All Forum Posts by: Radhika M.

@James Park Thanks for taking the time to answer in detail. Yes if 64% of a city's population left the price would fall. But this would be the case for any city. if 50% of population fell the property price would fall even in John Creek where you are investing. 

But I do agree with your premise that Asian population might have accelerated the real estate price here. One thing I see also is that the Asians usually do not like selling properties and like to hold them for generations. This is how it is in India also where I am from and that is one reason for the housing supply shortages and increase in price.

Also  wanted to say that I really do enjoy yours posts and learn something from them.

@James Park I know you use Cupertino, CA as an example in terms of median income and the housing affordability.

I am not sure where you get your numbers but can you check the same numbers say 10 years ago, 20 years ago and so on. I want to know if really where we are is so different for 10, 20 or even 30 years ago. Cupertino and bay area real estate has been expensive even in the 1990' and 2000's. We really wanted to buy a property in the area in 2000 and again between 2005 and 2006 but did not buy because we thought the property then was expensive.  we bought in early 2013 for almost double the price of what it was in 2005/2006. Even during the the market crash in 2009/2010 the market went down between 10 to 20% and it was one of the first markets to recover.  The couple who sold our property tried selling the house for X amount in 2010 since they bought a bigger place but they did not get the price they wanted so then rented it and then sold in 2013 for X + 300K more. again I am not questioning your logic or reasoning. I am just interested to see if we are really so out of the place in terms of affordabilty compared to before.

@James Park I am not sure there is 100% generalize this but from my observation here in the bay area the schools with Asian majority do much better than schools with less Asian. People tend buy for higher for good schools and I see in general that area's with good schools appreciate faster than others.

 I am in Cupertino area and know the schools and area very well and the appreciation rate has been crazy here. My neighbor bought their house for 350K in 1996 and now the house is work around 1.8 Million. Their property taxes are still so low that even when their kids are done with school they don't plan to move. Also the median income is misleading I think for area's like Cupertino because there are lot retirees still living in the area because they bought the house in 1950 or 1960's and pay so low property taxes that they have no motivation to leave. Most people in the area should be making 250K. If they are two income people they should easily make 350k+. This is just based on my observations.

@Curt Davis

@Curt Davis I think what @Jay Hinrichs

explained in regards to the high transaction costs and stagnation of prices makes sense.  Comparing to a Car was a bad analogy. I do understand that the price may not go up and you will loose money if there was a down turn when you try to sell if you bought at the peak/market. 

@Jay Hinrichs

@Curt Davis Have to agree with @Ben Leybovich and @Steve Vaughan on comparing an investment to a car.  Are you really comparing a Depreciating item to a Investment. If this is true I would never want to buy a property in those areas. Very strange example.

@Kevin Wood Thanks for the details. Hopefully you can raise the rent and increase the Value of the property.

@Kevin Wood Very interesting read. Congratulations on finding a great deal. What is the rent per unit? I am not familiar with Houston so just curious. And when calculating your cap did you include 8% vacancy or something lower or higher.

I think having a local partner is huge plus when doing remotely.

@Kumar Paj Thanks for providing more details.  I understand you have everything new now so repairs will be less but it won't be the case always. So do you keep reserve for capex? And you don't include Property management and because you are local and I do the same for my properties but that does not mean out of state we have to include. Again I have had 0 Vacancy so far but being far and relying on a property manager I am not sure I can rely on having low vacancy or repair costs. what it costs you in expenses being local are different from what it costs do it remotely. That is what I was trying to point out not that you are not seeing those numbers. Just that I won't see them.

@Kumar Paj

Thanks for sharing an example of the deal you have done with some numbers. In your post you state that you one of the projects was hard to deal with and I assume you are local. If I was local I would invest locally and be ready to work with foreclosures and stuff. The problem is being remotely you don't get the same prices and results as a local would get. The turnkey properties are going to be higher prices than what you are getting (This is to be expected as they are putting in time and effort into this). So once you do not get the same returns as locals get. Even in the numbers you posted you have not included property management fee, Capex and low vacancy and repair costs. I i include realistic numbers for all these the cash flow and cash on cash is much less than what you posted.

I have been looking on and off about buying out of state and so far not been able to take the leap because the numbers are not as great as people try to say they are when I account for eveything. 

@Justin Ericsson The management fees in the bay area where I live I can easily find for 6%. I am sure it is 8% or 10% in other areas. Also the capex for 3 homes is going to be  two times the cap ex of a one home (even accounting for higher cost of things in CA) same goes with repair and maintenance. What is the property tax in Chicago? I see experienced posters here post that they are doing flips in Chicago instead of buy and hold because of property taxes. The property taxes and insurances costs in CA are relatively low in percentages than many states I have seen. 

Even after all this I can see how the Chicago properties will have higher cash flow but I do not believe it will be 3X.  I am not saying one way is better than others and I think there is place for turnkey or out of state investing but please be honest in the numbers and expectations you set. 

Also I would like to see an example of the 159K house that is in B area that is renting for 2000. I have looked at many turnkey property website and have not seen a high rent as 2000 so far. If they really exist may be I will change my mind about investing out of state.