All Forum Posts by: Rick P.

I would advise leveraging slightly. Why not get a mortgage at 50% of appraised value? It allows current properties to still cash flow and lets you hold $200,000 right now. You can sit back and wait for a good opportunity to come along in real estate or maybe a stock market correction down the road. I like the optionality of cash in your position more than I like the additional cash flow each month. If the right deal(s) arise you can pounce on them.

Sounds like you're on a solid path Edward. I wish I had gotten started at your age. Live frugally, purchase solid properties that cash flow & then do it again and again.

Make the offer.  I've never understood this mentality.  You've done your DD on the area & you know what you're willing to pay.  Make the offer and see how it plays out.

For a long time I used section 8 as a last resort. Lately though, I have had a change of heart. I think that once you get comfortable with the added paperwork & inspections you really can't beat it. The money is there every month. It is a little bit of extra legwork in the beginning but I think it's worth it. I have heard the horror stories about section 8 tenants but I don't think they have been any harder on my properties than any other tenant(s). In fact I would say they've probably been closer to model tenants.

Zillow is a terrific tool.  I follow and post on Craigslist all the time to get a feel for a new  neighborhood/market.  I also use rentometer.com.  Good luck

It's a very two tiered market out there.  The vast majority of the new construction on the coasts has been luxury apartment rentals.  My guess is that you are not competing with the guy building the new high rise across the way.  Take your time, evaluate plenty of deals and look to see where you can invest that makes sense for you.  Keep in mind that as people get priced out of the so called 'luxury' rental market they may have to trade down to your somewhat less desirable rental.  I've seen this happen here in Chicago where I own some buildings just outside of the hot markets of river north & the west loop.  While new high rises are offering concessions I've been able to steadily increase rent on my rentals that are under 5 miles away because people are being priced out of certain neighborhoods.  Good luck

I am currently on both sides of this.  I have probably 60% of my rentals in C/C-  areas (of those, about 1/3 are section 8) and 40% in A/B locations.  At a certain point you just have to accept it for what it is.  I would say the first year to 18 months I was always stressed out.  At a certain point I just kinda came to terms with the fact that there was going to be the occasional eviction and that the same people were gonna be a week or two late with rent every month.  For instance, we have a couple units where people are 1 1/2 or 2 months behind over the course of 3+ yrs.  Is what it is.  

3 beds is def the sweet spot.  

Leasing a simple 3/1 SFH recently.........'Is the garage included in the rent?' Strange question under any circumstances. Even more so when it's an attached garage.

There is no real estate bubble nationally.  That is a given.  However, there is most definitely a bubble in select parts of leading metro areas.  That chart you have posted is hugely misleading.  The amount of apartments in the pipeline coming online in the next few years is outrageous.  This is what happens when cash is free and people are searching for yield.  The problem is all the new construction is 'high end' apartment units.  There is a two tiered economy and the top 20% of most of these metro areas are doing amazingly well.  I stand by my comment from earlier.  Most of the towns in America will never hit an inflation adjusted housing high again.  For example, a market like metro Chicago peaked in '06 according to Case Shiller.  10 yrs down the line and the metro area is still well below that '06 peak.  Factor in inflation and it's miles away.  Sure, The Loop, River North, Gold Coast, etc are at all time highs.  Again, that's what happens when money is free, stocks are going up and 401k's are at highs.  However, get outside of that bubble in every metro area and it's a straight up depression as far as home prices go.  Without the marginal all cash buyers of the world like Invitation Homes, American Homes 4 Rent, etc it would be really bad.  Quick example, I was raised in a standard middle of the road home in Des Plaines, IL.  Just outside of Chicago.  I grew up in a 3/1 1200sq ft house.  Standard issue.  That house was selling for $330,000 at the peak of the insanity in '05-'07.  Now that same house goes for $220,000.  That is the story of 80% of Chicagoland and 80% of the nation.