All Forum Posts by: Zen Lenon

That's awesome @Alex Yee! Instead of your family managing your property, you could always hire a property manager :) Just delegate those responsibilities to professionals. Long interest list, hmm, I wonder which builders you have looked at? Did you check out the quick move-in options? They typically close much faster because builders need to sell these properties quickly. I actually just bought a new build myself, and it will be completed by the end of the year. However, they took my EMD a long time ago, around the end of March. So your pre-approval should be considered; they just pull a final credit report three months before your home is built so you can lock in the rates. Let me know if you need my help; I'm happy to make the deal you have now happen for you or if you want to see other deals, theres so many. I'm unsure if this is relevant, but I just helped Las Vegas investor purchase a new build up north, and it closed in approx. 45 days, then her home had to get completed, so we had time to shop around with 3 different lenders to find the best rates. Actually, now that I think about it, she signed the purchase agreement before she got qualified, so I'm curious if you have a good representation. Do you have an agent? It was a quick move-in as well. So both options, quick or new construction, should use your current pre-approval letters to move forward with an EMD, if you are ready, willing, and able, of course :)

Alright just let me know, I'm happy to help :)

Hi there @Will Costello, Pleasure to meet you on BP. 

Let's dig into some numbers to give you a clearer picture. I think this is how I understand your situation to be...

Cash Flow Analysis: 

Option 1: Total cash flow from stock growth: $38,915

Option 2: Total cash flow from rental income and stock growth: $72,610

Return on Investment (ROI): 

Option 1: Initial investment: $100,000 Gain: $56,915 ROI: ($56,915 / $100,000) x 100% = 56.9%

Option 2: Initial investment: $100,000 Gain: $72,610 ROI: ($72,610 / $100,000) x 100% = 72.6%

Break-Even Point: 

I don't have the numbers for growth rate, rental income growth rates, I do know your cash investment per month so I'll reverse engineer and pretend you get $300 cash flow per month instead :) oh and I don't have the timeframe so I'll just use your 5 year timeline, I'll also use the 22.7% growth rate in Las Vegas Rental market :) You can always plug in your actual growth based on your data points.

Option 1: Keep Investing Money Assuming an initial investment of $10,000 and a monthly cash flow of $300, after 5 years with a 6.6% annual growth rate, the total money from Option 1 would be approximately $16,605.

Option 2: Pay Off Rental + Invest Cash Flow With an increased monthly cash flow of $1,000 and assuming a steady annual rental income growth rate of 22.7%, after 5 years, the total money from Option 2 would be approximately $18,899.

Therefore, based on these calculations, Option 2 would catch up to Option 1 by the end of the 5th year.

Okay I am not a financial advisor/lender but that was a fun exercise. Please don't take my word for it and consult with a CPA/a financial expert :) Thanks for sharing. Always consider your risk tolerance- everyone is different-, your long-term goals, and the impact of those costs we intentionally removed and risks as well.

So if I had to make this decision today, I would focus on option 2. Choose the strategy and find ways to iterate and make it even better. Good luck and again nice to meet you!

Quote from @Eric Fernwood:

Hello @Branden Jordan,

Broad statements do not apply to specific markets. In this post, I will focus on the situation in Las Vegas.

2008 vs. Today

2008:

• 90 months of inventory
• The number of available jobs plummeted leaving a significant percentage without work.
• About all that was on the market were REO properties and short sales.

Today:

• 2.4 months of inventory and falling.
• Only a small percentage of Las Vegas properties purchased in 2022 or later are underwater.
• According to Monster and Glass Door, there are between 26,000 and 31,000 open jobs.
• The current number of distressed single-family homes (06/28/2023):
  • Bank Owned (REO): 12
  • Short Sale: 10
  • Foreclosure Stated: 13

I see no comparison between 2008 and today.

What are we seeing in the property segment we target? See the charts below.

Sales - Median $/SF by Month

Prices have continued their upward trend since January, driven by shrinking supply and steady demand. Year-over-year $/SF is down 9.8% due to a large increase in $/SF in April 2022.

Sales - List to Contract Days by Month

The median number of days on the market continues to drop rapidly. This indicates strong demand despite high-interest rates.

Sales - Availability by Month

This chart displays the average daily number of properties available for sale in a given month. The quantity of homes on the market is decreasing, which will drive up prices.

Sales - Months of Supply

The inventory is now less than one month, while a balanced market typically has a 6-month supply. Scarcity traditionally leads to an increase in prices.

Jobs

Jobs are the heartbeat of any city. Currently, Las Vegas has between 26,000 and 31,000 open jobs. There is between $18B and $26B for new projects under construction, which will create more jobs and bring more people to Las Vegas. And, more are coming.

Source: Thousands of California businesses have fled Golden State for Las Vegas

Conclusion

From what I can see and read, Las Vegas is currently performing well and is expected to continue improving in the future.

 Wow, @Eric Fernwood you go above and beyond! Thanks for sharing the stats and thank you for connecting with me over the weekend.

Oh sweet! I work with PMs, Engineers, and UX/UI Designers daily :) It sounds like we have a lot in common. Yes you are right! I checked out the multi fams out too but none resonated with me as much as the SFH. I think for fourplexes, I may have to check other markets :) Let the search begin.

Hey @Alex Yee, welcome to BP! It's awesome to have you here. I can see you're really excited about your new build and the endless possibilities it brings. By the way, I'm originally from SF too and piloted the tech exodus lol, making the move to Las Vegas back in 2018. It's been awesome exploring the possibilities out here!

Closing on a new construction project is such a cool experience. You get to enjoy upgraded designs and a sense of security. It's interesting that you've found prices comparable to resale properties and discovered some fantastic incentives from lenders and builders. Now, let's dive into the fun part and take a look at some calculations to showcase the potential benefits.

I've come across a few new builds that offer a 5.99% fixed 30-year rate if you use their preferred lenders and opt for quick move-ins. Let's say you're financing a property worth $300,000. With that interest rate, your monthly mortgage payment would be around $1,800. Just a heads up, these numbers are purely for demo purposes and may not accurately reflect current market conditions.

I do recommend shopping around with three different lenders. By requesting a soft inquiry instead of a hard inquiry, you managed to avoid any negative impacts on your credit score. Although the rates aren't locked yet, receiving pre-approval is a positive signal that you qualify for a mortgage. That's a great starting point!

Now, let's talk about your interest in rehabbing a property. It's always wise to exercise caution, especially considering the possibility of interest rates exceeding 10% in the near future. While the current rates hover around 7%, you're in a relatively 'okay' position. Have you considered an adjustable-rate mortgage (ARM) product? It might be worth exploring, along with factors such as the location of the property and whether it already has tenants. There's a lot to consider, and joining a Facebook group for landlords can provide valuable insights from experienced investors who share their daily experiences.

When it comes to the BRRRR method, finding a good deal is key. Off-market deals can be quite exciting! Keep an eye out for expired listings or properties that have been on the market for over six months. You can reach out to the listing agent to inquire about the reasons behind it. Once you gather more information, you can make an offer that makes sense for you. Minimizing financial risk can be achieved by involving investors in your venture. Luckily, there are plenty of investors in the Bay Area who might be interested. Their contributions can help cover expenses and increase your chances of success. As for me, if I were in your shoes, I'd prioritize conventional loans for my primary residence, plan to refinance once rates become more favorable, utilize a hybrid STR/house hacking approach for cash flow, and leverage a DSCR loan for future investment properties after building reserves and a network of investors. There is a Freddie Mac product that is a 7/6 ARM that my lender mentioned as being free (please verify this with your lender as well). We are in similar situations, so I have been doing research since February of 2023. Again, please double check with your lender, as I am not a financial advisor :)

You mentioned your goal of achieving positive cash flow within a year. Maybe you can cash flow right away with your new build? I'm from the Bay so I'm used to house hacking, I'm sure you know what I'm referring to. House hacking the new build is an excellent move to offset your mortgage costs. Let's paint a picture: your monthly mortgage payment is $1,800, and you can rent out two bedrooms for $950 each per month. With this setup, you effectively eliminate your monthly mortgage costs, allowing you to generate positive cash flow. Oh, and at my current property, I do charge $50 per month for storage. So, if you implement a similar strategy, you'd actually end up $200 ahead. Of course, this is a simplified scenario, and it's crucial to factor in additional costs such as HOA fees, taxes, insurance premiums, and other potential expenses like SID/LID or master plan fees. It's important to carefully consider all these elements in your calculations.

Best of luck with your endeavors, Alex! It's a pleasure to meet you, and welcome to BP!

 Hi @Josh Edelman - How exciting! I noticed that as well regarding LinkedIn and Facebook's user experiences versus BP's user interface. Thank you for sharing, and now I finally know how it works. I just got my license as well, so if you need help, let me know. I'm happy to assist you in obtaining your license. There's a ton of fees. This is the biggest curve ball for me. No one talked about all the fees. I've learned a few things that I'm sure you would find useful too. For instance, check out PrepAgent on YouTube. I learned a lot from him. He teaches you how to pass the exam, which can get tricky. In fact, I think they do that intentionally to confuse you during the exam. Here's his channel: PrepAgent - prep and pass the RE Exam channel

Congratulations on your properties! It seems like we're in a similar situation when it comes to building our portfolios. What have you observed in the Vegas market? Do you invest out of state too? As for me, I'm starting to research multi-family properties, but I found that single-family homes are easier to cashflow, at least that is the case for me :) 

Thanks again for your answers, and I'm excited to get to know you.

 Thank you @Bill B.! This is so helpful. Like this :) Appreciate your help and it's nice to meet you! 

Hello, everyone!

I found the YouTube channel to be quite valuable. Now, I'm taking the next step and would love to engage and collaborate with other investors. As a newcomer here, my first question is about best practices.

I tried connecting with a few like-minded investors and encountered an error or got blocked after the second connection. I was wondering if it's considered bad practice to connect in a similar way as on LinkedIn, for instance.

I also attempted to respond to a few posts and noticed that every time I submitted a post, it would jump to the very bottom of the page. Do you receive email notifications when someone responds to a post? This is why I'm posting now: I'd like to understand the user experience (UX) a bit more.

Finally, if I wanted to connect with first-time investors, what is the best way to do this? I would appreciate your advice and any insightful tips on how to navigate appropriately within this platform. I'm trying to learn slowly and steadily, so I'm so curious to learn from investors with fewer than 10 properties who connect, collaborate, and engage here.

Thank you so much, and happy Friday, everyone!

It's great to be here.

Sincerely,

Zen

Hey Katie, 

This doesn't sound ideal, and I'm sorry you are in that situation. 

I think your assessment is spot on, the cost and risk associated with Hurricane Ian have already put a significant dent in your finances, amounting to $10k out of pocket. With the potential for more storms predicted this summer, there's a genuine concern for further damage and financial loss. Selling the property would help you mitigate these risks and avoid additional costs. Your gut might be in the right place here.

If the current rental demand in the area is lower, it could be quite challenging to maintain consistent occupancy and rental income. By selling the property, you would be relieved of the responsibility of finding tenants and managing the property from a distance. This is the second reason why I'd sell too.

The Florida real estate market can be quite unpredictable, particularly given the current political climate. Selling now would allow you to take advantage of any value appreciation the property has experienced while avoiding potential market fluctuations and uncertainties. 

While furnishing the property and listing it as a short-term rental may seem like an option, your concerns about high insurance costs and the lack of nearby properties are valid. These factors can increase the risk involved and potentially lead to financial challenges if the short-term rental strategy doesn't pan out as expected.

Considering all these factors, selling the property could be a prudent decision to limit your financial exposure, reduce risk, and provide you with the flexibility to explore other investment opportunities. Based on all these points, it sounds like you already know what to do. I too would take the L and shift into preservation mode. Good luck with everything, I hope situations become more favorable for you. 

Hey Daniel, 

I'm sorry to hear about the unexpected life updates. I hope all works out. 

I really like the options you mentioned.

Teaming up with a local agent who knows the market inside and out is always a good thing. They'll guide you through the selling process, handle the paperwork, and provide valuable insights on whether selling your place fully furnished or unfurnished is the best approach. They can also share comprehensive comp reports that give you a clear idea of the current market value. Having good representation is crucial, especially when dealing with uncontrollable factors. It's a smart move to delegate those responsibilities and give yourself peace of mind.

Alternatively, you could consider leasing the property and hiring a trusted property manager to handle day-to-day operations. This way, you can continue generating income while you figure out your next steps. Delegating these logistics can be a relief, especially when unexpected curveballs come your way.

Now, let's talk about creative financing options. This could present an opportunity for a potential buyer to take advantage of your low rate, making your property an attractive proposition. This really intrigues me! Are you considering offering some kind of contingency or seller financing to allow buyers to benefit from your low rates?

By the way, I'm genuinely interested in your property! If you're open to it, I'd love to learn more about the property specs, see the STR listing, and hear any additional details you'd like to share. Keep me posted, and good luck with everything!