All Forum Posts by: Joe Villeneuve

I should have specified 5-10% CoC ROI on a single-family or small multifamily (2-4 units) property. The intent is to see if people have lowered their expectations for returns based on the current market. I have been able to find 5-10% CoC ROI on these assets in some states but it just feels wrong lowering my standards (15% CoC ROI). I'm wondering if others are doing the same. There is no right or wrong answer here or deal to analyze; I'm just fishing for investor sentiment regarding desired returns in a challenging market.

If you found a deal with strict underwriting that netted 5-10% in an appreciating market, would you be interested in it? Why or why not?

To keep things simple, I'm not accounting for the cost of capital (that is very personal and varies for everyone) and I'm not considering other exit strategies. If it works as a traditional rental, everything else is gravy on top.

I get that, but this wasn't exactly a "bad hand" and I am certainly not suggesting he put any more money into it. The numbers are skewed by added expenses that had nothing to do with the actual deal. He put a ton of money into cap expenditures on the front end. The way to recoup that is not to sell, but to hold and to continue to build equity while also working with his PM to increase his NOI.

You lost me at paying for a mastermind class. Never pay for gurus. They will sell you the Brooklyn bridge and make it sound so easy to crush it in real estate. And never jump in doing the latest trend. It gets over saturated quick. The craze was STR from 2020-2023. Then everyone pivoted to MTR because everyone got into STR once Covid hit. Now MTR are over saturated so people pivoted to storage units or MF. Now that's over saturated. I stick with good ole fashion LTR and hold them for many years. They start off only as base hits, but look like home runs 5-10 years later. Most people need to hit home runs or grand slams today. I'm ok waiting 5-10 years to build generational wealth off my LTRs.

So very true! If nothing else, you have learned a ton with this first deal and maybe also found that for you, house hacking on repeat is the better option for your path to financial freedom.  

If I were you, I would hold the property...you have already put your money, blood, sweat and tears into it, now its time to let it work for you (with your PM). Plus, some of the cost that you mentioned are not specifically for the deal and shouldn't be factored into the calculations to determine if THIS deal was a good/bad one (i.e the mastermind course, setting up your LLC, etc). It may start to look a little nicer, if you take those out ;) I get that you are trying to be very honest with yourself and look at it from a gain/loss scenario.

Where I sit right now, if I were to cut my losses and sell, I'd be cementing the loss of over $100K. I've done an excellent job at meticulously tracking everything, so I feel comfortable with the "monitor closely to see what a stable asset looks like" strategy. But I value the different perspectives and would like to understand what led you to that conclusion more clearly.

There's no future here where I could get closer to breaking even? Why do you feel that way?

That may be valid in situations that you have been in, but that mindset doesn't apply to every deal so the blanket opinion to just "cut losses" and "move on" is useless.

I could see why you are concerned here, but if I was in your shoes, I'd try hold out as long as possible before jumping ship. 

My burning question- What do your operating costs consist of here? They seem high for what I am assuming to be a smaller sized property. What can you do to reduce these? Once you are able to increase your margins, I would try to pay down the mortgage as quickly as possible using whatever extra cash flow you can generate. Look at everything, from utilities, to landscaping, to property taxes etc to see where you can save. Your debt payments appear to be around $16.8K per year, not $24K, so I'm not sure where that figure is coming from, but once the mortgage is paid off, you'll have some more cash flow to play around with.

1031 exchange is always an option if you are really just done with this property and want to sell. I think all of the capital improvements you made will increase your basis too, but make sure to confirm with a tax professional on that.