All Forum Posts by: Account Closed

@Ben Leybovich

Given that metro Phoenix is gigantic it’s hard to say that new construction is averaging $1,500 particularly without knowing the unit mix and specific location. In Mesa and many parts of Phoenix you can go from $1M single family homes to $150k condos without blinking.

I think the fear right now is based on construction costs which mandate that you compete for that Class A market share. IMHO it’s impossible to predict the truest path of growth in the metro area. West Phoenix has seen much of the development as of late simply due to the lower cost of land. Jerry Colangelo’s development, the south mountain loop 202, Cavasson, Desert Ridge, Gilbert’s explosion, the downtown revitalization...it’s literally a crap shoot to see which area truly comes out on top. They are all competing for the same market share after all.

I think there is an income problem in Phoenix (and many other areas) right now where the construction/permitting shortage you mentioned has caused prices/rents to outrun what is affordable/comfortable. If you’re investing in class C I imagine that’s a great place to be right now in terms of occupancy rates, but I’m curious what kind of appreciation you’re modeling against all this competing development?

@Alishea B. Where are you finding such high LTV for cash out refinance? I have only been able to find 80%LTV or lower.

@Ryan Moore would you mind sharing which lenders you were talking about way back when?

@Kris H. I’ve done a bit of research. It looks like the official term is readvanceable mortgage. Best I can tell, this product is only available in Canada. Sounds like a business waiting to happen here in the states.

@Account Closed 80% is the standard here as well, though I know there are lenders that will go to 90%. I think my comfort level will always be relative to my cash unleveraged cash reserve. Curious though, is the combo you mentioned partially unsecured? 

@Ted L.

The goal is to sell prop #1 here shortly to be able to absorb the market taking a dive. In reality my hold period is so long (I’m 35) that with $100k+ in cash reserves I should be able to wait on the market to return, all the while having the renter pay down the original mortgage. I can’t predict appreciation with any certainty so my investment strategy hinges on max leverage with max cash reserves.

@Kris H.

Now this is why I’m wrote the post in the first place! I do not have that kind of setup and I absolutely should. I will definitely look into it.

Thank you!

@Carlos Medina

Real estate is the only investment vehicle out there where you can get 20x on your upfront money. You can’t be an accredited investor until you actually have cash reserves. Real syndicators want no part of the newbies. This is my beginner strategy and by moving every other year to make it work, I’m committed.

The work on my end is finding the growth markets, stashing the cash, moving, and researching the financing tools constantly. Just because I'm not looking to pick up a hammer doesn't mean I'm not working. Flipping and BRRR is just one strategy, it's not the only strategy.

I'd love to turn it over to a property manager 3 years from now with $2M in properties and $140k in the bank and just let them manage it. I'm halfway there right now. Even if I'm upside down a total of $1,000 per month on PITIA + CAPEX that gives me 10 years to run before my reserves are depleted. If the investments never appreciate at all, I've made $2M on my initial investment of roughly $40k at the end of 30 years. If the apocalypse comes and they lose 50% of their value over 30 years I'm still 11x my initial investment

@Jay Hinrichs

Hindsight is 20/20 right? Don’t beat yourself up too bad. It’s interesting how cash flow has become the main focus. Personally I wouldn’t get up in the morning for $100/door. I don’t need that kind of stress. I want to maximize my leverage to push my buying price higher. Ideally making it to $500k soon. Quick math there tells me that 2-3% appreciation to keep pace with inflation and $5k in principle pay down moves the needle $15-20k each year. I got my realtors license to tack another 3% on or $15k when I buy each prop. Nothing is perfect, but even at 0% appreciation that’s still $20k/yr every time I buy something at that price point. Now that’s an alarm clock!! It all hinges on putting enough from prop #1 away to create cash reserves to absorb any kind of vacancy or downturn. Part of me had even considered just cashing in on it now, taking my Queen off the table so to speak. Thoughts?

@Kris H. That’s obviously my biggest concern right now. I can carry for a while but unless I sell prop #1 I can’t handle more than 6 months with no renter in either rental. I don’t know a lot of new investors who could. With that said, what can I do to further hedge toward high cash flow to improve me reserve position that hasn’t been mentioned yet? Would welcome any tips!