All Forum Posts by: Rollan Dizon
Rollan Dizon has started 10 posts and replied 63 times.
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
@John Tu Nguyen:
I would be a little more aggressive and take advantage of the low interest rates and leverage up. Who knows if rates will ever be this low again. I would try to lock in 15yr fixed mortgages for the properties you own free and clear and take that money and buy a few multi-families. I think you can handle an additional 5 properties easily with the amount of reserves you have to handle vacancies or CapEx. But be selective and buy quality over quantity. I would put down 50% ARV and leverage the other 50%. I would also consider buying commercial properties and in other parts of the country to diversify.
I think the 2 biggest risk of being a real estate investor is being over leverage and being sue by a tenant. Since you have plenty of reserves and your portfolio is still relatively small, I wouldn't worry about that. I would make sure you have adequate insurance and hold your properties in an LLC to protect your assets.
Best of Luck to you.
John
John- thank you for your thoughts! I know if there was time to use leverage, now is prime time. Going forward, after I gain confidence that I can cash flow these first 2 SFH, i am in the camp of 50% ARV/Leverage, as I think that will allow me to sleep at night. I like to manage risk (its a big part of my focus), but I do know we get these rare opportunities to amplify returns. I am looking at multi units next, so I can have some exposure and understand how those work.
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Originally posted by @Joel Owens:
I wouldn't want a property giving me 1/2 a percent rent to sales price ratio. Essentially you have "dead equity" and a state of California that can be tenant friendly with your 400k property.
If your paper investments are with REIT's their returns cycle heavily. They took a bath years ago and now in the up cycle many have done well in the last few years. There has been talk about the REIT's model not being sustainable and another round of expected earnings to start moving to the neutral or loss category in the future again.
With that information some investors are selling off and moving into hard assets and cashing out the gains over the previous years.
Your other properties you are buying are at about 1% to sales price ratio. I just do not buy at those levels but long term maybe it works for you.
Joel, thanks, I know! California sucks for cash flow. My angle is for appreciation with the Tracy property long term while getting some cash flow. My paper assets is a well diversified stock, bond, energy, alternative investment portfolio that has been very consistent in returns. I only see the 1.5+ ratios in tougher neighborhoods, I have been leaning towards better neighborhoods, sacrificing a little cash flow for stability. Thanks for your input!
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Originally posted by @Harry Zhou:
Why is Birmingham, AL more attractive than other popular places? E.g., IN, FL, PA etc..
Bay area living cost is so high. But 1.4M investment asset is amazing.
Hi Harry, with my first investments, I used a turnkey provider that I trust. Birmingham was the one that gave me a reasonable cap rate, properties that I visibly liked and gave me a little equity. I am trusting their research, though I have been looking at a ton numbers ghethest few weeks. I dont expect bay area appreciation, this is purely for cash flow. My goal is to have half of my wealth in income producing real property and the other half in paper assets.
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Originally posted by @Billy Maloney:
Sounds like your starting off with pretty good deals, congrats.
Are you working with a turnkey company for your properties in Birmingham? How where you able to get turnkey properties with 15-25k equity going in? It seems like many if not most TK properties come at market value.
Yes, the first couple of deals were excellent! I am getting them through cash flow savvy. I am considering another, but the latest round of deals were not as attractive...
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Hah! I want to learn this business first! My goal is to trade or buy up to multi units and commercial. Thank you!
Post: Investor from CA, Stress test my plan!!!
- Investor
- San Jose, CA
- Posts 64
- Votes 26
BiggerPockets experts!
I want to get your thoughts and 2 cents from a philosophical and risk perspective. I am 42 years old and my wife is 39, we have 2 kids, age 9 and 5.
GOAL: Insulate my mid-long (5-10 years) term strategy (have income producing real estate to pay for fixed living costs + 5K month cash flow for investing) even during a 2008 housing meltdown.
I know debt can magnify the creation of wealth, but it can also magnify potential destruction. Investor psychology is unique to each individual, whether they are more aggressive or conservative; I find myself in the moderate-conservative camp throughout my investing career (yes, I have listened to Dave Ramsey since 2000). I have invested in REITs with my paper assets, but this is the first time I am investing in real property for the purpose of cash flow. Here is my situation, and would love to hear from you as to the risks I need to be aware of that may take me away from my goals. Since this is rental income, I will not lose sleep at night for temporary declines of real estate value.
Real Estate Owned (Assets, income, debt):
1. Tracy, CA Home, value is 400K, rental income is 2100-2400/month range (signing property agreement next month, converting this to rental from prior primary residence); no debt, no mortgage.
2. Birmingham, AL (in contract), Purchase Price 115K (fully rehabbed turnkey), value is 137K, rental income range is Gross 1200/month, 90K mortgage. This is in a B+ to A neighborhood, 3300 square feet home
3. Birmingham, AL (in contract), purchase price ("all in" rehabbed), 60K, ARV 87K, gross rent 850/month, B neighborhood, Cash buy, no mortgage
4. SOMA Condo, Global City, Philippines Vacation rental (via Airbnb), 2014 average per month 600/month, 150K value, no mortgage
Liabilities:
1. Primary Home in San Jose, B Neighborhood, 700K value, 510K mortgage, 3300/month PITI
2. Lifestyle expenses 3000/month (our enjoyment)
Paper Assets:
1. Investment assets 1.4M (Yearly contribution of 48K)
2. Checking/Liquid Investments: 100K
Income:
1. Earned income (Net, highest tax bracket), $18,000/month (this is also net of annual monthly investments to my paper assets)
Based on this information, what risks should I be aware of adding real property to my investments? In context of 2008 collapse? Based on my numbers, would you be more conservative? Aggressive? How so?
Thank you for your input!!!
Rollan
Post: Podcast withdrawals
- Investor
- San Jose, CA
- Posts 64
- Votes 26
I like Epic Real Estate Podccast.
Post: New Investor from SF Bay Area
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Originally posted by @Johnson H.:
Hi Rolland, welcome to BP! Join us for a meetup if you can. Details in my signature below!
Johnson, is that June 7?
Post: Investing in the DFW Area
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Check out Matt Thieraults podcast on Turnkey Real estate. You can download Stitcher and search for it along with other great cash flow podcasts, including Bigger Pockets. The education you will receive is worth thousands!!!
Post: New Investor from SF Bay Area
- Investor
- San Jose, CA
- Posts 64
- Votes 26
Thank you Gil! We should compare notes sometime...