All Forum Posts by: Robert M.

@Adam Sporinsky Although he much more experienced and informed than I am,  I do not think @Joe Villeneuve is considering enough stress. Even if you have positive cash flow in a normal situation, what happens if, because economy repeats 2007/08, several of your properties default on rent and it takes three months to evict them? If other properties do not have sufficient cash flow, in Joe's words, to feed the negative properties, AND your commercial loans come due for reset, you could be in a situation where you would be considered over leveraged. That is precisely what happened to many in 07/08. Loss of cash flow and loans coming due in a stressed down market where property was not worth what needed to be financed.  

It really depends on what you consider to be a worst case scenario. I doubt if any of us are willing to risk failing in a worst case.

If this same conversation took place in a growing economy, rather than in the stagnating,  to maybe growing one we are in, my worst case would be less severe.  

I am not an optimist for the next few years.

Over leveraged today has a different definition than it could be in a few months.  In 2005 there were very very few that were over leveraged, evidenced by the fact that they received loans. In a few years it became very different. 

again........ just my $0.02

I see several different scenarios that would define over leverage diffenently. 

Fixed rate mortgages

Variable rate mortgages

Commercial loans. 

Just like the banks were stress tested by the Fed to determine if they could solely survive another financial crisis, I believe we all should stress test our own leverage ( if we are leveraged).

I personally have all fixed rate mortgages on my four residential properties so I can eliminate a variable ( interest rate change) when I stress test ( I know what it will be). 

I do have commercial loans on two of three commercial properties one of which will reset in less than 12 months and another that will pay of in 2 years.

I keep 6 months reserves on debt (PITI) service. I believe this is a worst case scenario. I do have additional funds over that so believe I am NOT over leveraged. However, If I did not have sufficient funds for 6 months of debt (PITI) service, I believe I would be over leveraged. THAT is my definition of over leveraged (in my stage of life). Many might believe 3 months is sufficient.

p.s I sleep well at night also

as they say.............just my $0.02

when I google search it, several sites come up and none of them will load either. 

Makes me nervous.

I tried two browsers, Firefox and Microsoft edge. neither loaded but timed out. 

I have Kaspersky protection. 

No other loading problems today.

link does not appear to work

@Nathan Zhivalyuk  it looks like it might be rock wool. the joints are not taped as asb joints usually are. can you show a pic of an elbow. 

ONLY way to prove is to test ( $<100 at a lab) but many people experienced can tell by looking at the way it is applied. Are those steam lines?

Others have been correct, no issues if not "friable" (dusting).

@Andrew Herrig. I tend to agree with you on the conundrum you have identified. 

I have 4 SFRs and do not cash flow on my least expensive. ( $1300/month). Others above $1500-$2000 do seem to cash flow ( and cause less "issues" from tenants). Remember,  a roof is a roof no matter what the rental rate. Same holds true for furnace, HW heater, appliances. 

If you look at cap ex for these items as "fixed costs" and many other costs ( PITI, Taxes , insurance, maintenance) as "variable" costs, you can understand why low rent SFRs are very hard to make cash flow on as you cannot cover the high percentage fixed costs by the lower dollar margin rent.

Nice Job, @Warren Bright, how much did it cost you and how many hours work? 

Nope, just had a tenant go from 13 to 7.

have also seen courts "claw back" advance payments.

I used the tide stiff brush approach on a black oily ugly garage floor and it now looks great.