All Forum Posts by: Alan Brown

Excellent information, Mike!

And those sizes sound amazing; A realtor here with a lot of experience running STR's promotes small over large for some of the same reasons... margins seem to be not so far apart between small and large, easier to rent smaller size, and the larger ones sometimes end up with large parties, a lot of cleaning and more wear and tear.

Trying to decide between what I know (long term) and STR's for an upcoming investment. Wish I was still fishing the Yellowstone!

Hey, @Michael Rutkowski, great insight!   Wow so Bozeman is moving ahead with regulations?  Thats pretty scary.  I guess maybe it's better to get it figured out sooner as opposed to later.  

I was wondering, in your experience, do you opt for smaller STR's , or bigger ones? I'd be interested in your opinion on that. Let me know, and I'll give you the general opinion here.

Thanks!

So nice to hear of someone who really likes their PM.  I have to find a new one for my properties in KC 

Hey, @John Hickey, how goes it?  I'm finally under contract on my 1031 and am starting to get serious on looking for replacement properties... Do tell, how is the progress going on your Newburgh places?  What kind of cash flow are you seeing, if the work is done yet?  

Wow TRUE DAT, ALL Y'ALL

@Joshua D. most excellent sage advice as always! 

@Bob Okenwa, fantastic mentoring.

@Jonathan Olivares, go for it man!! There are old farts like me that will come out of the woodwork to help a young guy out; Josh is right, go to every REI you can find. And both these guys not kidding about BP being a PhD in Real Estate investing. I wish like hell I had all that available to me when I started... you've got a gold mine of information free, thanks to Josh Dorkin.

Good to have goals and take MASSIVE ACTION, but don't get too hung up on a number to reach to start investing. Here's what I think you should do, I would do if I were your age: Go for the flips for sure if you like the idea... but start out by also house hacking a multi!! have someone cosign with you if you need it, to get an FHA 3.5% down loan to owner occupy something (I think a 4plex would be best); Eventually your return on investment (ROI) will be almost infinite with so little cash invested. Also, you probably will have free rent from the cash flow from the other units, so what you would be paying in rent money can go into your flips. HOUSE HACK AS MANY TIMES IN A ROW as long as you can stand living in multis, then house hack a house with a roommate: Someday you'll have a spouse and they won't let you get away with it for long. DO IT WHILE YOUR YOUNG!!

Then, as you get good at flipping, cull the deals you find that make great rental sense, for yourself... I have a friend in Kansas City who does about 60 flips a year, and I think he grabs a couple a month for his own portfolio.  Do the BRRRRRRR!  IF YOU do it right, you don't need to put in long term cash.  You find a flip, have your crew rehab it, decide to rent it, and as soon as your lender will let you refinance it, do it!! (this is tricky but find the right lender).  Then you have pulled ALL your capital out (hopefully), and maybe even a little more, and your returns will literally be INFINITE, because you have NONE of your own money in it.  "Velocity of money"

Also, if you're frozen, find a contractor you trust, go to REI's, find people you trust. Vet them as best you can, then bring them a deal and split it with them: Have them work the deal with you and teach you everything. Wash their car if you need to. Once you have done one, you will feel much more confident. Keep going, growing, making mistakes. Hell, in 2-5 years you might have all the income you want, and didn't have to wait to stash away $400k!

ps take a road trip across country and listen to 80 of the BP Podcasts.  Then do another one and somewhere along the way you can listen to all 225 of them.  It's all in there.

Wow, @Ryan B., excellent quick synopsis, as well as the points about Sales comps/cost approach;  We all need to be thinking along those lines on whatever we buy (or build), as well as adding in the income approach for good measure!

I love that part of the world so much, and never can wait until the next time I can get there.  I hate the thought of too much available land!!  Kalispell has sprawled like the devil in 30 years, as have most other great places in Montana.  I remember evaluating Steamboat Springs, CO many years back when it was in a down cycle and we thought we might afford an investment there;  I was terrified by that very concept:  so much available ranch land, already some up for sale at the time, and all I could think of was what Bozeman is doing now:  4000 houses per year as far as the eye can see!!  I have learned that the Essential places of towns like that do tend to hold their value, being close in, the charm, the funk effect, so it's a little less scary.  I had spent many years in Boulder CO, where they had the brilliance to buy up all the available land around the city and turn it into open space, so that sprawl could not happen, driving values through the roof, and providing an excellent healthy buffer to create an even better lifestyle.  Values have not stopped growing in that town in 25 years or more, much to the detriment of anyone who wants to get in!

Question, why would you not do multi over a quad in Kalispell??  If the numbers work and one likes multi family, why not?

(will vote on your post if I could figure out how!)

@Sourabh Bora, How has your hunting been going?  Have you fallen in love with any particular town in the Hudson Valley?  And was your search in Beacon fruitful, and is a VRBO a decent possibility there?

I am looking in the Kingston/saugerties areas, but they are hot:   hard to find deals, just have to dig a little more.

Thank you @David Zheng!!  I knew I could count on somebody to give me a good fib to take the edge off!!  

@Slava Okunev, believe me, I'm the wrong one to ask, but I will say that I have been told by lenders that they add depreciation back in, so that your income looks more like it is... Definitely ask a lender, though!

@Joel Owens, yes, I have a 1031 coming up, and that's exactly what I think I will do now!  Excellent point.  I need to be done with that particular market, and now's the time to sell it, so here we go.  As much as I appreciate the 1031 and have used the crap out of it (Canadians, poor happy souls, have no such lovely thing), I do wish it's 45 day window and property identification were not so arbitrary... 

I'm whining of course, but the last one I did, the Seller knew that after the 45 days I had no other properties that would work (top end limit of $ amount of properties I could identify was maxed), so he had all the leverage, and screwed me on some major inspection Items that came up.  Rehabs were nowhere near done at the end of my 45 days, so he got away with about $20k in work I could sue him for, but that won't happen of course.  Anyway, I did get some great properties out of it and avoided a $90k tax & recapture hit!

@Russell Brazil,  THANK YOU for saying that!!  As much as I know I'm paying a lesser tax rate on that money in the end result than regular income, I kind of wish I could just not have the write off for depreciation, so I was not forced into the 1031.   Just pay the 18% on my gain at the end and be done with it!  

nobody will lie to me...:(