All Forum Posts by: Randy Gutierrez

I would say in just about any market LVP is more desirable than carpet especially for rentals, it is the national trend of today. Generally speaking if you see carpet in 2022 it is simply for cost reasons. On an older home that person decided to not fork over the cash to pay for upgraded flooring. On a newer flip/build that person went over budget and probably added carpet in 1 or 2 bedrooms to scale back expenses to make the numbers work better.

We typically do LVP on everything and carpet on stairs. You can charge more for LVP and they are way better with pets than carpet giving you the ability to charge more rent for pets and increasing your tenant pool. 

On a SFH yes it will be 75% LTV if using conventional financing. You can get a better LTV using a commercial/portfolio lender.

I can't see myself buying bitcoin anytime soon but accepting bitcoin or crypto currency as rent isn't out of the question.

I understand you feeling some sort of sympathy, it's only normal. At the end of the day rent is due, unfortunately you must vacate them or set them straight. Brand new furniture and electronics isn't a priority over rent. 

Quote from @Michael P. Lindekugel:

Previously, the Federal Reserve indicated it would raise the federal funds rate four times this year. On March 16th the Federal Open Market Committee said it expects to raise the federal funds rate six times this year targeting increases between .25 and .5. The Fed announced it will raise interest rates .25 the first round. Federal Reserve Chairman Jerome Powell is study of past Federal Reserve Chairman Paul Volker. Inducing a recession is the only way to slow hyperinflation. Volker induced two recessions in 1981 and 1982 to stop 1970s hyperinflation. I think the Fed could induce a recession by summer.

Housing on a national level is overvalued relative to inflation by about 35%, relative to wages about 27%, relative to rents about 25%. The home price to income ratio is very close to 2007 just before the Great Recession. But, there are few high leverage purchases compared to the 2000s. All cash homeowner purchases account for 25% of sales. Most purchases include a significant down payment compared to many low down payment purchase in the 2000s. We are due for a price correction. Price corrections are 10% to 12%.

The 10 year treasury and 30-year fixed mortgage loan market reacted to the March 16th FOMC spiking. By raising or lowering short-term interest rates, monetary policy affects the housing market, and in turn the overall economy, directly or indirectly through the effects of interest rates on 1) the user cost of capital, 2) expectations of future house-price movements, 3) housing supply, 4) standard wealth effects from house prices, 5) balance sheet, credit-channel effects on consumer spending, and 6) balance sheet, credit-channel effects on housing demand.

If a bear market emerges, then we should expect home devaluation nationally of 20% to 30% or more in markets overvalued relative to wages and rents.

I don't know why people insist on comparing 2007 to 2022. Between lender requirements, money supply, size of the population, and new workplace environments (remote work) just to name a few, there are so many different variables. The fed is just increasing rates to pre-pandemic rates for now, 2019 was a solid year compared to 2018.

I've had tenants that have had no hot water for 3 days. It is what it is, just communicate effectively and get it done in a timely fashion. When I used to rent in NYC I remember half the units of a 40-unit building we lived in had no heat for 2 weeks.

Generally speaking most of my tenants prefer to be present during any visit, whether it be repair, city inspection, appraiser etc. and I respect that because I completely understand if I was in their shoes. Just a matter of privacy and security, more so if your state permits firearms too. If it were me I would try my best to work around their schedule but personally I would just show it once its vacant, you can do some minor fixes and get it show ready if needed. The whole idea of gift cards, dinners, and things of that nature just seem completely unnecessary to me.  

My portfolio consists of older homes built in the late 1800s and early 1900s. Most of the homes have had just about all of their major components upgraded at some point so I wouldn't consider them a money trap per say. I haven't encountered one still using knob and tube wiring for example. Maybe you might run into one using an older furnace or a federal pacific panel. All things considered I will say the R&M/cap ex might have to be bumped up a bit and definitely get a proper inspection.

Quote from @Oscar Almonte:

Hi Newbie here,

I am looking at properties but the rents are 5 to 9 hundred below market on some properties. The issue is how do you get rents up to market with tenants in place. I am a newbie and cannot take a hit by raising rents and having these tenants getting pissed trashing the place and leaving. A double whammy.  If I buy at a certain price with these rents I will be losing money.  Is it just best to keep it moving?

Thank you,

Assuming the % rent increase is legal in the area you are investing in, raising the rent 500 to 900 dollars will make any tenant run and 100% will piss them off.

Not having the ability to take a hit makes me think you might be buying prematurely, rents aside, you must have something reserved in the event something goes wrong i.e pipe bursts, furnace stops working, leaking toilets, etc.

It clearly states in the description that the house is in need of a full remodel to the point where tearing it down was mentioned as a possibility. CLEARLY this house needs a ton of work and I haven't even seen pictures, not to mention those statements are coming from the seller's side. 

Hatem, only you are able to determine how much risk you are willing to take, maybe you have a great paying career job and a lot of capital in reserves which will help mitigate some of the risk, but my advice is to start with something simpler especially if you are a new investor.