All Forum Posts by: James Park

Just curious. Is there anyone in Bigger Pockets who own 7-10 SFR rentals with 7 - 10 mortgages ranging from $2M - $3M over the course of 10 years financed under one name and now financially free?

I realize that multiple mortgages is a double edge sword. It builds your wealth over time through leverage and principal payment, but there is definitely risk involved of vacancy and managing multiple tenants.

My longer term goal is to buy one SFR rental every year from 2012 - 2020 in a good school district, purchasing for atleast 10% below market value, with atleast 15% Cash and Cash return with 25% down, and holding each home for 7-10 years.

It is a sound long term retirement strategy with real estate?

I just received an investor's rate quote from the bank yesterday. 4.6% with 20% and 4.125% with 25% 30 year conventional.

For those you who manage mutiple single family home rentals, do you take the lower rate by putting down 25% or take the higher rate with only 20% down.

I am starting small and looking to invest in a 3/2 or 4/2.5 SFR near where i live.

Thanks

In markets like LA/OC/SF/NY, it is still cheaper rent than to own, however in markets like Detriot, Altanta, Dallas, Austin, Houston, it is cheaper to buy than to rent.

I would think that diversifying your SFR rental would be ideal. Do some of you diversify your SFR rental portfolio, by having 2 $100k SFRs, 2 $250k SFR, and 2 luxury SFRs? In the school cluster i target my investments, the cheapest SFRs are priced in the $170,000 range with rents in the $1400/month.

I guess with this strategy, you have some property that cash flow well and some that will appreciate much faster in very nice neighborhoods. There are certain high end subdivisions in the Atlanta market where home in the $350,000 - $550,000 range move very quickly. Even rents in $3000/month is high in demand as the schools are ranked top 3% in the state.

This thread is a spin off of "Buy 1 rental home or 3 rental homes" I was wondering if any of you in BP nation own one or multiple higher end SFRs in very nice areas? or even focus on higher end SFRs as your stategy in emerging real estate markets?

In the Atlanta market, any homes in the $350,000 - $600,000 range is considered to be in the luxury market. By higher end rentals I mean rents in the $2000 - $4000/month range. By accident (a home purchased to live in, but became a rental property), I own one SFR rental in a high end neighborhood which rents for $3000 month which has been rented to the same tenant for 7 years now.

This is my opinion between high end SFR rental vs. lower end SFR rentals and I would get some feedback from other BP members. I think the biggest risk of a higher end SFR rental is the vacancy factor, but once you capture that "A" tenant they will most likely stay as your tenant for a very long time. I am assuming with apartments, MF, and lower end SFRs, you will have more turn over, more maintenance cost, but your CAP rate will be higher and you will have more diversification as one empty lower end SFR doesn't sting as bad as a higher end rental. I would think that you have greater appreciation on a higher end SFTs than you would with a lower end SFR.

The areas I target don't have any apartments or Mulit-family so i have no choice but to invest in SFRs. Today, I try to look for the cheapest SFRs in the best high school cluster in Atlanta.

I wanted to get some feedback from other BP members who rent out homes in the luxury neighborhoods vs. lower end SFRs price at $100,000 with $1000/rent. Which have you found to be more profitable. I think that every new rental property you take on can add additional financial risk.

Personally for me, I rather own 10 $300,000 SFRs than own 30 $100,000 SFRs with 30 tenants. I used to think of my tenants as customers before, but now I have a mind set of selecting good tenants like you would when you inteview a employee to hire for your own business. I would like to acheive my SFR investment goals with the least amount of tenants i possible can.

What are your thoughts?

"Georgia has a lot further to go than Texas."

Hey David, can you explain what you mean by this? Do you mean that Atlanta is behind Dallas, Austin, and Houston in terms of infrastructure, employment, real estate cycle? I am interested in finding out how Texas differs from Georgia.

Bryan, what would be your best guess on the average year over year appreciation in Austin from 2012 - 2020? There are only 3 metro cities that gained over a million population from 2000 - 2010 and Texas has two of these cities. There is a huge inflow of American families moving to Texas.

I didn't know that Texas property taxes average around 3%. Are you telling me a SFR assessed at $340,000 in Austin has a property tax of $10,200 a year? Here in Atlanta our property taxes can range from 0.8% - 1.5% depending on the county. Our state income tax is 6% whereas Texas is 0%. What is your sales tax like? I live in a area where the sales tax is 7%, but i can drive 10 - 15 min to Gwinnett County and pay 6% sales tax.

In any case.... I agree with all you Texans on BP nation. Texas's real estate market will be a winner in the next 8 years.

Is Texas going to be the next california real estate market in the next decade? There seems to so many positive outloOk for texas. As an investor , compare and contrast the real estate market in Atlanta metro vs Austin & dallas.

Is there potential for property values to double in value in select re markets in ga and tx?

J Scott,

What is your opinion on flipping higher priced homes in more luxury neighborhoods like Buckhead and Sandy Springs compared to flipping $50k homes. Is what you are doing now, easily scable to the higher end neighborhoods when the buyer demand rises for homes priced in the $300k - $500k range?

Martin,
I totally know what you are talking about. I've been running my business from my home since i left the corporate world in 2007. It was much easier to manage when we didnt' have any kids, but we now have 2 year old twins and my wife takes care of the them full time. I currently operate 2 business from my home: an ecommerce company, a web design company, and now looking to build my brokerage/SFR investing company. I guess you will know when you are ready to move out. Your net profit will be large enough to take on the carrying cost. I hope to purchase an office/warehouse and operate all three businesses in a office/warehouse some day. I work alone, but I have 3 trusted employees working for me in india since 2007.

Ebere,

The bigger issue is not whether my CPA will allows me to deduct the $15,000 of repair in my schedule E or depreciation. He will not allow me to deduct beyond the $11,000 rental income that i received from my tenant in 2011. Therefore my CPA will not allow me to deduct the rental loss from this property to reduce my personal income in my 1040.

I would really appreciate if anyone can show me a link where i am allowed to this. My CPA told me he has no issue about the depreciation and repaid costs. It just allowing me to deduct beyond my rental income in 2011 is his issue.

Thanks.