All Forum Posts by: L. Brown

Quote from @Joe Villeneuve:

First, there is no such thing as an "overly competitive market".  When you encounter a market/property where there are many, many offers that end up raising the end purchase price to a number much higher than you thought it would (or higher than what it should have been), all you di was run into a group of buyers that are focused on the property and not the deal.  They did you a favor.

Learn how to design offers into deals (strategies).  Learn how to analyze markets (based on dollars, not school systems, etc...) not properties, and instead of looking for deals, look for opportunities.  You won't find an "overly competitive market" there because you're the only one that knows how to buy there.

The best "deals" are generated from opportunities.  They are not just "found".  What you've experienced is just one reason why.  All deals are made up of two things:

1 - Minimum cost to the REI. The only cost to the REI is the cash they put in, so this starts with the smallest DP possible, and positive CF.
2 - The terms where someone/something else pays for the rest.

How you design those two things are based on the strategies you develop over time, an in depth understanding of math (geometry and algebra) as it applies to money, and your ability to correctly (mathematically) analyze markets. That's it.

Joe, thanks for your reply. I'd love to dig deeper on some of your points. Can you explain what you mean when you write "learn how to design offers into deals". Specifically, what is the difference between an "offer" and a "deal"? 

Also, how does one analyze markets (instead of properties)? What is the difference between looking for deals vs. looking for opportunities? Specific examples are welcomed.

Lastly, you mentioned it's important to develop strategies that lends itself to minimum cost to the REI and terms where someone else pays. Can you suggest some of these strategies?

I'd love to consider your comments in the context of clear action items/steps. 

Quote from @Dylan Speer:

Have you considered 1031 exchanging into a DST? Or other syndications? Those will remove the competition and provide consistent cash flow and growth.

Dylan, I am familar with 1031 exchanges, but have never heard of a DST. I will look more into this and follow up. Thanks for the suggestion!

Hello BP,

I really need some advice. I bought my first duplex in 2020, where I rent out the larger part of the house and live in the attic apartment. The plan was to live in it for a year and buy another investment property (a duplex or higher that I would live in). High rocketing home prices, increases in the mortgage rates and insane competition has kept me from buying my next property. Living in the attic apartment was ok for 1 year but we are not into year 3 and I can't take it anymore. 

At first I wanted to buy close to where I live, but it's a high cost of living area and I would consistently get beat out by people offering way over asking/market and/or cash buyers. So I decided maybe I would look farther out, but alas, the same experience. The last property I looked at had 25+ offers and was under contract a few days after being listed. I am somewhat surprised as I thought the high interest rates would keep some from buying. I guess not.

 I admit, I'm pretty frustrated and not sure how to move forward. I would welcome any suggestions you may have.

Hey BP, I currently have a house that I rent out but would like to remove the current tenants, renovate the basement (by adding a bedroom) to re-rent the house at a higher price. This is my first time doing this, any would love recommendations on resources about how to do this, ie. how to budget for the renovations, how much to increase the rent by, cost/benefit to see if it’s worth it, etc.

Thanks, all. This confirms my thinking.

Hey BP,

I bought my first 2-family home (owner occupied) in August 2020 with a conventional loan. I am working on buying another multi-family (2-4 unit, owner occupied). I spoke to the lender I used to buy my current property about buying another property and he said the following:

"For a conventional loan the minimum down payment for a 4 family is 20% vs 15% for a 2 family. Since you already own a 2 family it will be very difficult to buy another multi family using a FHA loan since FHA has a guideline that does not allow the program to be used to acquire additional investment properties."

One of the reasons I went with the conventional loan is so that could keep the FHA in my back pocket if I wanted a home I wanted to put a lower down payment on. Is he correct that I can't use the FHA loan to buy my second investment property?

Great thoughts everyone, thanks!

Hey BP,

I currently own a duplex that I occupy. I’ve had the property for 1 1/2 years and all in all, it’s gone extremely well. As I think about my next move, I’d ultimately like to prepare to buy a small apartment complex (no more than 10 units) that would cash flow enough for me to pay the mortgage on my (yet to be purchased) single family dream home (not extravagant, but really nice).

Here’s my question: what are some of the major differences between buying and managing a duplex vs an apartment complex (I would hire a property manager)? Is going from a duplex to an apartment complex too big of a jump? Would getting something smaller (ie. 4-plex) be a better move to get my feet wet into commercial property? Thanks!

Yes, it's completely insane! I bought the house for $320k :-/

No, they didn't walk the property- well, they might have walked around the perimeter of the house without my knowledge, but they never came inside the house. I will ask the seller what renovations were done.

I'm still a newbie- can you explain why having it listed as a owner occupied matters? Does that change the property taxes? Also, what do you mean when you say "they have a cap that expires at each sale date"? You mean a cap in terms of the maximum amount of property taxes they can impose? (forgive my ignorance!)

Hello,
I'm new to real estate investing but took the leap and bought a duplex where I occupy one unit and rent out the other unit. While living in one unit of the property, the tenant pays $1500, and the PITI is $2100, so my monthly out of pocket is not much. My plan was to eventually move out and rent the unit I currently live in. This would give me a monthly cashflow of about $900. Then the trouble began...

I was recently notified by the town that my property taxes are doubling ($5,000 to $10,000)! When I asked the town about this, they said it was because there were a lot of renovations done to the house before I bought it and they are just getting around to assessing the new value of the house. This kills any cash flow I might have had, even if I rent out both units! I will obviously appeal the new assessment, but I'm not sure if I will win.

Has this happened to anyone before? Any suggestions on how I can still mangage some cash flow in the property? I almost feel like why bother to make improvements to the house if the tax assessor will come around, increase the taxes and make it so that you can't afford it!