All Forum Posts by: Sam Yin

@Maria Moya

If I could get my wife to be on board with me from the beginning, there might have been a serious chance we would have been billionaires before we retire. But that's not the case. Thus, we are nowhere near that, nor will we ever be in this lifetime.

My wife is NOT into REI. All of my investing has been fraught with emotional drama. Therefore, I do all of it and she just shows up to sign papers when needed. There was a point where I had to force her to see what we own because I wanted to make sure she knew what we had in case I passed away. These days, I have accepted it. I do my deals. I mention them, if she cares to hear it. She generally disagrees and feels I'm making a mistake. She is content as a worker bee. Mind you, her spending habits have creeped up exponentially, but that's another discussion.

At the end of the day, she let's me make all the final financial decisions. I respect her viewpoints and always take her into consideration, balancing the amount of chaos a move would cause. My goal is to keep a level of tranquility in the home, but also grow wealth for our legacy. It's the dynamic of our relationship, and I accept it. She is a great wife overall because she puts up with all my shenanigans over the years.

The point is, you may not always be able to get your spouse involved, but you need to respect each other. Pursue your dreams, but not at the detriment of your relationship. NEVER put money/investing over your relationship. That money won't wipe your butt when you are old and feeble, but your loved ones will, and will do it with care.

@Justin Goodin

I will have to concur more with @Robert Rixer. The comparison is a bit misleading on the OP.

I started with SFRs and moved to multifamily. I will likely go back to SFRs if the opportunity is there. And back and forth again as needed. They are both have their merits and downfalls.

Here is the simple truth, it would take roughly the same amount of rentals, with a few exceptions. One multifamily building with 20 rental units should achieve roughly the same as 20 SFRs. I use that number because that would seem to be the bench mark for FI from W2 for many people, with basic life styles. Double that to 40, either SFRs or unit counts in multifamily, and it should cover most people's FI number for comfortable living standards. If those numbers do not fit FIs, then it is likely bad investing strategies or one has an unrealistic outlook on living standards.

The example takes into account to average cash flow of $200-300 per rental. At 20, that would equal to $4000-6000. At 40, that would equal $8000-12000. Those are some comfortable living standards for most people.

As for capex events, they are not too far off. Rental units within multifamily buildings with have individual A/Cs, heaters, and boilers. There are some exceptions on the boiler. Thus, these things go out and cost similar to SFRs.

In essence, when comparing the same number of rentals, regardless of type, would yield about the same fluctuations in rent. The advantages of SFRs is the quicker ability to partially liquidate. That advantage can translate into quicker growth or plugging holes during recessions by isolating and eliminating low performers or paying off higher grade individuals. That cannot be done with multifamily. The advantage of multifamily is the better control of valuation by the owner and the ease of operations since it's all localized.

There are much more nuances, but thats the most apparent.

Just my 0.02

As of this week, I am getting between 5.75 - 6.25. 

 I'm sorry Bill... I'm going to have to agree with most of what you just wrote. I have a strong feeling that the prices will keep creeping up, and even more so when the rates drop.

As for inventory, there seems to be a steady supply of inventory in CA. I constantly get called with opportunities, many of which are pretty good, they are just not listed on the open market. Prime evidence is the constant number of closings off the market. Makes you wonder just how many players there are in a given area. I snatched up as many as I could before depleting my capital. I guess I could take some of these off-market offerings into a partnership... but its just not my style at the moment and I do not have the network to pitch it too. I feel I would have to really operate it for my equity share. Then it will defeat the purpose of passivity, which was the whole point for me to begin with.

That being said, there is just too much to pass up for too long. I think I explore equity extraction to have some liquid ready to go.

I can vouch for @Dave Foster. I have used his services and it was smooth. No complaints. Worked out great!

@Jonathan Rivera

Take a flight, spend a few days there. At least see the property first hand before you buy.

These are just free advice from those that experienced, or know someone close with experience that would dictate this. Investing is a risk, why add more risk when you can avoid it at the front end?

@James Carlson

Total agree. People overlook some REI fundamentals in search of that great deal up front.

I paid $40K over appraisal on my first small commercial multi... 8 unit that appraised for $660K. It was a fixer with rough tenants on top of that. I did it knowing it was my way to break into the commercial market. Everyone thought that was a stupid mistake. My wife thought I was crazy and was pissed.

I held it for 2 years. Stabilized the rents. Put in about $25k of improvements, to include 2 unit rehabs, new roof (mostly covered by insurance) new paint, and eliminated one unit. Sold it for $200k profit, 1031x to a $2M deal with 14 homes and vacant land... Which will likely trade for $2.5M+ once rents stabilize.

The kicker is I really spent zero out of pocket for this. The seed money started as an SFR that I put $30K (hard earned savings) as a down payment. Lived in it and fixed it up for 2 years. Rented it for almost 3 years at zero cash flow and 1031x into that small multi. While holding the multi, I cash flowed $30k first year and $50k second year. The current asset cash flows slightly less, but will be stabilized to cash flow more than where I left the last one.

@Jaron Walling

Agreed.

@Nicholas L.

DITTO!!

If neighborhood class is important and you are planning on investing any significant amount of money, then its worth having boots on the ground to see, smell, and feel the area. Google searches will not do it justice. There are a few exceptions, like those well known/accepted areas like Beverly Hills or Palos Verdes Estates or those areas where every house within a 2 mile radius sells for over $5M. Outside of that, you can easily be duped by Google or local property managers. Because at the end of the day, YOU give it the grade, not others because it is a bit subjective.

Example, Hollywood, CA: there are A communities and D communities very close to each other. Bozeman, MT, there are A communities and D communities. Miami, FL, there are A communities and D communities. You get the jist...

@Justin Goodin

5. Have/build adequate reserves.

True example:

I had an apartment fire that took out several garages on New Years and additional damage to two adjacent apartments from the Fire Department putting it out. Then, 7 heaters at a different apartment needed replacement in the span of a few weeks. On top of that, a drunk driver plowed into a separate apartment, taking out the gas meter with it, one day before a tenant move-in. All this while carrying an eviction and several vacancies.

Everything was repaired/replaced out of pocket, without insurance getting involved (this is CA). Eviction went to trial last week and that person just started making repayments for missing rent and attorney fees. But their unit will need some rehab. I have 2-3 more evictions planned next week. In total, about $100K of reserves was spent as of January 1, 2024. For the sake of argument /causation,if I carry the vacancies for the year (which I will not), that's another $100K.

This is an outlier scenario, but it just happened. It can happen to anyone in any class area. The fire was from the rear neighbor kids playing with fireworks. The heaters were getting old and it has been abnormal colder this year. The drunk driver was unpredictable. Insurance is dicey and it's better for me to spend $100K than saving that by using insurance but risking no renewal... Or worse ...

As you grow your business, so should you grow your reserves. It will keep you competitive in this business.