All Forum Posts by: Bill Goodland

I heard Bruce Norris of the Norris Group talk about market cycles recently on the @Joe Fairless podcast where they tracked different metrics, most importantly being the percentage of home affordability on California through boom and bust cycles. We are no where near the low levels of true affordability we saw 10 years ago, nor do we have the loose lending and over supply. Real estate cycles involve supply and demand like anything else and remember that we went essentially 5 years without building new homes in most markets after the crash so builders are still playing catch up in hot markets. With more supply coming to market steadily, rising interest rates and lack of wage growth, I definitely see cooling off of demand and prices but we simply don't have any where near the same fundamentals that would warrant someone saying there will be an entire market bubble "burst" throughout the country. But then again, I'm 23, what do I know

Ivan Barratt thank you for the insight, I have read most of the Rich Dad series books and definitely want to abide by his principles of build businesses, buy real estate. I am currently going to school to be a physician assistant where I will earn a near 6 figure income(most of which put towards building my portfolio) with a rather flexible schedule to focus on real estate on the side. While I will have a rather good income to fund my investments to start I know I don't want to trade my time for money for too long. I have thought about the possibility of buying a franchise business down the line or starting a PM company to build the pipeline for constant cash to invest. Would you recommend it from a profitable, scaleable and manageable business standpoint? Would love to hear your thoughts on the business itself.

David Thompson thank you for your response, I'm grateful for the thoughtful input. Ideally I would like to one day get to the point of being able to tackle large value add deals. I know that potentially investing in some syndicated deals first may give me a better understanding of the process but I know the first major step is getting up to that accredited investor status. I always think value add buy and hold even on the residential side will be my bread and butter, but flipping definitely is an enticing way to accelerate that growth and learning the rehab process as I get into this business.

David Faulkner I totally agree with you and assume you have much more knowledge and experience than I do. But to me, it sounds like your distaste for leverage assumes that people are not buying smart with significant reserves in case of unforeseen circumstances. It's hard to go broke when you don't owe anybody anything but it's also damn near impossible to get wealthy. I would rather have an abundance mindset and make sure that I can justify my investments based on the top 5 "well what if this happened" questions that I hear from family and friends than live in fear of the sky falling on the real estate market again. From what I can tell, even in the worst real estate crisis in modern history, I don't think too many people who bought for cash flow in stable markets with at least 65% or so LTV on their overall portfolio got hurt but then again I could be wrong.

It seems to me that focusing your time and efforts on finding buy and hold opportunities may only be the differences of a couple % extra return or say another $100 a month in cash flow, however flipping in a more expensive market(and probably more desirable to live which is important to me long term) could have 50-100k profits as opposed to 15-20k in places like the Midwest that seem better for buy and hold. Even though I want to focus on wealth creation through buy and hold, seems to me like a better option would be to focus on profitable flipping to fund wealth creation, and sacrifice a little ROI on buy and holds by letting a turnkey company find some stable CF for you. Any thoughts on this strategy is welcome.

Yeah that's definitely a good option. Curious why you haven't invested passively in deals such as syndication? Obviously lending gives you a solid return, but considering I'm assuming you have to find good deals to lend on, why not choose other passive methods with potential for greater upside?

Theres a ton of information on this site about house-hacking, but the basics are to find a small multi-unit property between 2-4 units(because you can easily get residential loans) that can get FHA financing on it. You can get into the property for as little as 3.5% down, however I would recommend at least 5% to limit the amount of PMI you pay, and the fact that you can more easily get rid of PMI with more money down. Then, you rent out the other units and ideally have your tenants pay your mortgage and expenses while you live there for free. You have to owner occupy the property but can move after a year and repeat the process over and over again as you learn to be a better investor and landlord.

Welcome to BP Justin. It's great that you want to start getting educated on growing your wealth, but I hope you understand that this site is dedicated to real estate investing and not stock investing. I personally have been invest, and doing some trading of stocks and options for about 5 years and plan to put it towards real estate in the coming years. I suggest reading the ultimate beginners guide at www.biggerpockets.com/ubg and if you want to grow your savings through stocks I would suggest low cost index funds such as vanguard or ETFs for industries that you think have good growth potential(for example I have done well with semiconductor and tech company ETFs). If you want to be more active in trading, I would recommend checking out the free courses at optionalpha.com on the success strategies of options trading. One note worthy thing however, is that with real estate you can leverage an investment and have someone pay it off for you while you still have relatively good control of its performance(through good management, improvements etc.) however with a stock, you essentially are completely helpless if something goes wrong. Either way, money sitting in the bank is dead money so put it to good use, good luck!

Now before and the buy and hold people come in and tell me how that is the only way to gain true wealth, semi-passive income, and reap all the tax benefits, thank you but I know that already. Now, for the fix and flippers, I am curious what you do with your flips profits once you have successfully scaled your business?

I have heard many flippers on the podcasts saying that they eventually start holding some of their flips, but what if your market's rent to value ratios don't make sense for buy and hold? It seems to me that the quickest way to scale a business and make the best return on your capital(once you are educated and have a large nest egg to invest) is to begin flipping or BRRRRing properties if renting making sense. My question is for people in say the southern California area that flip, do you buy out of state turnkey to grow your passive income streams, invest in syndication deals, look for boots on the ground to buy rentals out of state, index funds, or just plan to fix and flip until you can't anymore?

Originally posted by @John G.:

@Bill Goodland Just heard back, I should be able to get up to 75% of the appraised value not to exceed the purchase price if done in the first 6 months!

Sounds good to me then. I understand everyone else's concern regarding risk and class of neighborhood but as far as I'm concerned, I would go where you see the highest ROI. If you plan to get a loan on the cheaper property I would also just speak to some local agents and see if they could give you a decent sense of whether or not you're paying a fair price for the turn key home, along with seeing the scope of work on the rehab(to better understand future expected capex and repair costs). No way would I pay more than 100% ARV and considering you're paying cash, I don't think you should pay more than 85-90% ARV so you can still pull a significant amount of cash out. Another tip would be to check Trulia crime maps and google street view to make sure there are no red flags that would make it an actual D neighborhood instead of C. Looking forward to hearing about your success no matter what route you choose!