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Overleveraged Advice Please Help
Hi, I was hesitant about writing this but want anyone out there that can help. Please give me any tips or advice. I rather sleep peacefully at night. I could use the criticism and just want to not worry every month about vacancies, repairs, tenant not paying rent, etc.
I have a portfolio of about 12 rental properties. They all are rented but one. However, what stresses me out and makes it hard to sleep at night is the 8 properties that are under 1 blanket loan. Its a 7k payment that includes mortgage, taxes, and insurance. Though, what I have noticed, is with 1 vacancy and especially 2 I am in the red and usually have to use my nest egg to get by for 2-3 months. I did the blanket loan because I had too many repairs that piled up over the course of 2 years and so I refinance to pay all that debt off but now feel like my numbers are very tight. I have 12 properties but only cash flow $2000-2200 and that's saying they are all rented with minimal repairs. Which most of them have been fixed up by now to not have problems, but you know stuff will come up. My problem was every time I did a cash out refi or had 30-40k I would go buy another property to expand but never kept a nest egg. Right now I only have a nest egg of about 25k. When I think it should about around 60k.
Technically they cash flow $3000 if you take the $800 in property management off my monthly sheet. But that would be difficult for me to manage as I have a day job. I mean I could but I feel like that would be more headache than it is worth. Ideally I feel like I should be cash flowing 3000-4500 which is about 350 a property or so. I get upset at myself lately cause I have a really good credit score and am a numbers guy. Just I have friends that have 2-3 STRs or LTRS and they cash flow around $2000-5000 on just 3 STRs. I don't mind selling some but it stinks because with the refinance there is a sell off price with the new lender and that won't make me cash out much more likely break even. Please give me any advice so that I can make sure I am moving in the right direction before it could possibly be a massive problem in 6 months if there were to be 2 vacancies or non payment of tenants. Send me your email and I can send the portfolio.
1.Should I keep grinding it out and build some equity? Pray no vacancies or repairs.
2. Sell 4-5 properties (likely break even) and feel good about 5 strong properties that have minimal repairs?
3. Sell just 3 and buy a STR that could help the portfolio balance out with its cash flow?
4. Other option?
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @Michael Sloan:
@Nathan Frost you’re talking about taking on more debt to provide a cushion.
You can obviously save money with your job. Otherwise you wouldn’t have a portfolio this big.
Self fund your reserves with savings and the cash flows
I don't get it.
Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?.......
You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months? The first 1-4yr is the grind-time.
If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.
I get the feeling that you already made your decision and did this whole post just looking for validation.
NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach....
The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go.
And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious.
At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.
And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......
I mean I am still in a good spot when sell 3. Creates a nest egg of 60 to 80k. Then can stash it away or put in index fund as the nest egg for next 20 years.
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
Honestly, probably the best advice on here. Not to hate on others. Just seems like the best approach.
Honestly, probably the best advice on here. Not to hate on others. Just seems like the best approach.
Quote from @Brian Kloft:
Honestly, probably the best advice on here. Not to hate on others. Just seems like the best approach.
#4 All Forums Contributor
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- Lake Oswego OR Summerlin, NV
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#4 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
I have been making this same point on BP for the 10 years I have been here. However pretty much get shouted down by the refi till you die crowd max leveage get as many doors etc etc.
With low value assets.. ( to me thats 150 or so and under) paying those off as soon as possible for long term hold I think is a smart play..
Quote from @Jay Hinrichs:
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
I have been making this same point on BP for the 10 years I have been here. However pretty much get shouted down by the refi till you die crowd max leveage get as many doors etc etc.
With low value assets.. ( to me thats 150 or so and under) paying those off as soon as possible for long term hold I think is a smart play..
#4 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
- 61,602
- Votes |
- 41,803
- Posts
#4 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
Quote from @Nathan Frost:
Quote from @Jay Hinrichs:
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
I have been making this same point on BP for the 10 years I have been here. However pretty much get shouted down by the refi till you die crowd max leveage get as many doors etc etc.
With low value assets.. ( to me thats 150 or so and under) paying those off as soon as possible for long term hold I think is a smart play..
to me have enough cash to do these things without having to tap into equity.. snow ball your mortgages after keeping healthy reserves its not like making a few hundred bucks a month is going to change your living standards so dont take a dime out of the properties focus on one and pay it off.. Of course DSCR loans cut both ways they are bad for those that want to pay off debt in the first 5 years.. they are bad for those that want to sell some units off etc etc.. things that get glossed over when your taking out the loan but then have to live with after the fact.. things change and now your locked into bad terms..
Quote from @Jay Hinrichs:
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
I have been making this same point on BP for the 10 years I have been here. However pretty much get shouted down by the refi till you die crowd max leveage get as many doors etc etc.
With low value assets.. ( to me thats 150 or so and under) paying those off as soon as possible for long term hold I think is a smart play..
Good to hear that there is someone else on here that isn't all for the refi till you die idea.
Quote from @Jay Hinrichs:
Quote from @Nathan Frost:
Quote from @Jay Hinrichs:
Quote from @Brian Kloft:
@Nathan Frost First I did not read every response but I am going to give you my answers since I tend to be of a different philosophy than most on here when it comes to debt. We have a very low debt level on our properties so we have a high cash flow and don't lose sleep over making payments or if a tenant is going to pay or not. We just had to pay $60k for 3 renovations at the end of the year and a roof is coming up next month. It drained our reserves for the property but it has been growing fast again. Your problem is what all of the people that keep saying to refi and buy more, refi and buy more, don't talk about. They think it is low risk because they have zero equity, but they never factor in the risk or the stress of having it all collapse on you; which you are starting to realize.
First, stop buying. You need to build up a much much bigger reserve for your properties. With that high of debt, $60k is not enough let alone the $25k that you have. You have 12 properties. You need to focus on stabilization and optimization now. Every penny you make from the properties needs to go into reserves to build it up. If you have any extra money from your W2 job at the end of the month, set that aside for a secondary reserve as well. Build up that war chest. If you wanted to sell a property because you don't like it, that is fine, just put all you make into your reserves. However from what I saw it looked like all you are going to get from all but one property is $10k per property or less. If you can go a year without any issues then that will add another $24k to your reserves, bringing it up to $49k. That should give you a little breathing room, even though it should be higher.
I challenge you to look at your investments in a different way. Imagine how it would be if you owned all of your properties free and clear. No Loans. In current dollars, how much would you be making. Would you be very happy with that? It is a lot easier to deal with 12 properties that are paid for than to deal with 48 or more properties that have heavy debt on them. Also how much are they worth and what would that look like if they were all paid off? If you want to have more income and more net worth than what the 12 can provide you, even if paid off, that is fine. Just take a break from buying and get yourself on solid ground. Get your debt paid down so that you have some cushion if you need it. You don't want to have to sell 4 or 5 properties just to pay for some big problem when having $60k+ in the bank would do that and you would still have your properties. Build up your reserves to $140k+ and if you are in a better place then you can take $40k and buy another property, but you will have that $100k reserve to help you weather any storms.
Like I said, my approach is just about the opposite of everyone on here, but I can tell you that two of my paid for renovated units cash flow more than your 12 units do and I don't worry about making any of our payments and managing 2 units is way easier than 12. Even my "high" debt property I could sell for cheap and fast and still come away with a lot of money to cover any huge issue because it is not leveraged at 70%+ of the value. I am not against debt, just high debt to value ratios.
I have been making this same point on BP for the 10 years I have been here. However pretty much get shouted down by the refi till you die crowd max leveage get as many doors etc etc.
With low value assets.. ( to me thats 150 or so and under) paying those off as soon as possible for long term hold I think is a smart play..
to me have enough cash to do these things without having to tap into equity.. snow ball your mortgages after keeping healthy reserves its not like making a few hundred bucks a month is going to change your living standards so dont take a dime out of the properties focus on one and pay it off.. Of course DSCR loans cut both ways they are bad for those that want to pay off debt in the first 5 years.. they are bad for those that want to sell some units off etc etc.. things that get glossed over when your taking out the loan but then have to live with after the fact.. things change and now your locked into bad terms..
Makes sense. So best to hold tight during the pre payment penalty and snowball 1 house then the next?
@Nathan Frost are there any of them that stick out as a pain but also have some equity? I've always been a fan of selling the losers every so often.
Also 12 properties is totally manageable if you have good systems. I would fire the PM, suck it up and right the ship. Sell 1 or 2 of your problem properties and make sure you have $60-100k in the bank.
Do it now, don't wait!
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Real Estate Agent Texas (#727530)
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- [email protected]
Quote from @Jordan Moorhead:
@Nathan Frost are there any of them that stick out as a pain but also have some equity? I've always been a fan of selling the losers every so often.
Also 12 properties is totally manageable if you have good systems. I would fire the PM, suck it up and right the ship. Sell 1 or 2 of your problem properties and make sure you have $60-100k in the bank.
Do it now, don't wait!
Agree do it now. Why I reached out. I have 12 but am selling 2. Should give me 60-70k nest egg. I really don't have any that stand out. I did big repairs the last 2 years on 3 of them. I feel now they are all solid. Just minor repairs here and there. I am thinking of cutting ties with the PM. I might see how it goes till their contract expires December 2024. They slow with stuff, I mean, I have a day job so could be difficult. But they let stuff sit vacant for 2 months when I can get them rented in 2 weeks. They wait for a property "to be ready to show" before they list it. Me on there end, once I know its vacant I list it and say it will be ready on this date. I'll see how the next few months go with them but I am selling 2 currently and that could really put me in a good spot. I might only be cash flowing at 100% occupancy at $1500 which for 10 is not good but I'll have a nest egg that could last a long time. I just don't want to be dabbling at the nest egg for 1-5 years and it not make sense. I rather be cash flowing at 3k-5k where if there is 3 vacancies I can still survive.
Hey @Nathan Frost! I would run the numbers for ALL properties and specifically look at your return on equity to help guide the decision for each property.
Here is what I suggest that you do:
1. Analyze individual investments - dive into each property. How is it performing? Would you buy this rental again today?
2. Model Scenarios to Explore Opportunities - WHAT IF scenarios! Explore other investments and scenarios. What's the opportunity cost with the current equity?
3. Create / update your portfolio architecture action plan - Write it down.2) Focus on your return on equity. ROE is a great metric to look at because it takes into consideration your current returns compared to current market value. I'll send you a video on how to evaluate this metric. It's not talked about enough and VERY important when analyzing a portfolio.
Quote from @Nathan Frost:
Quote from @Stuart Udis:
@Nathan FrostLet me pose this question to you: What is the upside to continuing to "grind" as you describe it? From what I've gathered the properties will not begin to cash flow significantly better, you are in a market that cannot easily absorb unexpected capital expenditures (greater risk to you in the future) and the principal paydown is pretty meaningless for a while. If you agree with this, aren't you better off selling, recapitalizing yourself and focusing on better opportunities armed with the relationships and knowledge you now possess? I sense you have an emotional attachment to this portfolio because it likely took time and effort to assemble and this keeps you holding on.
Yes, my first ever LTR is in the portfolio that I personally rehabbed myself. But honestly I am over the personal attachment now that I am older and wiser. I rather sleep comfortable at night than worry about the next 7k payment / vacancy. I definitely am smarter now and have way better knowledge. And yes, you are correct. These properties will pretty much rent at the same price for the next 5-10 years unless I updated a few of the bathrooms and AC units. I might break even but I think it is smart to sell 3-4 of them and move on. The last 2-3 I have acquired in my portfolio are my best cash flowing properties because I have learned over the years how to calculate a deal better than I did when I started with these.
It sounds like you have answered your own question. It makes sense to sell the worst performers, bulk up your reserves for the remaining properties, and then use your returned capital for something else.
I started walking down the same road - buying smaller residential properties by myself. I learned the same thing: A lot of hassle for a little bit of profit. I'm also liquidating that (smaller) portfolio and have pivoted to larger properties.
Happy to talk 1:1 if you'd like.
Quote from @Louisa Davis:
Quote from @Nathan Frost:
Quote from @Stuart Udis:
@Nathan FrostLet me pose this question to you: What is the upside to continuing to "grind" as you describe it? From what I've gathered the properties will not begin to cash flow significantly better, you are in a market that cannot easily absorb unexpected capital expenditures (greater risk to you in the future) and the principal paydown is pretty meaningless for a while. If you agree with this, aren't you better off selling, recapitalizing yourself and focusing on better opportunities armed with the relationships and knowledge you now possess? I sense you have an emotional attachment to this portfolio because it likely took time and effort to assemble and this keeps you holding on.
Yes, my first ever LTR is in the portfolio that I personally rehabbed myself. But honestly I am over the personal attachment now that I am older and wiser. I rather sleep comfortable at night than worry about the next 7k payment / vacancy. I definitely am smarter now and have way better knowledge. And yes, you are correct. These properties will pretty much rent at the same price for the next 5-10 years unless I updated a few of the bathrooms and AC units. I might break even but I think it is smart to sell 3-4 of them and move on. The last 2-3 I have acquired in my portfolio are my best cash flowing properties because I have learned over the years how to calculate a deal better than I did when I started with these.
It sounds like you have answered your own question. It makes sense to sell the worst performers, bulk up your reserves for the remaining properties, and then use your returned capital for something else.
I started walking down the same road - buying smaller residential properties by myself. I learned the same thing: A lot of hassle for a little bit of profit. I'm also liquidating that (smaller) portfolio and have pivoted to larger properties.
Happy to talk 1:1 if you'd like.
Will do
1. Do away with the manager and go to self-manage. Start your leasing with your vacant unit. That will put another whole month's rent in your pocket instead of the manager's.
2. Review your budgeting and projections to ensure you have a line item for major repairs. This is called CapEx. You take every item that will need replacement at some point - water heater, AC, heat, appliances, windows, roof, etc. Divide it's cost by it's useful life in months and this is the amount you should be putting aside each month for when the repairs come up.
I would not go through all the pain of stabilizing the properties, catching up deferred maintenance to sell and break even.
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Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @Michael Sloan:
@Nathan Frost you’re talking about taking on more debt to provide a cushion.
You can obviously save money with your job. Otherwise you wouldn’t have a portfolio this big.
Self fund your reserves with savings and the cash flows
I don't get it.
Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?.......
You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months? The first 1-4yr is the grind-time.
If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.
I get the feeling that you already made your decision and did this whole post just looking for validation.
NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach....
The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go.
And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious.
At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.
And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......
I mean I am still in a good spot when sell 3. Creates a nest egg of 60 to 80k. Then can stash it away or put in index fund as the nest egg for next 20 years.
Ok, so you're arrogantly ignorant, got-that.
I find it interesting your style of confidently assuming the future, then impulsivity based on that assumption. Do you see the lack of fact/data based decision making here?
You say that you had an assumption of the future, so you didn't just hedge for that, you completely changed everything and went ballz-out on things. I read here that your doing the same thing again; assumptions of the future and making rash significant actions per.
It's funny your use of Pace as the comfort-excuse that it's ok to be rash, impulsive, assumption, because it's "learning". Because yup, Pace's 1st several business went under and, he didn't do them again. He learned from it all and ADJUSTED. That's what I suggested you consider, an ADJUSTED measure of doing REI.
But as started, clearly you're happy to be in the arrogantly-ignorant club, fly that flag, wear the jacket, and by all means exercise your freedoms to do so. But let's not kid ourselves into some BS lie that it's "learning". When arrogance is in charge, there is no learning being done, none.
If you keep on this path of fear based assumptive emotional decision making, it's gonna burn ya. Fair warning.
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @Michael Sloan:
@Nathan Frost you’re talking about taking on more debt to provide a cushion.
You can obviously save money with your job. Otherwise you wouldn’t have a portfolio this big.
Self fund your reserves with savings and the cash flows
I don't get it.
Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?.......
You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months? The first 1-4yr is the grind-time.
If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.
I get the feeling that you already made your decision and did this whole post just looking for validation.
NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach....
The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go.
And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious.
At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.
And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......
I mean I am still in a good spot when sell 3. Creates a nest egg of 60 to 80k. Then can stash it away or put in index fund as the nest egg for next 20 years.
Ok, so you're arrogantly ignorant, got-that.
I find it interesting your style of confidently assuming the future, then impulsivity based on that assumption. Do you see the lack of fact/data based decision making here?
You say that you had an assumption of the future, so you didn't just hedge for that, you completely changed everything and went ballz-out on things. I read here that your doing the same thing again; assumptions of the future and making rash significant actions per.
It's funny your use of Pace as the comfort-excuse that it's ok to be rash, impulsive, assumption, because it's "learning". Because yup, Pace's 1st several business went under and, he didn't do them again. He learned from it all and ADJUSTED. That's what I suggested you consider, an ADJUSTED measure of doing REI.
But as started, clearly you're happy to be in the arrogantly-ignorant club, fly that flag, wear the jacket, and by all means exercise your freedoms to do so. But let's not kid ourselves into some BS lie that it's "learning". When arrogance is in charge, there is no learning being done, none.
If you keep on this path of fear based assumptive emotional decision making, it's gonna burn ya. Fair warning.
Get it. What do you suggest then? Data. I have the spreadsheet.
Quote from @Nathan Frost:
Hi, I was hesitant about writing this but want anyone out there that can help. Please give me any tips or advice. I rather sleep peacefully at night. I could use the criticism and just want to not worry every month about vacancies, repairs, tenant not paying rent, etc.
I have a portfolio of about 12 rental properties. They all are rented but one. However, what stresses me out and makes it hard to sleep at night is the 8 properties that are under 1 blanket loan. Its a 7k payment that includes mortgage, taxes, and insurance. Though, what I have noticed, is with 1 vacancy and especially 2 I am in the red and usually have to use my nest egg to get by for 2-3 months. I did the blanket loan because I had too many repairs that piled up over the course of 2 years and so I refinance to pay all that debt off but now feel like my numbers are very tight. I have 12 properties but only cash flow $2000-2200 and that's saying they are all rented with minimal repairs. Which most of them have been fixed up by now to not have problems, but you know stuff will come up. My problem was every time I did a cash out refi or had 30-40k I would go buy another property to expand but never kept a nest egg. Right now I only have a nest egg of about 25k. When I think it should about around 60k.
Technically they cash flow $3000 if you take the $800 in property management off my monthly sheet. But that would be difficult for me to manage as I have a day job. I mean I could but I feel like that would be more headache than it is worth. Ideally I feel like I should be cash flowing 3000-4500 which is about 350 a property or so. I get upset at myself lately cause I have a really good credit score and am a numbers guy. Just I have friends that have 2-3 STRs or LTRS and they cash flow around $2000-5000 on just 3 STRs. I don't mind selling some but it stinks because with the refinance there is a sell off price with the new lender and that won't make me cash out much more likely break even. Please give me any advice so that I can make sure I am moving in the right direction before it could possibly be a massive problem in 6 months if there were to be 2 vacancies or non payment of tenants. Send me your email and I can send the portfolio.
1.Should I keep grinding it out and build some equity? Pray no vacancies or repairs.
2. Sell 4-5 properties (likely break even) and feel good about 5 strong properties that have minimal repairs?
3. Sell just 3 and buy a STR that could help the portfolio balance out with its cash flow?
4. Other option?
You can refinance some of the debt with an interest-only loan. You would not be paying down the principal amount of the loan for a while, but it would put you in a better spot for cash flow.
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Quote from @Tanner Lewis:
Quote from @Nathan Frost:
Hi, I was hesitant about writing this but want anyone out there that can help. Please give me any tips or advice. I rather sleep peacefully at night. I could use the criticism and just want to not worry every month about vacancies, repairs, tenant not paying rent, etc.
I have a portfolio of about 12 rental properties. They all are rented but one. However, what stresses me out and makes it hard to sleep at night is the 8 properties that are under 1 blanket loan. Its a 7k payment that includes mortgage, taxes, and insurance. Though, what I have noticed, is with 1 vacancy and especially 2 I am in the red and usually have to use my nest egg to get by for 2-3 months. I did the blanket loan because I had too many repairs that piled up over the course of 2 years and so I refinance to pay all that debt off but now feel like my numbers are very tight. I have 12 properties but only cash flow $2000-2200 and that's saying they are all rented with minimal repairs. Which most of them have been fixed up by now to not have problems, but you know stuff will come up. My problem was every time I did a cash out refi or had 30-40k I would go buy another property to expand but never kept a nest egg. Right now I only have a nest egg of about 25k. When I think it should about around 60k.
Technically they cash flow $3000 if you take the $800 in property management off my monthly sheet. But that would be difficult for me to manage as I have a day job. I mean I could but I feel like that would be more headache than it is worth. Ideally I feel like I should be cash flowing 3000-4500 which is about 350 a property or so. I get upset at myself lately cause I have a really good credit score and am a numbers guy. Just I have friends that have 2-3 STRs or LTRS and they cash flow around $2000-5000 on just 3 STRs. I don't mind selling some but it stinks because with the refinance there is a sell off price with the new lender and that won't make me cash out much more likely break even. Please give me any advice so that I can make sure I am moving in the right direction before it could possibly be a massive problem in 6 months if there were to be 2 vacancies or non payment of tenants. Send me your email and I can send the portfolio.
1.Should I keep grinding it out and build some equity? Pray no vacancies or repairs.
2. Sell 4-5 properties (likely break even) and feel good about 5 strong properties that have minimal repairs?
3. Sell just 3 and buy a STR that could help the portfolio balance out with its cash flow?
4. Other option?
You can refinance some of the debt with an interest-only loan. You would not be paying down the principal amount of the loan for a while, but it would put you in a better spot for cash flow.
he got roped into a DSCR loan and has pre payment penalties plus the cost of doing a new loan that would just bury him further.
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Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @Michael Sloan:
@Nathan Frost you’re talking about taking on more debt to provide a cushion.
You can obviously save money with your job. Otherwise you wouldn’t have a portfolio this big.
Self fund your reserves with savings and the cash flows
I don't get it.
Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?.......
You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months? The first 1-4yr is the grind-time.
If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.
I get the feeling that you already made your decision and did this whole post just looking for validation.
NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach....
The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go.
And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious.
At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.
And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......
I mean I am still in a good spot when sell 3. Creates a nest egg of 60 to 80k. Then can stash it away or put in index fund as the nest egg for next 20 years.
Ok, so you're arrogantly ignorant, got-that.
I find it interesting your style of confidently assuming the future, then impulsivity based on that assumption. Do you see the lack of fact/data based decision making here?
You say that you had an assumption of the future, so you didn't just hedge for that, you completely changed everything and went ballz-out on things. I read here that your doing the same thing again; assumptions of the future and making rash significant actions per.
It's funny your use of Pace as the comfort-excuse that it's ok to be rash, impulsive, assumption, because it's "learning". Because yup, Pace's 1st several business went under and, he didn't do them again. He learned from it all and ADJUSTED. That's what I suggested you consider, an ADJUSTED measure of doing REI.
But as started, clearly you're happy to be in the arrogantly-ignorant club, fly that flag, wear the jacket, and by all means exercise your freedoms to do so. But let's not kid ourselves into some BS lie that it's "learning". When arrogance is in charge, there is no learning being done, none.
If you keep on this path of fear based assumptive emotional decision making, it's gonna burn ya. Fair warning.
Get it. What do you suggest then? Data. I have the spreadsheet.
2-parts:
First, take a big step back from things with properties, clear head, go golfing, fishing, whatever just "clear the deck" of everything. Then, when clear, come at it fresh BUT with a focus that your going to do all things, answer all questions, all "feelings" with MATH. That your going to see what MATH has to say on it all.
So, your going to have to get accurate with what the math says, of what the properties themselves are now. As i said before, I have heard nothing of where your Cap-Ex stands. So, do an accurate analysis of where Cap-Ex stands.
Next, get math of where property and market rent appreciation projects out as for next 1,3,5yr window. NO, this is not a "feeling" based thing, it's DATA driven. If unsure how, lookup local chapters of MFH landlord associations, they are champions of this and may find data from them. Yes, they do different assets but the market data will have a lot of cross over. City Data is another resource. You need to sort out Supply-Demand curve.
Now if done right, your going to have all this data compiled, your going to have an idea of market direction, of what the future will hold. And, most importantly, what the #'s REALLY look like on those properties. Way WAY too often people get into "cheap" properties only to find they are very VERY maintenance expensive, ticking maintenance bombs.
LAST PART, don't just knee-jerk "ok, SELL", no, IF the math says "sell" REPEAT this fact/data finding mission to answer the question of how to BEST sell, for MAXIMUM ROI. All this talk of relying on PM's and others to peg an as-is now-Now-NOW sale..... that's just bonkers.
What is the MATH of how to BEST sell? Is it retail at vacancy? Is it via a terms offering retail? Is it maybe offering a terms purchase to existing tenants here-n-now???? There is so many variables and potentials in selling, net-0 is NOT an "Investors" action or journey.
2nd-Part; Explore the other ways to REI because I got a funny feeling there is a different segment of the industry that would serve a better fit for yourself.
Honestly, these issues you've aired, a cold-blooded "Landlord" wouldn't loose a wink of sleep over. These are for most part what one would call "good problems". Don't believe me, oh-man, just wait until you have REAL Landlord problems, like evicting a tenant because there meth-fueled adult-child moved in and is rapidly destroying the place, only to get it all done over months and receive back a human-feces painted home, copper stripped, destroyed everything...... Or, or, or.... It get's a LOT uglier then what's keeping you up at night, oh-so-much uglier.
If what you've detailed has been keeping you up with worry, I can't imagine the wreck you'd be dealing with a tenant nightmare.
SO as said, I get feeling your NOT cut-out for this specific iteration of REI. Which is a-ok, there is a lot of other ways to do REI, it's not a 1-strategy-fit's-all thing. And forcing it, that's a setup for real hardships to come. Because eventually you WILL have a tenant nightmare, it is the law of averages, do landlording long enough and it WILL happen, not if but when.
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Quote from @Jay Hinrichs:
Quote from @Tanner Lewis:
Quote from @Nathan Frost:
Hi, I was hesitant about writing this but want anyone out there that can help. Please give me any tips or advice. I rather sleep peacefully at night. I could use the criticism and just want to not worry every month about vacancies, repairs, tenant not paying rent, etc.
I have a portfolio of about 12 rental properties. They all are rented but one. However, what stresses me out and makes it hard to sleep at night is the 8 properties that are under 1 blanket loan. Its a 7k payment that includes mortgage, taxes, and insurance. Though, what I have noticed, is with 1 vacancy and especially 2 I am in the red and usually have to use my nest egg to get by for 2-3 months. I did the blanket loan because I had too many repairs that piled up over the course of 2 years and so I refinance to pay all that debt off but now feel like my numbers are very tight. I have 12 properties but only cash flow $2000-2200 and that's saying they are all rented with minimal repairs. Which most of them have been fixed up by now to not have problems, but you know stuff will come up. My problem was every time I did a cash out refi or had 30-40k I would go buy another property to expand but never kept a nest egg. Right now I only have a nest egg of about 25k. When I think it should about around 60k.
Technically they cash flow $3000 if you take the $800 in property management off my monthly sheet. But that would be difficult for me to manage as I have a day job. I mean I could but I feel like that would be more headache than it is worth. Ideally I feel like I should be cash flowing 3000-4500 which is about 350 a property or so. I get upset at myself lately cause I have a really good credit score and am a numbers guy. Just I have friends that have 2-3 STRs or LTRS and they cash flow around $2000-5000 on just 3 STRs. I don't mind selling some but it stinks because with the refinance there is a sell off price with the new lender and that won't make me cash out much more likely break even. Please give me any advice so that I can make sure I am moving in the right direction before it could possibly be a massive problem in 6 months if there were to be 2 vacancies or non payment of tenants. Send me your email and I can send the portfolio.
1.Should I keep grinding it out and build some equity? Pray no vacancies or repairs.
2. Sell 4-5 properties (likely break even) and feel good about 5 strong properties that have minimal repairs?
3. Sell just 3 and buy a STR that could help the portfolio balance out with its cash flow?
4. Other option?
You can refinance some of the debt with an interest-only loan. You would not be paying down the principal amount of the loan for a while, but it would put you in a better spot for cash flow.
he got roped into a DSCR loan and has pre payment penalties plus the cost of doing a new loan that would just bury him further.
I don't know why so many are missing this SIGNIFICANT added cost to things.
More expenses, more debt, more $-cost's is NOT the answer.
But transferring liabilities could be. Maybe. Hard to say without the data.
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @James Hamling:
Quote from @Nathan Frost:
Quote from @Michael Sloan:
@Nathan Frost you’re talking about taking on more debt to provide a cushion.
You can obviously save money with your job. Otherwise you wouldn’t have a portfolio this big.
Self fund your reserves with savings and the cash flows
I don't get it.
Why did you buy all these properties and ramp up so quickly just to freak out over what-if, what-if, what-if?.......
You clearly were on an acquisition BLITZ. Did you honestly expect a moon-shot of rents or appreciation within months? The first 1-4yr is the grind-time.
If your thinking sell a few and like magic what's left turns great, your delusional. You'll have same issue but at a different portfolio size, that's it. You've been pretty clear that ALL of your properties are "meah" performers.
I get the feeling that you already made your decision and did this whole post just looking for validation.
NO, borrowing more $ is DUMB! Taking out MORE debt, with MORE cost of debt is like saying you got 2nd degree burn so let's go to the beach....
The cheapest bail-out $ is a PARTNER, not loans. Selling 10% equity stake in portfolio injects cash at 0% rate, right. No, not ideal but your talking "what-if" for worst case scenarios, well there ya go.
And don't be dumb DON'T sell em with tenant in, wait for move-out THEN sell em to get FULL retail, that's just simple basic stuff, i don't know why I have to call out the blatantly obvious.
At this point Nathan, I have a pretty good felling that your NOT cut-out to be a landlord and arguably, should sell 100% of your portfolio. Yup, do it smart, as tenant's vacate, but I think your in the WRONG segment of REI. If something this simple and NON-panic is panicking you to loose sleep, your int he wrong business bud.
And that's ok. Landlording is NOT the only way to REI, not by a long shot. Maybe mini-storage is more your flavor, or maybe being a private $ lender, or, or, or.......
I mean I am still in a good spot when sell 3. Creates a nest egg of 60 to 80k. Then can stash it away or put in index fund as the nest egg for next 20 years.
Ok, so you're arrogantly ignorant, got-that.
I find it interesting your style of confidently assuming the future, then impulsivity based on that assumption. Do you see the lack of fact/data based decision making here?
You say that you had an assumption of the future, so you didn't just hedge for that, you completely changed everything and went ballz-out on things. I read here that your doing the same thing again; assumptions of the future and making rash significant actions per.
It's funny your use of Pace as the comfort-excuse that it's ok to be rash, impulsive, assumption, because it's "learning". Because yup, Pace's 1st several business went under and, he didn't do them again. He learned from it all and ADJUSTED. That's what I suggested you consider, an ADJUSTED measure of doing REI.
But as started, clearly you're happy to be in the arrogantly-ignorant club, fly that flag, wear the jacket, and by all means exercise your freedoms to do so. But let's not kid ourselves into some BS lie that it's "learning". When arrogance is in charge, there is no learning being done, none.
If you keep on this path of fear based assumptive emotional decision making, it's gonna burn ya. Fair warning.
Get it. What do you suggest then? Data. I have the spreadsheet.
2-parts:
First, take a big step back from things with properties, clear head, go golfing, fishing, whatever just "clear the deck" of everything. Then, when clear, come at it fresh BUT with a focus that your going to do all things, answer all questions, all "feelings" with MATH. That your going to see what MATH has to say on it all.
So, your going to have to get accurate with what the math says, of what the properties themselves are now. As i said before, I have heard nothing of where your Cap-Ex stands. So, do an accurate analysis of where Cap-Ex stands.
Next, get math of where property and market rent appreciation projects out as for next 1,3,5yr window. NO, this is not a "feeling" based thing, it's DATA driven. If unsure how, lookup local chapters of MFH landlord associations, they are champions of this and may find data from them. Yes, they do different assets but the market data will have a lot of cross over. City Data is another resource. You need to sort out Supply-Demand curve.
Now if done right, your going to have all this data compiled, your going to have an idea of market direction, of what the future will hold. And, most importantly, what the #'s REALLY look like on those properties. Way WAY too often people get into "cheap" properties only to find they are very VERY maintenance expensive, ticking maintenance bombs.
LAST PART, don't just knee-jerk "ok, SELL", no, IF the math says "sell" REPEAT this fact/data finding mission to answer the question of how to BEST sell, for MAXIMUM ROI. All this talk of relying on PM's and others to peg an as-is now-Now-NOW sale..... that's just bonkers.
What is the MATH of how to BEST sell? Is it retail at vacancy? Is it via a terms offering retail? Is it maybe offering a terms purchase to existing tenants here-n-now???? There is so many variables and potentials in selling, net-0 is NOT an "Investors" action or journey.
2nd-Part; Explore the other ways to REI because I got a funny feeling there is a different segment of the industry that would serve a better fit for yourself.
Honestly, these issues you've aired, a cold-blooded "Landlord" wouldn't loose a wink of sleep over. These are for most part what one would call "good problems". Don't believe me, oh-man, just wait until you have REAL Landlord problems, like evicting a tenant because there meth-fueled adult-child moved in and is rapidly destroying the place, only to get it all done over months and receive back a human-feces painted home, copper stripped, destroyed everything...... Or, or, or.... It get's a LOT uglier then what's keeping you up at night, oh-so-much uglier.
If what you've detailed has been keeping you up with worry, I can't imagine the wreck you'd be dealing with a tenant nightmare.
SO as said, I get feeling your NOT cut-out for this specific iteration of REI. Which is a-ok, there is a lot of other ways to do REI, it's not a 1-strategy-fit's-all thing. And forcing it, that's a setup for real hardships to come. Because eventually you WILL have a tenant nightmare, it is the law of averages, do landlording long enough and it WILL happen, not if but when.
Agree. One thing I have learned is you have to buy off market to get a deal. Do not buy on Zillow etc. Anything on market is too pricey. And that can kill you with cash flow and equity.
Quote from @Nathan Frost:
Quote from @Jordan Moorhead:
@Nathan Frost are there any of them that stick out as a pain but also have some equity? I've always been a fan of selling the losers every so often.
Also 12 properties is totally manageable if you have good systems. I would fire the PM, suck it up and right the ship. Sell 1 or 2 of your problem properties and make sure you have $60-100k in the bank.
Do it now, don't wait!
Agree do it now. Why I reached out. I have 12 but am selling 2. Should give me 60-70k nest egg. I really don't have any that stand out. I did big repairs the last 2 years on 3 of them. I feel now they are all solid. Just minor repairs here and there. I am thinking of cutting ties with the PM. I might see how it goes till their contract expires December 2024. They slow with stuff, I mean, I have a day job so could be difficult. But they let stuff sit vacant for 2 months when I can get them rented in 2 weeks. They wait for a property "to be ready to show" before they list it. Me on there end, once I know its vacant I list it and say it will be ready on this date. I'll see how the next few months go with them but I am selling 2 currently and that could really put me in a good spot. I might only be cash flowing at 100% occupancy at $1500 which for 10 is not good but I'll have a nest egg that could last a long time. I just don't want to be dabbling at the nest egg for 1-5 years and it not make sense. I rather be cash flowing at 3k-5k where if there is 3 vacancies I can still survive.
I would fire the PM now after seeing this. Don't wait and let them cost you more money.
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