All Forum Posts by: Malcolm Douglas

"It takes hard work to get lucky"

Would love to get feedback from those invested in real estate during the dotcom bubble of the late 90s and early 2000's.  This was a obviously a different type of pullback compared to the more recent real estate crash, so I would love to hear any differences or similarities.

How did prices of real estate act leading up to the peak and thereafter?  What challenges/opportunities, if any, did you encounter?

Take it for what it's worth, mainly a prediction, but the investment firm I work at seems to think recession is likely late 2019/early 2020 with stock market seeing declines before that.  Keep an eye on the yield curve flattening as short term rates begin to equal long term, this usually is an accurate predictor of economic slowdown.

This is guess but I think stocks will be hit hard as a lot of new wealth was put into the stock market over the last cycle and the advent of ETF's has allowed investors to buy large pools of stocks.  When the next panic hits, and people rapidly pull money out of those ETFs, it could accelerate declines as those ETFs are forced to sell off stocks in order to pay those redemptions. Machine trading can also magnify it. We saw a 10% decline in February in a matter of days/week.  What will that decline look like when there's a real panic?

It's for reasons like that, and this, that I have been shifting money out of stocks and into real estate. 

I have the co-signers fill out separate applications which indicate their employment and salary history.  I also require credit checks.  If both income is high enough and credit check reflects history of paying their debts I have all I need.

I have a 2 flat with 1st unit duplexed down and have considered converting to a 3 unit. 

Assuming you meet the necessary zoning, you will need it approved by the city to do it legitimately.  Several people I've spoken with suggest creating a relationship with your alderman or knowing the right lawyers who specialize in zoning that can help expedite the process.

You also want to consider if it makes sense economically.  What will it cost to create a 3rd unit and how long before you start seeing a return on that investment?

Look to network more and establish good relationships. You’re either talking to the wrong people or don’t have a good deal. Go to a local meetup, meet like minded people and see if anyone has interest as you build those relationships. Even if no one will co-sign you could partner on this deal with someone more experienced and learn from them. Relationship and experience points sometimes yield a better return than a single deal, especially early on in investing career.

You're not over leveraged and seem to be sitting on enough cash for another deal and plenty of reserves. 5 more years of amortization and those two SFH will have even less debt to pay off.

Consider looking to invest in a good cash flowing multifamily deal.  As you near retirement, and your goal of no debt, you can assess the best option to achieve it.  Could be selling one property to pay off others, loan from 401k to pay off others, or maybe draw equity from one deal to pay off best performing asset.

@Ashish Acharya Thanks. Apologies if I wasn't clear but I was asking about property taxes.

@Logan Allec, @Chase Gochnauer, @Michael Plaks Thanks for the info! Very helpful and something I will look to research further before year end.

I am curious - Living in Chicago, both a high state income and real estate tax district, does it make sense to try and pay the first RE tax installment of my 2017 bill before year end?  I will be over the newly proposed 10k threshold once the law is enacted and therefore unable to make the full deduction for 2018. 

I understand there's a time value of money factor here but curious if other RE investors in similar cities are doing/considering this strategy, if at all possible.

Also, as a broker is #2 pocketing commission?