All Forum Posts by: Nathan Grabau

You can enter a Delaware Regulatory Trust. This maintains RE exposure, but does so more passively. Biggest downsides are the returns are not stellar normally and it is sometimes difficult to sell your interest in one. 

For me personally, I see MTR's as a strategy to get high appreciation properties to cash flow, and that cash flow amount is less significant than the appreciation potential. 

If I were doing rental arbitrage, I would make sure I was making money post depreciation(of furniture/ appliances) and that the return after that was removed reasonably exceeded what other passive investments would generate. Besides learning how to do this, your monetary return is all Cash on Cash returns. I can get 25-30% returns in low entry price markets with a PM, so the CoC would have to exceed that.

Have you tried to furnish any of them and put them on furnished finder or corporate housing by owner? These are MTR sites where you can typically get about 50%+ more rent per month as a furnished rental. This is also a great way to improve your portfolio's cash flow! 

Paul Fazzini handles my residential (1-4 units) and personal insurance needs in Colorado. I have been really happy with his service. We had a situation where I needed to mess with some policies and move some different things around to get my DTI down to close on our most recent property and he moved mountains to help figure it out.

If you send me a DM I can send you and him an email together or you can google him and his information will come up. He is out of Fort Lupton.  

I have a mix of both on my properties. My commercial brokers will not write policies at actual cash value for me. I would make sure that if you are going to do do the actual cash value you are covered in a total loss event. One thing people can forget here is capital gains tax, which if you have owned a property for a long enough time is a major expense. If you go with the ACV, have a total loss, do not have the money to rebuilt the structure/ do not want to, and take the insurance money and sell the lot, this is a taxable event. 

 But if you had to say either supply will increase or demand will increase, isn't it easier to argue that we see demand increase more than supply? 

@Nicholas L.

In Longmont, Colorado 80503 zip code where the median is 750k+

Listed at 599 4/29/2022; under contract 5/6/2022 (assuming over ask because of how fast everything was moving), 33 days later, 6/9 back on market for 585k, 7/28 to 570, 8/8 to 550, 8/23 to 530, then we ended up buying it after closing cost concessions at 514k. It appraised at 540k and the zestimate peaked at 642 in May, so there were actual comps to support the 600k+ price. 

If you take the peak zestimate, minus our net sale price, its a 19.9% drop. 

Inventory in mostly move in condition is not seeing this happen though, more like a 5-8% drop from the top. The landscaping was also allowed to run rampant all summer in a xeroscaped yard, which can get nasty. It's a $2,500 fix that scares away 85% of buyers. 

I am not sure where the bottom is. I am able to get distressed inventory at a 15% discount in Colorado. In 2008, the Colorado market only lost about 11% of its value from peak to trough over 3 years. If you are buying right, you are going to be fine. I think we are closer to a bottom than people realize because there is substantially more potentially energy in the market to the upside than to the downside. Builders have slowed down, MBS are at a historic high vs 10 years, if you substitute case shiller for owners equivalent rent; inflation is negative, and there are lots and lots of people who want to buy but are waiting to see what happens. If the 30 year average mortgage gets back to the historic high end of its range(10 year plus 2, or its actually normal range 10 year plus 1.75) that leads to a 5.25-5.5% 30 year, and VA and FHA rate potentially in the 4's. This will defend the lock in effect, but dumb buyers into the market.

And I get the downside risk, but I think it is easy to debunk a greater than 8-10% decrease over the next 2-3 years, which is what it would need to be just to leave people negative post am schedule. If people pay off their mortgage by 5% over the next 3 years, but the market drops 5% in the next three then turns around, they are essentially picking up all the upside exposure with very little downside risk. 

Below the median, sold for about what it would have in 2020. 

For me, this points to why RE is a great investment, even at the best buying opportunities, prices are above what most people actually paid for the RE. 

In Colorado we are seeing people who overpriced their homes and are having to chase the market down. Specifically seeing this with distressed inventory. We closed on our fifth property in the fall almost 100k below where it went Under contract at a couple month prior.