Future & the Availability of Rental Opportunities

Nef Ojeda · 2022-11-01T19:34:52-07:00

Hey BP members, My wife and I are diving into this world of Real Estate investing (single/multi-fam or house hack) and we are studying and cramming as much information as we can and naturally we have a few questions. For some context - we are within 3 to 6 months of crossing over to the right side of the quadrant. A few of our questions below:(1) How saturated is the market with what we perceive are many pursuing the same goal of REI?(2) Let's say our first crack at this REI works really well and we want to continue growing our portfolio, (which is our intention) will it be more difficult during these turbulent financial times for a newbie to build a strong and steady portfolio in comparison to past economical downturns?(3) When does one need to consider having an LLC?The questions above are coming from a perspective of individuals who are not investors yet are on that path. So if the questions above are a tad unclear or misplaced we will accept all constructive corrections and opinions or a better redirection of what we were trying to ask. Thanks for your time and any support and expertise you can give.:Nef:

Kit SerrellBusiness Member

Investor · Member since 2021 · 157 posts · 218 votes

3y

Hi Nef!

Congrats on your journey!

1. Depends on the market but there is enough pie to go around even in competitive markets where good deals are hard to find. If you have trouble getting started or scaling in your local market, you can always invest elsewhere.

2. "turbulent financial times" are never-ending and there isnt a perfect market or perfect time to buy. When rates were 2.5%, people didnt want to get started because there was "too much competition" and they "didnt want to overpay" and now the same people are saying they dont wont to get started because "rates are too high" or "I am going to wait until rates fall again" etc etc etc. My point is...there isnt the perfect time to buy....you just have to buy what makes sense today with the decision-making knowledge you have available. That being said - It is still a great time to get started... I just wouldnt get started with some luxury million-dollar airbnb and instead I would buy something more recession-proof (single family, multifamily, househack, etc)

3. If you buy a house or multifamily to househack, you cant put it in an LLC since you are buying it with a residential loan as a primary residence. DISCLAIMER: I am NOT a lawyer but my understanding is LLC's only offer one "layer" of protection and honestly a good insurance policy/commercial insurance policy with an umbrella liability policy will do you more good than an LLC will. The only people who win when you open up an LLC for every property is your lawyer, accountant, and the banks. Any lawyer will tell you that ultimately if you do something grossly negligent, malicious, etc it doesnt matter if you have an LLC or not - its bad news. I personally didnt start an LLC until I bought my 4th property.

1 Reply

Nef Ojeda

OP

Member since 2020 · 10 posts · 2 votes

3y

Hey Katherine, I truly appreciate your reply and your insight and recommendations.

There is so much to consider in this REI world. So many "experts" pitch REI is not truly difficult and anyone "can" do it. I believe this to be true in the general sense of the word but If I learned anything there is always more to the story. As optimistic as I am I know I must take a cautiously analytical approach. So, I am reading, learning and networking my way to building a strong foundation that will be instrumental in allowing my wife and I success. More over, I can't shake off my inner dialog saying things like: We can make it but so many are out there trying or already successful maybe we are too late?" or "Will I have learned enough to make the right decision when the times comes to get the first property?" or (my favorite) "is all this really worth it - will I actually be successful?". I know these thoughts are normal, this venture isn't something I'm used to. Naturally the brain is telling me not to do it, it will be hard work, it does not fit in our current life pattern. But, I am on a different path now and I don't see life the same anymore and financial freedom is on the forefront. As RK states ... the biggest challenge in moving from the left side of the quadrant to the right is ones mindset.

I hope this reply back isn't too exhaustive, I figured you put time and effort - so will I.

Again, thank you for your post.

:Nef:

0 Reply

David Friedman

Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes

3y

(1) With HGTV and other shows, it became cool to invest in real estate. Add to that all of the cash that is floating around due to stimulus and hedge funds buying with cash, I would say it was more competitive than I had ever seen until just recently. With interest rates pushing above 7% if you don't have cash, most deals on the market just don't pencil. We will see prices come down, but there are plenty of people on the sidelines waiting to get in. I think more importantly you should ask yourself, which niche of real estate do I want to get really good at? Then you can start to perfect running the numbers for those types of deals or finding better contractors for those types of deals. You want to create a competitive edge for yourself.

(2) Anybody who tries to answer this question without saying "It depends" is just lying to you. You could buy a property tomorrow and the FED might raise interest rates by another 2 percent. Or the government could give out $2,000 more in stimulus checks. It's hard to say. You can make deals happen in any kind of market, up or down. It's a numbers game. If you try to predict too far out you will sit on the sidelines. If you think the market will get better in a year or two, then find a desperate seller and negotiate a deal that you can profit on today.

(3) Not sure if this is allowed in your state (I am in California). I would create your first LLC when you are in escrow on your first deal. Make offers like this: "Nef Ojeda or assignee." Then you can assign the contract to your LLC or you can even wholesale the deal to another investor if you want.

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Nate Sanow

Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes

3y

There’s a lot here to unpack and others covered it well, I’ll just chime in to encourage you towards an abundance mindset, particularly while in this phase of research. There are and always will be deals, and opportunities to invest.

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Nef Ojeda

OP

Member since 2020 · 10 posts · 2 votes

3y

Much appreciate the replies. They are not taken for granted. Enjoy your the rest of your week.

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Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

3y

It's easier now than it was the last 10 years to get yourself in an investment property. Values are plateauing and the ball is in the buyers court. You can always give excuses on why it's a bad time to buy. If you find the right deal theres no need to overanalyze

0 Reply

Nef Ojeda

OP

Member since 2020 · 10 posts · 2 votes

3y

@Eliott Elias: I totally agree - If a property is a good deal today, today is the day to take advantage of it. I'm currently focusing on learning on how analyze a property to know if that particular property is worth the investment or not.

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Future & the Availability of Rental Opportunities

Future & the Availability of Rental Opportunities

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