All Forum Posts by: Account Closed

@Dylan Whitcher great to have you in the forums man. There are a surprising number of people in Tucson doing the same thing thanks to all of our large supply of smaller multifamily. Have you spoken with a lender yet? One thing I advise all of my investor buddies and clients is to get that done as early as possible. The good MF deals are moving quickly and waiting 24-48 hours for that piece of paper has cost a couple people deals.

Hey Alex, in Tucson even properties in need of rehab tend to sell within 96% of asking price. Coming in that low he/she probably ran it and 5 other low balls by the client and they rejected them all. Not everyone is good at getting back to people with rejected offers, especially if they're unrepresented. If you're reping yourself you'll want to call from time to time to check in on the status of your offer. 

Are you looking for a place to rent down there or someone to manage your rental? I have family down there and was stationed there for a while. I have not heard anything good about any of the managers in the area. They tend to do a shotty job as there isn't much competition forcing them to provide quality service. 

If you're looking at on market deals you're more than likely not going to find a great deal. With MF being so hot right now there are investors from out of state buying non cash flowing properties counting on rent appreciation. I'd take the time to get connected with agents who specialize in that product type. They're likely to have pocket listings that only go out to their database of buyers. 

Thanks for the feedback everyone. 

@John Corey I think you may have misunderstood what I was saying. You are 100% right. As long as the property is cash flowing and you do not plan to sell the property is a great investment in a recession. I am talking about shifting retirement funds from traditional financial assets, stocks and bonds, into real estate if you plan to retire during the next recession. The reason being that when a recession hits it could be big or small long or short we just don't know. But looking at recent recessions there is the potential of losing 20-50% or more of your investment in say your 401k. That loss is a major impact to potential cash flow that you would not see with a property. It's great to get some insight from the other side of the pond, thanks!

Last week I was having a conversation with my dad about retirement. Like most people, the majority of his retirement investments are done via his 401k. I came away from that conversation thinking, “If I was in his position what would I be doing right now.” Taking into account down international markets, shifts in leading housing markets like Dallas, and the current trade wars, being ready for a recession is the obvious answer.

The European, South American, Chinese, and Mexican economies are all currently in an economic slowdown or recession. In Europe, the UK’s growth is stagnant. Britain ‘s economy contracted 0.2% for the second quarter after a minimal 0.5% advance in the year’s first period. The German economy, which is heavily dependant on automotive exports, is also slowing down due to an international slump in demand. Italy has been in a recession since 2018 and is sitting at about 30% youth unemployment. Mexico, America’s third largest trading partner, is similarly dealing with its second consecutive down quarter.

All of that begs the question, is the Trade War with China the straw that breaks the camel's back? No matter your political persuasion, we can all see the swings in America’s stock market every time new news is released on its happenings and the billions in subsidies doled out by the United States just to keep the agriculture industry above water. China has long been a leader of global economic growth, but is slowing to a near 30-year low of 6.2% in 2019 despite the Chinese government's quantitative easing. Many economists predict that economic growth in China could slow to 4% as their economy continues to mature. Central bankers have been hoping that Chinese fueled growth would justify the levels financial assets in the U.S. have reached, with stock and bond markets pushing records. But with China’s maturing economy causing a slowing of global growth financial assets are creating a bubble. When the market finally recognizes that low interest rates are not fueled by growth, be prepared for that bubble to burst.

Speaking of bubbles, let’s not forget about the booming real estate market America has had the last 5 or so years. Housing markets across the country have experienced tremendous growth. Most reaching or exceeding the prices prior to the collapse of the market in 2008. That combined with low inventory and low interest rates have driven a seller’s market. Recently however, leading markets have been experiencing a shift. Dallas is a perfect example. As of January 2019, 78.9% of all ZIP codes in Dallas have shown signs of shifting in favor of buyers, according to Trulia. The number of houses on the market has also gone up 24% with the number of sales down 3% and prices only up 1% from the same time in 2018.

So with all these indicators of a pending recession, how does someone planning to retire in the next three to five years mitigate losses and stay on track? The long and short answer is a smart investment in multifamily property. As returns in the market slow or turn into losses, rental properties continue to cash flow, often offering 10 to 15% cash on cash returns. Then, when the market rebounds, you have the potential to sell the property and liquidate your investment or carry the note and act as a bank for a new buyer, making your money on the interest they pay.

Last week I was having a conversation with my dad about retirement. Like most people, the majority of his retirement investments are done via his 401k. I came away from that conversation thinking, “If I was in his position what would I be doing right now.” Taking into account down international markets, shifts in leading housing markets like Dallas, and the current trade wars, being ready for a recession is the obvious answer.

The European, South American, Chinese, and Mexican economies are all currently in an economic slowdown or recession. In Europe, the UK’s growth is stagnant. Britain ‘s economy contracted 0.2% for the second quarter after a minimal 0.5% advance in the year’s first period. The German economy, which is heavily dependant on automotive exports, is also slowing down due to an international slump in demand. Italy has been in a recession since 2018 and is sitting at about 30% youth unemployment. Mexico, America’s third largest trading partner, is similarly dealing with its second consecutive down quarter.

All of that begs the question, is the Trade War with China the straw that breaks the camel's back? No matter your political persuasion, we can all see the swings in America’s stock market every time new news is released on its happenings and the billions in subsidies doled out by the United States just to keep the agriculture industry above water. China has long been a leader of global economic growth, but is slowing to a near 30-year low of 6.2% in 2019 despite the Chinese government's quantitative easing. Many economists predict that economic growth in China could slow to 4% as their economy continues to mature. Central bankers have been hoping that Chinese fueled growth would justify the levels financial assets in the U.S. have reached, with stock and bond markets pushing records. But with China’s maturing economy causing a slowing of global growth financial assets are creating a bubble. When the market finally recognizes that low interest rates are not fueled by growth, be prepared for that bubble to burst.

Speaking of bubbles, let’s not forget about the booming real estate market America has had the last 5 or so years. Housing markets across the country have experienced tremendous growth. Most reaching or exceeding the prices prior to the collapse of the market in 2008. That combined with low inventory and low interest rates have driven a seller’s market. Recently however, leading markets have been experiencing a shift. Dallas is a perfect example. As of January 2019, 78.9% of all ZIP codes in Dallas have shown signs of shifting in favor of buyers, according to Trulia. The number of houses on the market has also gone up 24% with the number of sales down 3% and prices only up 1% from the same time in 2018.

So with all these indicators of a pending recession, how does someone planning to retire in the next three to five years mitigate losses and stay on track? The long and short answer is a smart investment in multifamily property. As returns in the market slow or turn into losses, rental properties continue to cash flow, often offering 10 to 15% cash on cash returns. Then, when the market rebounds, you have the potential to sell the property and liquidate your investment or carry the note and act as a bank for a new buyer, making your money on the interest they pay.

As a side note make sure to check out the Events and Happenings forum. The information for the next Old Pueblo REI Club meeting is posted there.

You'll want to contact an accountant or tax advisor in Arizona as it can vary based on hold time. 

@Alexandra Garced hey Alexandra I've had clients use the VA Reno loan and almost pulled the trigger on it myself but ended up needing to go hard money to make the deal work. Feel free to shoot me any questions you have.

@Brian Ware hey Brian I'm one of the brokers on that property. If you want give me a call we can go over the numbers.