All Forum Posts by: Rob Barry

Great work @Caleb Bryant! Way to take down a killer deal.

I am truly disgusted with the state of things in the U.S. government these days. What ever happened to working across the isles and statesmanlike behavior? 

Now I'm learning that, without a renewed spending bill, the Georgia DCA's pipeline of funding support from HUD is running out. The letter I received said that there will likely not be funds available beyond February 15th if this "very long" government shutdown continues. So let's add the poorest Americans and their landlords to the list of people feeling the squeeze as our fearless administration pushes forward on its quest to keep out the Mexicans.

Oh but there's a silver lining. Tenants are still required to pay their portion of the rent...

@John Reardon

A few things I’ve been thinking about.

In many coastal markets, high-end real estate prices have been coming down due to oversupply and decreased interest from money from the East looking for haven assets.

Millennial student loan debt is an issue that threatens to change what we think of as “primary markets.” This generation, who now look to build families in homes, cannot afford coastal regions like previous generations and are moving to the Austins, the Atlantas, the Nashvilles etc. As rates rise I expect this to pick up pace.

MF construction has been on a tear of epic proportions. The WSJ reported the other day of rent price pressures as supply builds to meet demand in many markets. But I think we are a ways from that being the reality in some of the hotter markets where the millennials are migrating to.

Larger MF sponsors I’ve talked to/listened to podcasts from speak of a rash of newbies (“coaching students”) getting into the game and overpaying for assets, particularly in hot markets. This - with a period of rent appreciation as millennial talent flees expensive coastal markets - has caused cap rate compressions that are accelerating the frequency with which MF assets change hands. Strikes me as a kind of “greater fool” game. Eventually these 1970s buildings trading at 5caps will express their inevitable capex requirements. That, coupled with a wave of commercial loans needing to be refid at much higher rates - could provide a bonanza of cheap assets in the coming years.

I’m focusing on single family for a while until the madness created by so much capital sloshing around leads to some blood in the streets. Secondary and tertiary markets, cashflow, section 8 for now. Only doing MF alongside sponsors who've survived downturns before...

I am looking at moving properties from my name into a trust which, due to the The Garn-St Germain Act of 1982, cannot trigger a mortgage's due-on-sale clause (like putting a property into an LLC). But I'm not sure who best to name as beneficiary. 

My first thought is my wife, though doing that would clearly tie her/us to the properties. Would that create some of the same liability we're looking to avoid? We could also use the attorney as the trustee, but that is sure to generate legal fees.

Anyone on BP have an opinion or rule of thumb on this?

I own SFRs in Greater Atlanta and Warner Robins, GA. Great cashflow and low buy-in in WR. Great appreciation in Atlanta and OK cashflow if you can snag a foreclosure and BRRRR it. Those are getting hard to come by though, especially below $100k.

I looked at Birmingham in depth recently and it seems like a great cashflow market. But I have a feeling you'll be waiting a long time to see any kind of significant appreciation. B-ham is on the up and up, but I don't see major velocity yet, and the housing stock can get very old (my ATL SFRs are all 2000s construction and bought as foreclosure). Strangely enough, hedge funds and pensions have been buying up everything in sight over there. Could be a good sign but it seems that the result will be SFR neighborhoods treated like commercial portfolios. Be prepared to sell based on cap rates. Buddy of mine bought 35 units in two buys and is sitting pretty so far.

Knoxville I haven’t looked at in depth, but it does seem to have that velocity. 

It’s tricky this late in the cycle, with rates going up and construction/home starts slowing down in many markets. I’m only looking at deals where I can buy and fix all deferred maintenance for well below market and still get decent cashflow.  

I love a story where everyone wins and an investor lands a killer return. This is what it's all about. Textbook! Nicely done. 

Really nicely done @Henri Meli! 

That switch from SFRs to commercial is something I have considered but haven't really put the time into researching. 

Can you explain a little bit about how you market for tenants in this niche and by how much you've been adjusting leased space?

A lender at my REIA said that Fannie has lifted the due-on-sale clause when deeding a property over to an LLC. Is this true? When did that happen?

If you qualify as an accredited investor you’ve got some interesting options. I like P2Bi, where you can lend to small businesses with debt secured against assets and usually 60-day liquidity. I’m averaging 10.36% there. You’ve got to do some diligence on the companies you lend to though. There are also hard money funds like Broadmark that are more hands-off. They also average 10%-11% but come with higher minimums and one-year lockup on new funds added. Of course you could add in the minimum once per quarter for a year if you’re just sitting on way too much capital, and then after a year you’ll have new investable liquidity at the ready each quarter. I’m a big fan of VTSAX too. But generally I think it’s a bad idea to park shorter-term money in equity (as opposed to debt). It can go down, and you’ve lost principal. Or you it could go up, and if you sell too soon you’ve triggered a short term capital gain.

I'm not a big fan of pure turnkey. As a gross generalization, it tends to take too much meat off the bone vs just wholesaling a property and getting it rehabbed and rented. But you can buy TK with leverage where you often need cash and speed to do it yourself. Again, unfair generalizations, but it's what I've seen. The best investors make their money going in.