Newbie investor looking for advice on a deal

[Will M.]

Hello,

I'm currently looking at a new build townhome in Las Vegas (Inspirada in Henderson, actually.) 

The house is around $330K. It's looking like monthly expenses (including mortgage) will be around $2K per month and rental comps are right around $2100. I'm planning on holding for 10-15 years for retirement so I don't need a ton of cash flow in the near term. Hoping it appreciates while someone else pays down the mortgage. 

As I'm a newbie, I'm sure I'm missing some (probably several) things when analyzing this deal. So, does anyone have any quick tips or advice on if I should move forward? Or, what else I need to know before moving forward? 

Thanks in advance 

[Bill B.]

You can’t ask me. I don’t believe in investing for cashflow if you NEED the cashflow. One broken appliance means no cash flow. One month’s vacancy or lack of payment for a month, an eviction, the make ready and then more vacancy, there’s a couple years of cashflow, maybe more. 

One of my best investments was negative $800/mo cashflow until it was paid off. They all provide massive cashflow over time, but if positive $200 or negative$200 determines if you can afford a deal, I don’t think you can afford a deal. 

Think of it this way. If you break exactly even with 20% down for 30 years. And you get 5% appreciation. Your property will double twice by the time you pay it off. That’s 2000%. But if you’re breaking even at the beginning, by year 15 your rent has doubled by year 30 it too has quadrupled. You won’t just be breaking even after 5-10 years. To me these are retirement accounts. Your 401k doesn’t cashflow and yet every expert will tell you that you need one. There is no easier way to retire than buy and hold quality homes, especially in states with no income tax, low property tax, cheap insurance, almost zero exterior maintenance, and no weather events. 

In 13 years I turned $305k into almost $5million in real estate equity, producing $250k/yr in income by buying a rental and a new primary every year for 6 years. That's 12 properties. No buying and selling, no flipping, heck, not even by buying beat up unwanted properties. These were all on the MLS bought with a realtor. That's with a PM that allows me to spend less than an hour a month working on my rentals. And this was done before BP, podcasts, and all the free help that comes with it. I didn't know ANYONE that owned 1 rental, or even 2 homes. I was just sick in my stock portfolio going up and down outside of my control. Sometimes more in a day than I'd make working for 3 months. I never made more than $60k working and wouldn't have had health insurance if I hadn't married a nurse. If I can do it, literally anyone is smart enough to do it. Unless that 2 year degree I got at the community college in just e or 4 years was really the difference. Floor hockey, bowling, and so on.