All Forum Posts by: Neil G.

Thanks everyone! Househacking and/or purchasing additional income properties in better cashflowing markets would likely be the best way to live "for-free" while allowing me to live in the places I want. Makes sense.

The challenge is finding househacking opportunities in high priced markets that cover expenses. Time to get creative!

Hey all! What what would you do in my situation?

I'm 31 years old, unmarried, unattached to any geographic location (have lived in 10 countries in the past 5 years,) and run an Internet business. The business produces good income and I am sitting on an accumulation of cash... Let's imagine $500k in liquid deployable cash...

Now I want to establish some stability in my life by setting up two home bases in my two favorite places. Mexico City and somewhere in USA (thinking Austin - I'm going there in a couple of weeks to see if it feels like home - second and third choices would be CO and NC).

From an investment perspective, I'd like to invest my cash into semi-passive RE projects to create generational wealth (I understand the multi-family model best). I don't want to spend more than a few hours per week on RE as I'm busy enough running my business.

What's holding me back is:

1. If I purchase nice a 2-3 BR house in both Mexico City and Austin (and I don't want to live in B-C class properties), the income opportunity of renting them out while I'm not there doesn't look great. Maybe I'll break even on the two properties if I'm lucky.

2) Considering my situation and current market conditions, how much should I leverage vs pay in cash?

3. Maybe I should consider another strategy? Maybe rent in these places and buy elsewhere? I could probably afford to purchase two homes to live in and leverage a third as an investment in another market, but it seems like a risky move to deploy so much cash when many people are predicting a cool-down in the US RE markets.

Any tips appreciated!

Salud

I'm taking this opportunity to brain dump my thoughts on potential home-bases.

Places I've lived for at least one month, RANKED from most preferred --> least:

Mexico City, Budapest, Chiang Mai (Thailand), Lviv (Ukraine), Copenhagen, Canggu (Bali), Guanajuato (MX), Bangkok, Valencia (Spain), Playa Del Carmen (MX), Tbilisi (Georgia), Mazatlan (MX), Palm Beach (FL), Guadalajara (MX), Saint Petersburg (Russia), Plovdiv (Bulgaria), Kyiv, Athens (Greece), Novi Sad (Serbia), Medellin, Easton (PA) 

Criteria for rating potential home bases (will vary for each individual): 

• 1. Mo. Cost of Living 
• 2. Addtl Tax Obligations 
• 3. Prox to Fam and Friends
• 4. Social/Dating 
• 5. Scenery 
• 6. Nature 
• 7. Food 
• 8. Livability 
• 9. Fun 
• 10. Ease of Transit 
• 11. Safety 
• 12. Work Friendly 
• 13. Real Estate Opportunity

After rating some home base options on the above criteria from 1-10 (and weighting columns proportionately to my preferences) and running a quick excel calculation, my top choices for home bases are Miami, Austin, Denver, Tampa, Mexico City and Asheville NC.

Hi @Brandon M., they never revealed a reason. However, I did some more digging and eventually found out that they had next to nothing in their HOA reserve. So with all of the red flags, I eventually pulled out of the deal. Waiting to get my EMD back.

@Brandon M. yes, I'm still in due diligence period. I made a $5000 EMD, but it was contingent on inspection, so I don't think I should have a problem getting it back. I'd only be out the $2100 for the inspection.

The lack of transparency really scares me. The only thing I'm now really considering is coming back with a big reduction due to lack of transparency, required repairs and changing market conditions. And then switching from plan A to plan B and selling them off individually.

Hey gentlemen, thanks for your input. @Joseph Cacciapaglia the building is not listed on the MLS. The seller reached out through their network to see if they could get it under contract without listing it. Not sure why. Also important to note, the seller is not releasing a P&L, even after being under contract. They're only offering convoluted account statements that have each of the 8 units separated, making it nearly impossible to get an accurate property history. They're stonewalling additional requests by my mortgage broker for information and won't disclose tax payments or insurance payments. The mortgage broker is telling me these are red flags.

Interesting advice regarding requesting mold and roof are fixed. I will consider this if I decide to proceed.

@Brandon M. yes, plan A was to buy and hold for cashflow, but this deal is looking less and less promising as a cashflow deal as the due diligence progresses. Considering property history isn't being released and repairs are adding up. I'm thinking that the building wasn't very profitable and they're trying to hide this. Either that or they were completely incompetent in running it and maintaining records.

The plan B is looking like a better idea, but based on advice I'm receiving here and also from my mentors, asking for a reduction in price due to the repairs and lack of transparency should be in order. Not to mention the fact that the market conditions are changing and they're likely to want to liquidate this thing.

Hey all, I really need some advice on my first deal. I'm under contract on an 8-unit condo town-home building (all 3/2s) that would be my first deal. It's a 2007 build in the Tampa, FL area that I found off-market and the price is $890K. My realtor tells me that the seller has a few backup offers as well, including one full price cash offer for $880K.

So the inspection just came back showing the following issues:

- Mold in a few interior rooms

- Evidence of rodents

- Original roof requires repair, replacement and/or evaluation - there are active leaks in the attic

- 7 out of 8 water heaters need replacing at any moment ($5600 total estimated)

- 5 out of 8 A/C units need replacing at any moment ($25K total estimated)

- A bunch of minor things need to be fixed, i.e. Two dishwashers, some lights, screen enclosures, some inoperable cooktop units etc

My Estimates (note that the market CAP is 7-8%):

- WORST case scenario for rents ($1225), occupancy rate (88%) and high repair costs ($75K): 2.3% CoCr and 5.1% CAP

- BEST case scenario for rents ($1300), occupancy rate (95%) and low repair costs ($20K): 7.6% CoCr and 6.6% CAP rate

Even though I strongly expect the numbers to look closer to the best case scenario above, considering my out of pocket expenses are going up with all of the repairs and also that the stock market is tanking right now and money is becoming scarce, I'm not so sure about this deal.

Note: One other consideration is that the neighborhood has a bunch of similar 3/2s going up right next door (they're a bit nicer) and those are listed and selling quickly at about $180-190K each. Maybe I could shift gears and try to make this a flip by sprucing up and selling each of individual condo units one by one? With repairs I could be into each unit for around $130K and my realtor says I could get $165K for each. 

What would you do??

@Bryan Mitchell yes, that is correct

@Evan Polaski that's super helpful. Digging into that thread now. Thank you

I'm looking at an off-market eight unit condo building, but the seller isn't providing NOI, so I don't know the current CAP rate. They've offered a rent roll, but that's just showing the current roll (which shows 3/8 units vacant). The seller won't release the P&L until we're under contract.

When I plug in an estimated 7% for vacancy/concessions, the deal rocks, but I'm concerned that the current NOI (with high vacancy history) doesn't justify the price of the deal.

In this type of situation is it reasonable to make an offer and then get the official numbers later, or is it a red flag that indicates the deal should be avoided?