price: $219,000

This is a Temple student rental that is tenant occupied until the end of July 2021. My investor bought this with cash and is looking at $2400 a month in gross rental income. The property is right near campus and is a no brainer for students looking for a cheap rental. There is 4 units each renting for $600 a month. My investor liked this because no work is really needed to continue to rent this out immediately. Right off the bat he will be cash flow positive and can continue to build his passive income portfolio.

@John Harvey sure let's talk. I just sent you a DM. 

@Buyan Thyagarajan we actually had a deal just like the one your describing that sold yesterday. $110k purchase and $190k ARV in 19139 if you were going to flip it. It already had a lot of work done: new paint, wood flooring, recess lighting and apex plumbing etc. It also had duct work so putting in Central A/C wouldn't cost much. As far as whether it's a buy and hold versus flip, thats up to the investor. If you were to rent it out, it wouldn't need much work at all. No finished basement, no additional half bath needed. That's something you need to take into account when doing buy and hold versus flip. In zip codes like this, you don't need to do everything to the property to make it rent ready.

Whether or not you want to flip something like this depends on what kind of returns you're looking for on a project. If this is your first project, you may want to look for a little more wiggle room. The person who bought the example I provided is going to flip it but they have their processes and systems in place and knows what it will take as it's not their first rodeo. 

As you know, there's been a lot of appreciation in most markets in the U.S. in the past year. Philly is no different. Prices are up in most areas of Philly. But, when it comes to predicting future appreciation we look at spillover from nicer areas, new construction etc. I hope this helps. 

Mahir Rasheed is a U.S. economist at Oxford Economics and he wrote that "Nearly 90% of the for-sale inventory in May was of homes where construction is ongoing or has not started, while 36% of homes already sold have not yet broken ground…"

There has been a smaller increase in the past year in home prices of new builds versus existing homes (18.1% versus 23.6%). This increased demand for new homes will keep homebuilder activity supported but will have a negative growth impact on existing homes trading hands. There has also been a decrease in lumber prices which should help builders mitigate cost pressures.

Now is the time to build and look for full guts that need everything done. With prices still inflated, this is how you will get the biggest bang for your buck!

@Rafael Saldaña I would say in today's market working with a wholesaler or searching for off market opportunity on your own would be the best way to make the most out of your first investment. Some of the off market properties wholesalers provide are surprisingly turnkey and can cash flow right off the bat. These aren't going to be new construction but you would most likely see a better ROI up front from an older turnkey investment than a new construction in today's environment.

The competition in new development and properties you find on Zillow is so high today that it can be tough to find a good deal.

For all the Section 8 rental investors out there, I would love to hear about your experience. What are the pros and cons you have found from being a Section 8 landlord? And for those that avoid Section 8 rentals, why do you? 

I appreciate any and all feedback on this topic!