All Forum Posts by: Serge S.

Full disclosure - I am a big believer of not buying $30k pigs. Against the sound advice of 

@Ben Leybovich I like to dabble in low C class every once in a while. Usually a quick turn and then an owner finance to an investor or I'll rent it out until I get tired of the tenant class. During the hot summer months in AZ we like to escape to the mountains and in my boredom I will bid on properties at trustee sales. If the purchase price and risk is low then I'm fine buying site unseen. So I purchased a pig for $25k which would rent for around $650. Completely forgot about it until this morning and sent one of my handymen out to access the remodel. Here are the pics he sent back:

After wiping my tears I couldn't help but laugh. Note to self

DON'T buy site unseen.

DON'T buy pigs.

Find something better to do than buying random houses. Boredom has a price:)

Once you reach $25k your goal will be $50k.

Interesting. @Ben Leybovich and I did a similar study and posted an article in the blogs and came up with your exact amount of around $170 per month on a small SFR. The point here was that the $600 rental and $30k purchase price home is not what it seems. With nearly $200 in just capex there is little to no real return with this investment class after factoring in repairs, taxes and turnover. We were called crazy for providing such "inflated" capex numbers. The reality over the long term is pretty much exactly as you document. Thanks

Be careful listening to Ben Leybovich His Schtickle is not one size fits all. Setting up an S corp w payroll is not right for everyone and there are cheaper options than Obamacare especially if you at young and healthy.

@Will Barnard is this your deal. Saw your name as associate at the bottom. If so congrats and would love to hear about it. California Investor Buys E. Phoenix Apartments For $5.8 Million

@Steve Olafsonwhat happened? 

Steve hit the nail on the head. If RE investors can hone just one skill, it would be the ability to recognize where we are in the cycle and move accordingly. You want to accumulate heavy buying the best assets with as much debt as possible irrelevant of rates, naysayers and the doom and gloom around you. Once the cycle peaks we shift sideways via 1031 to either other asset classes that have yet recovered (SFR, retail, MF, Office, whatever) while holding the true quality cash flow which at that point becomes irreplaceable. By that point you should know exactly what you are holding. If everything you are holding is a homerun then at that point its time to consider deleveraging or accumulating cash for the next cycles.

These cycles take a long time and can be hard to see if you have not been through a few. These cycles will wipe out the weak that jumped in when risk was seemingly low (positive employment, RE in the news and uncles buying SFRs) while those that accumulating will be moving sideways growing their balance sheet preparing to buy from those that missed all the signs. Stay disciplined and staying patient is the name of the game.

Originally posted by @Ben Leybovich:

Originally posted by @Brent Seehusen:

If everybody is overpaying for apartments right now, then are you guys thinking about selling your holdings?  @Ben Leybovich @Serge S.

 Hahaha - @Serge S., you wanna take this? hahaha

 Well ... the answer is long. I've had offers on some of my assets and decided not to sell even with a large capital gain. The problem is replacement. I cannot replace the stable income lost without a lot of risk and headache. Can't speak for others but this is the issue I am hearing from most.

Well @Ben Leybovich I guess 1031 money feels like free money for some people. What happens if they abolish or limit the 1031 exchange? In my market master metered junk where utilities are up to 15% of GOI (with no chance of RUBS) are selling for $50k per door. Seems like $50k per door is becoming the norm around the country. All you have to do is show 90%+ occupancy and a nice pro forma and the money follows. Just sit back and patiently wait for it to come back to you. This is the part of the cycle where we sit back and watch, build relationships and wait for the desperate call to take this junk off my hands. Sucks if you your just starting out and trying to build some cash flow but great if your holding quality assets. Two sides to every story.

$180k hmmm ... I'd buy a Tesla Model S 85D, a big bag of medicinal marijuana and flood Ben Leybovich email with great deals for him to lend on for me. Why use the cash to invest when you can do 100% financing:)

Not sure if you are following but its starting to seem likely that 1031 exchanges will be limited: 

https://firstexchange.com/ProposedTaxIncreasesforRealEstate

I can imagine the adverse effects this will have on RE, particularly large multifamily.