All Forum Posts by: Account Closed

A thought experiment:

Imagine you own a widget store.  Widgets are expensive, each costing hundreds or even thousands of dollars.  One of your regular customers, Jane Deadbeat, comes into your store and buys a widget from you every month.  But this month Jane took a widget off your shelf, and walked out of the store without paying you for it.  Every time you call Jane asking for payment for the widget, she has a new story about why she can't pay for the widget.  But she is having no problems enjoying the widget that she didn't pay for, and definitely has no intention of returning it to the store.

No pay.  No Stay.  GTFO.

Zillow is not super accurate in my opinion.  It's "more accurate" maybe in areas where all the houses are the same for miles, but generally I would take it with a grain of salt.

It also sounds like someone who overpaid for the home and regrets it now.

"A bird in the hand is worth two in the bush.", "Pigs get fat.  Hogs get slaughtered.", "And so on..."  (The last one is mine:)

Assuming you are educated about your market and have done your research and/or gotten some valuations from realtors as to the value, and the offer appears attractive, I don't know why you would not accept it.  Either it's a good offer, or its not, or you don't have enough information to decide.

Your friend and mine, Nick Varner.

As someone who bought two houses in Parma in the last 18 months, its definitely a lot tighter in terms of good deals.  For the most part the only way is to do repairs (whereas maybe 2 years ago you could do an interior paint and ticky tack items and that was all.)

We followed Dave Ramsey to get out of debt.  We were not his typical consumer debt listeners, we didn't have revolving, auto, or student debt of any kind, we only had real estate (heh, I should have known back then!) debt but it was not income producing real estate, it was personal home real estate and land for future home building debt.

We did pay everything off and became debt free.  It was an amazing feeling.  In fact, later we fell off the DR wagon and financed a larger, more expensive personal home and it was a disaster...  A money pit in so many ways, and brought so much stress into our life.  When we moved, we bought our very nice home with cash.  We have since decided that for us, free & clear is the way we like to be on our personal assets.

But we do use leverage in investing.  We're conservative though, and not doing low money down ultra-max leverage deals.  We put good 20% or 25% down payments on the units, and buy them under valued, and only buy cash flowing property.  Basically, buy properties with a large "margin of safety" as Ben Graham / Warren Buffet would say.  So even if the market goes way down, we wouldn't have to worry too much.  I considered doing 100% cash deals, but I didn't feel good about taking all the money I had in savings / investments and putting it into a handful of properties, whereas I can put a portion of that into more properties, have someone else pay the balance down for me, and still have a lot leftover as backup funds.  Your mileage and situation will vary.

I wouldn't make too much work for myself.  A quick check for public social media posts is probably as far as I would go with it.

Like most investing, its numbers, and time.  Time is almost always the most important thing.

I buy a SFH in Parma, OH today. I get it for 65K. I put 20% down and 5K in repairs into it. I'm in it for 20-25K of my money. Every month I make a couple hundred bucks after all expenses and mortgages. However, the value of the home goes up over the long term. The rents on the home go up over the long term. The principal on the loan goes down over the long term - AND someone else is paying it down for me. There are a ton of tax advantages for real estate that I mostly don't understand (its why I have a CPA) but basically I won't be paying taxes on a lot of the income due to depreciation and so on.

I hire out the management of the day to day. I find the deals, and am involved in terms of acquiring and getting it ready to rent, then I hand it off and think about it once a month when I get my statement. Sometimes there's a little communication happening if some repair occurred or if a tree limb fell on the house (like just happened at one of them:) But for the most part, I don't have to do a whole lot, and in 10 (aggressive) to 30 (autopilot) years, I will have an asset worth 100K (or more) that is free and clear, bringing in a LOT more money every month, etc... All with 20K (or whatever) of my own money. I think that's where the power of REI is. If you have a plan and can work it, you will wake up one day and own a ton of awesome assets.

I'm not counting on using any of the proceeds of the REI for quite a while. Its all going back into the rental checking account to pay for expenses on the rentals, repairs, acquisition of more rentals, etc... At some point in the next couple years, I will probably do a little bit of "debt snowball" to direct some of the profits into principal paydown to accelerate getting to the free & clear stage on some of them.

I have a couple houses there, and I haven't had them that long, and they have already gone up in value in one year.  Its MUCH harder to find deals than it was a year ago.  They all require some work in order to get a good price now.

Excellent!  Not many people do deals like that.  Enjoy it!  You accomplished the hardest step for most people, which is to take action immediately when spotting a good investment.