All Forum Posts by: Vincent Samaha

I've been thinking about this too. 

i don't make a household budget based on pre-tax income. I don't know why you'd leave taxes out of deal analysis. 15-40% of your gross income could be vaporized. I'd rather at least make a reasonable estimation and then hope an accountant can work some magic afterward. 

At 20% for an STR seems to be what I should aim for. But at current rates, that would result in a very low ball offer, like you mentioned. So it might be best for sellers to start lowering their prices in their own.

I get the feeling some places are listed just to see if someone bites. If Zillow says your property appreciated 100% in 2 years, you may as well throw it up there on the chance that someone will buy it. And if no one does, they might just pull the listing. 

I'd use numbers that result in my target CoC. Prices should be more in line with expected returns.

I don't expect the prices of anything to return to 2020 levels unless supply somehow catches up to monetary debasement or there is a crash. 

But prices maintaining high levels while interest rates continue to rise isn't sustainable. Market conditions change, but sellers (of anything) are always hoping to do as good or better than past sellers and are reluctant to capitulate to reality. Eventually they will capitulate and accept a more reasonable gain or just pull their property off the market.

I meant an amount equal to some multiple of their present equity. 

Or I can just figure out approximately how much they have into the property in total, principal + equity paid, and use a multiple of that. 

The Robuilt email today talked about acquiring an STR without any money by simply taking over the existing note from the owner.

I can see some people going for this if they are in a bad situation and need the money, but I doubt someone asking double what they paid in 2021 is in such a situation. 

But what about sweetening the deal by offering to maybe doubling or tripling their equity in addition to taking over the loan? They get to double/triple their money (minus the interest/taxes/ins they've paid) and I get a low interest rate mortgage at pre-insanity prices? Then we avoid closing cost and such too.

I'm new here, so I have zero experience, but I'm a numbers guy. I plan to take the advice on one of the recent episodes of BP and just make low-ball offers. I'm working on a calculator (modified from Robuilt), and whatever price point puts my CoC return at my goal is what I'll offer.

Housing affordability hasn't been this low in general since 2006. You can even go look at price histories on Zillow and find some crazy appreciation over the past 3 years. Sometimes they're asking 100-200% over what the property sold for in 2020, even with higher interest rates! 

Sooner or later sellers will come to terms with reality, but the price that works for you is what it is regardless of what insane number they throw up on Zillow. Make offers, get rejected, let them stew on it, and see what happens. 

Thanks for the clarification on CoC return.
I got the 10-12% from a BP video on LTRs. So 20%+ is the goal then for STRs.

I also haven't considered income tax that will eat into CoC... Are your CoC numbers before or after tax?

The plan is to get my numbers set and then see what fits into them. I've not going to try to make a square peg fit into a round hole. 

 I listen to him and other people in that circle. "Rich Dad Poor Dad" is a mindset changer.
I just know I can't rely on the tax environment to stay the same or get better, and that's assuming the market doesn't take a dump when I need to start taking withdrawals.