All Forum Posts by: Jonathan Pflueger

@Mike K.

Yes I agree. And because of that type of mentality by the county you can expect home prices to rise even more. It is unfortunate. 

@Kevin S.

As real estate investors, we constantly weigh the pros and cons of different investment strategies, including the decision between a larger or smaller down payment on rental properties (I prefer smaller anytime I can). Let's consider what the lender suggests where puting 20% down on a $400,000 SFH results in a $500 monthly negative cash flow, while a 40% down payment would break even (even that is subjective to how you calculate breaking even but the is another post in and of itself).

Positives from an investor's perspective:

- Leverage and Appreciation: By opting for a 20% down payment, I'm leveraging my capital. If the property appreciates at the expected 5% annually (a reasonable assumption in many parts of Florida), that's a $20,000 increase in value on a $400,000 property. My effective return on the additional $80,000 (if not used for a larger down payment) could be substantial if invested in another property.

- Expansion: Using the saved capital to invest in another property can potentially double my investment opportunities, diversifying my portfolio and increasing my chances for additional income and appreciation.

Negatives from an investor's perspective:

- Cash Flow Concerns: The $500 monthly negative cash flow translates to $6,000 annually, a significant amount that needs to be managed carefully. This strategy requires a solid financial buffer to handle the negative cash flow and any unexpected expenses. Are you financially savvy or responsible enough to handle this?

- Market Volatility: Real estate markets are subject to fluctuations. Relying solely on property appreciation is risky. A downturn in the market could negate expected gains, impacting the overall investment strategy.

Additional Suggestion:

- Cash Reserves: Maintain strong cash reserves to cover the negative cash flow and any unforeseen expenses. This will ensure the investment remains viable during tough times.

As an investor, the decision to go for a smaller down payment and manage a negative cash flow hinges on my (your) ability to handle the financial strain and my (your) confidence in the property's appreciation and cash flow potential. It's a calculated risk that could lead to substantial gains but requires careful planning and risk management. All of this possible, what do you feel you are up for?

@Lance Hulsey

Yeah, that test is really gonna make things more difficult. Before you only had to pass a 2 minute flow test and even that was up to the pumpers discretion. The county is not making any of this easier that is for sure. 

@Jennifer Wood

Thanks, my pleasure. I am excited for you and your journey. You are on the right track!

The answer is, it depends..

Cedar offers natural resistance to rot and pests with a great look that can enhance property value, but at a significantly higher cost and it requires regular maintenance to retain its appearance.

Treated pine is more budget-friendly and offers good durability due to chemical treatments, although it will not look as nice in my opinion. It's less maintenance-intensive but might not last as long or appeal to higher-end tenants or buyers.

Also, consider your target market and investment strategy: if maximizing appeal and property value is key, cedar might be worth the investment. For rental properties or flips where costs are more of a concern, treated pine is probably better?

What part of the country are you located? What is your end goal?

Great questions, let me elaborate. When people mention "investor-friendly" real estate agents, they're referring to agents who have a deep understanding of the real estate invesment market and the specific needs of investors. These agents differ from those who primarily work with homeowners looking to buy or sell their primary residences. Here's how investor-friendly agents can access "investor-worthy" deals:

1. Network and Relationships: Investor-friendly agents often have extensive networks within the real estate industry, including connections with banks, attorneys, foreclosure specialists, and other professionals who might have leads on distressed properties or motivated sellers. They might also have relationships with contractors, wholesalers, and property managers, which can be invaluable to an investor. Never underestimate a good network!!

2. Market Knowledge: These agents typically have in-depth knowledge of the local real estate market, including areas with high investment potential, upcoming developments, or changes in zoning laws that could affect property values. This allows them to identify properties that might not seem valuable at first glance but have great potential for investment.

3. Access to Off-Market Deals: Many deals that are ideal for investors never make it to the open market. They are sold off-market, often because the seller wants a quick sale, the property is distressed, or for privacy reasons. Investor-friendly agents often have access to these off-market deals through their networks. Again, this comes down to their network!!

4. Experience with Distressed Properties: While it's true that many clients of real estate agents are looking to sell for a profit in non-distressed situations, investor-friendly agents specialize in or are at least familiar with foreclosures, short sales, and REOs (bank-owned properties). These types of sales can be complex and require a different approach than traditional sales, and they often represent opportunities to buy below market value.

5. Understanding of Investment Strategies: An investor-friendly agent understands various investment strategies, whether it's flipping, buy-and-hold, BRRRR (Buy, Rehab, Rent, Refinance, Repeat), or others. This allows them to tailor their search and recommendations to fit your specific investment goals and criteria.

6. Negotiation Skills: These agents have honed their negotiation skills to ensure they can secure the best deals for their clients. They understand the importance of purchase price in the investment equation and work to negotiate terms that meet the investor's financial goals.

Investor-friendly real estate agents bring a lot more to the table than access to the MLS. They provide insights, connections, and expertise that can help investors find and secure deals that meet their investment criteria, including those that involve distressed properties or sellers in unique situations. It's about leveraging the agent's network, knowledge, and skills to find opportunities that others might overlook. Again, right back to network, network, netwrok!!

 @Owen Rosen

I wonder how much of this is based on the insurer you have, the amount of properties they insure for you, and the type of claim you file for. For instance, a claim filed under a federally declared natural disaster is most likely looked at very differently than a claim for a leaky pipe. 

My biggest gripe is that these differences are never discussed or talked about and most people that I read or talk to have this feeling that not filing a claim is almost always better than filing (except in total loss situations and very high dollar amount claims). 

Many believe and advocate that filing a homeowners insurance claim will lead to higher rates, discouraging claims altogether. This subjective and heavily pushed idea seems driven by a real sense of fear. I mean, why pay for a service and not utilize it when you need it? Filing insurance claims is the cost of doing business in real estate and if you can’t afford a rate raise maybe the investment you own is not really a true investment…

What have been your experiences with this? At what cost threshold do you decide to file a claim? If you did file a claim was your insurance automatically raised astronomical amounts?

I have filed multiple claims across several properties and some have more than one claim (all within 1-2 years) and I have not had any rate adjustments. Is my experience normal?

@Wesley Jensen

First off, making a claim on your homeowners insurance does not automatically mean it will be raised. I have made numerous claims, sometimes on the same property and my rates have never been raised. While your rate could be raised for numerous reasons raised, claiming it will be automatically raised because you made a claim is just not true. Do not be afraid of using your insurance. Only use it when you truly need it, but do not let fear stop you from utilizing a tool you pay for.

Second, this decision is not the tenants. You are responsible to make sure your rental is clean, safe, and livable - not the tenants. If you feel there is damage, you have a duty to inspect. Your tenants concern are real but they do not trump ensuring your investment and their living situation is up to snuff.

There should be a clause in your lease that allow you access to the home within a certain amount of notification time. Utilize this clause, get your insurance in there, and figure out the real extent of the damage. Your tenant has no say in this.

 @Ardian Selimi

New construction is not a newbies game. Also, it it is very hard to make it scale - especially, given the 8 year, $100k cash flow timeline that you have.

Your number one problem getting to your goal is going to be cash. You only have so much cash to put down in the form of down payments and renovation costs. Every dollar you leave in a deal is one less dollar you have for the next deal.

How do you solve this problem? Well the BRRRR strategy is the way to go. This strategy is over preached for a reason - it works. I have personally done this over and over again and every time I have been able to refinance all of my money (down payment and renovation costs) out of the deal while maintaining true positive cash flow. This has allowed me to scale much quicker, in fact, since I started this about 8 years ago my available cash to invest has exponentially grown (think 10x) given the appreciating rents and equity that has occurred.

Alaska is a unique market I am sure. But so is where I am. There are deals out there and they are waiting to be found by someone like you. Are they are most likely not on the MLS. But they are out there. You need to become a deal junkie. This life revolves all around the deal. Who cares how much money you have if you can't find any deals. Find out how to find the deals I mentioned. You are already a head worker, you can't work in a restaurant all day and not be. So take some of that hard work and niche out figuring out a way to find deals off market that will get you to your goal.

A couple of ways you could get started are cold calling, sending postcards, driving for dollars, and just getting out and talking to people when you see a home that looks like it could be a deal.

Bottom line, the only person between you and your goals is you.