All Forum Posts by: Sam Yin

@Carlos Ptriawan

by the way, how is the current market up in the bay? I continually see deals both on loopnet and off market, but I have not followed up to see the final transaction price. Looks like there are still deals that pencil to about 5% COC in the multi space.

 I agree with you Carlos. Very good analysis.

@V.G Jason

DITTO!!!

Best response in a long time. I concur 100%.

I'm kinda retired ... Kinda... Because I got to the point where I could, and I realized it is crazy boring. I found a few retirees to have coffee with a few mornings a week. I hit the gym. I jump on the tractor and rotate my crops and poultry. I care for 3 kids and we travel as much as their schedule allows. At the end of the day, I still feel bored. That's why I chose to continue to invest with what I can and when I can. I have even recently taken it upon myself to visit more job sites and walk the properties when the wife is at work and kids are in school and my breakfast buddies are tied up.

F.I. just means you do not need to go work, but you should still find something to do and keep your life full of purpose.

@AJ Wong

If rates drop to about 6%, there may be a quick influx, but it will be temporary. I think we will continue to see the same trend as we have this past year. The prices would continue a slow and steady rise, perhaps 2 -4% . There may be some minor deviations in a few small pockets that are medium to low, but all the higher markets will not see much change. Prices are so high that it has priced out many as is, even with a small decrease in rates.

Now... If rates drop below 5%, then you may see a combo of both more buyer AND higher than normal price increase, maybe 4 -8%.

People who waited/procrastinated for the last 10 years will mostly find another excuse to wait. More will get priced out. Even with new financing options with small multi. Remember, higher prices equal higher down payment. Lower down payment equal higher mortgage. The average required DTI did not change. Thus if someone wants to take advantage of the 5% for small multi, they better have a high income to support the mortgage. Not too many lenders will credit current rents of the remaining units above the primary residence unit dollar for dollar.

What I do foresee is an uptick in refi if rates fall to 6% or below. I have a few that I plan to refi if the opportunity is there, but it would need to drop below 6%. The likelyhood is very remote, and probably late or after 2025 if it did happen. If not, I'll just keep saving to buy or exchange equities.

Just my 0.02

@Jake Andronico

A lot of great responses. I will concur with @JD Martin and his math. At the same time, I do agree with @V.G Jason on his perspective regarding premature W2 quitting. Do leave the W2 if you are not ready to take on all the struggles of REI. The most important aspect of this discussion is that there is no one size fits all. Every individual had different drivers and motivations as they reach milestones in their REI journey.

I left my W2. I did so when I cash flowed at least all my W2 gross PLUS benefits plus a little extra. This way I knew I could sustain the same lifestyle. In all fairness, I could/should stop and just concentrate on paydown. But my attitude towards REI has evolved as the business evolves. This is mainly because of my family make up. Single folk and childrenless folks will not fully understand my position. I think about me, my wife's evolving needs, and the children's current and future needs. I focus on fortifying the assets and project what i may want to do after they grow and move out. Additionally, there is always that possibility of unforeseen splits that would cut it all in half.

Additionally, I'm not one of the lucky ones out there that have a spouse willing to/or have the exact same outlook in life. I do love what coach Carson puts out and how he lives. I WISH my wife was willing to do the same because I would drop everything right now and drag the kids around the world. But the reality is my wife likes her current situation and is not willing to make those adjustments. I factor the growing costs of living and foresee that I need to continue to invest in order to keep ahead of those uncertainty. Thus, 4 paid off units will not work for us. I mean... $10k/month cash flow will BARELY make ends meet. We live in CA and will likely in the foreseeable future.

Recently, I have shifted my focus from immediate cash flow increase to more of providing a safe and good quality housing to the community. I have begun to take some losses as a result of more charitable landlording. I do it because I got to a point where I can. It is also very satisfying to see a struggling family get up on their feet and find a brighter future because someone gave them the opportunity. Because the portfolio is large enough. If I had under 10 rentals, there would be no way to take such losses, even if only one was dedicated as a charity case housing. Heck, it would be tough with under 50 units because those are controlled vacancies to factor on top of uncontrollable vacancies.

At the end of the day, do what fulfills you.

@Jeff S.

To your OP, it IS possible. It was possible back then, right now, and in the future. It has a lot more to do with mindset than many people believe. MINDSET is so powerful!

I have posted how I did it a few times in the past. I concur @Travis Biziorek and @Dan Heuschele in their mindset, as I have had a similar journey in REI. It took discipline and a lot of hustle. It is not for the faint of heart. Like @JD Martin posted, you need to have the right perspective. There are so many opportunities, yet those that refuse to take action often make excuses and continue to claim others that made it were lucky or started at the right time.

I believe that as times change, opportunities change, but the opportunities are there. In this day and age, education is plentiful and readily available, not like before. Thus, in the past, it was not luck. It was sheer will, determination, and hustle... Much like what those who live off rentals have posted.

I only recently invested, compared to many of the veterans on this forum. It took A LOT of grind. I was working full time, with a few part time jobs, and raising three kids. But I never gave up, even with minimal sleep. I kept looking for ways to overcome obstacles as they come. I dragged my young children with me and had them sleep or wait in the car in the crazy summer heat while I made repairs, more times than I can remember. Eventually, I graduated to hiring others. Now I have my own in-house managers. I walk away from my W2 in December 2021. I stay on the fence and kept the door open to go back, but I put all of my efforts to building the rentals into a sustainable business. By the end of 2022, I was just wasting time with lingering on the W2 fence.

It can be done. Where there is a will, there is a way. Glass half full all the way.

@Omar Williams

To your OP, the quickest option/strategy is to find a partner. Another solution is to find a HML that would be willing to do 2nd position and collateralized with your current portfolio.

There are a few other methods out there, but as you get more creative, you induce more risk. You will likely have less cash flow to keep you in business.

@Omar Williams

You may be having a Net Worth problem.

After trying to use your equity as a DP, you have just reduced your worth. The Lender needs to know they can recoup if you fail in your business plan.

For example, John Doe has 5 rental houses, each worth $1M, but only have $400K in equity per house. That's a total of $2M of equity. John Doe has $200K in the bank, but need another $800K to complete a 25% DP on a $4M asset. John Doe decides to use $800K of equity to fill that gap. Now he is only worth about $1.2M, and out there trying to borrow $3M. Probably not gonna happen.

There are exceptions, like strong relationships and great track records, etc. But the jist of it is you may it be able to qualify. Not to mention the global DTI.

@Christopher Penaflor

The short version is this:

I was taking a class in Dec 2019. There was an older guy in class that looked lonely. I invited him to lunch during the break between class. In our 15 min ride to get tacos, with 2 others guys my age, he asked what type of retirement plan each of our employers gave. There was nothing stellar. I did tell him that I over the last several years I have purchased 3 SFRs with 15 yr mortgages and they will be paid off around when I will retire. I lived in one for a few years to fix it up. All were fixers. I was breaking even, or actually losing money every month because I self manage. But I figured in 15 years, they will be paid off and I'll start to make some cash flow. He said he invested OOS. He was an auditor in his 60s. I'm barely in my 40s.

He asked me 2 questions that changed my life. He asked if I followed the 1% rule, I told him I never heard of it. He then asked what was my CAP rate, I told him I never heard of it. The conversation ended because class resumed. But I was intrigued. I wrote it on my hand and looked it up on Google that night. I HAD NEVER USED THE INTERNET TO LOOK THINGS UP until that point. I never knew there was so much info online. My life had just revolved around work, raising kids, and terrorizing the neighborhood on my motorcycles.

Needless to say, my Internet research led to YouTube, which eventually led to the Bigger Pockets podcast around Feb 2020. I NEVER KNEW THERE WAS SO MUCH INFO ON YOUTUBE until that point. Kept learning and started to test out what I heard on YouTube that June of 2020... Middle of the pandemic.

Within 2 years of hustling, I achieved F.I. and quickly R.E. Now I'm a house husband by choice. Raise kids full time. Enjoy what life has to offer. And I still continue to invest in RE. It has been a life changer.

I did it for generational wealth, but lately, I'm rethinking the whole generational thing... But only time will tell if my kids even care to carry the torch. I hope one day they will realize it's power and how it has provided for EVERYTHING we do these days.

@Carlos Ptriawan

I have to believe this applies more to the bigger institutions. I do not see it in the smaller mom and pop portfolios.