All Forum Posts by: Rick Albert

In any market, go to the MLS or MLS syndicated sites (Zillow, Realtor.com, etc.) and sort based on days on market. Then look at the OLDEST listings first. Those are low hanging fruit to negotiate the best deals. The Sellers are motivated to sell and they should know by now they aren't getting their price.

I have one under contract for almost $100,000 below asking and roughly $400,000 below the median price point for the area.

Hey Sasank,

I'm a 2x house hacker here in Los Angeles and invest out of state. I will say that by investing here first, it allowed me the leverage and experience to invest out of state. Mainly because we are dealing with bigger numbers here. A 3% appreciation on a $1M asset versus a $100K asset or even $3,000 a month rent versus $700. With the exception of my last purchase back in March, I haven't done a down payment since 2015 and I was up to 15 doors including my personal residence. 

The top advice is to understand your long term goals and risk tolerance as well as what's in your current bank account. There are a variety of factors that help with the decision making.

So I just sold a condo in a similar situation. We were one of seven on the market. I told my Seller that unfortunately, she will have to compete on price. She did and we were the only one that got sold. In her case, my Seller still came out ahead and was happy.

I know it sounds weird but I would actually consider joining the board and impose a loan on the complex, get this work done, and then impose a massive special assessment to cover it. The condo market is suffering across the board and there isn't really an immediate end in sight (although it will eventually pass). But I have seen some complexes sell for a premium if they are in decent shape since there is still demand for affordable housing. 

If you don't want to put in the legwork, then I would consider selling at a loss. You are putting the future of the complex in the hands of the HOA Board members, who are really just volunteers that don't necessarily have the credentials to manage a complex.

I've personally used Exchange Resources, Inc. and so have my clients. 

Question: Do you plan on buying more rentals? If so, typically you go with 30 year so that you cash flow more and lower DTI, which will help in expanding your portfolio.

If you don't plan on expanding and just want to focus on what you have, then you can consider a 15 year.

There are three things I've done to expand my portfolio. With the exception of my latest property, I hadn't used my own money as a down payment since 2015.

1. HELOCs: A Home Equity Line of Credit can be pulled out of your property and then you may be able to use it as a down payment for the next one. I've done this twice.

2. Business partner: I have two properties where a business partner and I own it together. We pulled funds together. 

3. 1031 Exchange: At some point it made sense to sell my first house hack and reinvest the money out of state. At that time, between the sale, HELOC, and business partner, I sold one condo to aquire 7 units out of state.

I hope this helps. Good luck!

What do you anticipate the appreciation to be? Oklahoma isn't actually known for appreciation. Here are a few questions that might help:

1. What's being developed as far as apartments in the area? If more apartments are being built, then you have more competition, which means you have to compete on price. That lowers your ROI and with a fourplex slows your appreciation.

2. Another factor to consider is loan buy down. Each month you make a mortgage payment, you are creating equity just by virtue of less debt. Is that factored into your calculations?

3. What is the unit mix? For example I recently bought a fourplex where each unit is 3 bedrooms. Rents are low now but overtime I believe I will become the house alternative, which will raise rents quickly. 

4. With low cash flow, how does this hold you back from scaling?

5. Are there other options? Base hits work better over the long term than a few home runs once and a while.

You have a couple of options:

1. Selling is interesting because you might get more value out of the tax free money than renting it. The backyard sounds great and the buyer pool might pay a higher price than what a tenant would pay.

2. Airbnb: My understanding is STL put in some strict laws. Plus being near the school doesn't really add value.

3. Renting it out. It will be hard to cash flow on a new property so maybe you house hack the next one (2-4 unit for example) and then rent out your house. Now you just added multiple doors with little money down. This might be the highest and best use of your money.

Ultimately you have to run the numbers as to what makes the most sense. Renting out may not be profitable and we are seeing longer than normal vacancies. 

You want the highest price with the least hassle. Unfortunately they are two different things at two different price points. I recently sold one of my investor's properties and we got multiple offers and didn't go with the highest offer because the winning bid was cash and that was easier for my seller.

In most cases (not all), the best way to determine the highest price is likely listing it in the MLS for maximum exposure. It's really the luxury market that does well with properties not listed online but that is a different world.

Are you looking to invest locally or out of state?

Even with a mentor, there is risk, just like with any investment. So I will say how much of your savings are you willing to risk?

As others have said, house hacking is probably the safest way to go to get started. I started with a condo house hack and I have scaled from there. 

If you can't house hack for whatever reason and you are truly concerned (which is valid), then maybe start with a small under $150K house out of state (Alabama, Ohio, etc.). Use up less of your savings but you are getting your foot in the door. 

The reality is the best lessons are on the job training. I've learned more hands on than I could in any class.