All Forum Posts by: Aaron Gordy

The crystal ball is never accurate. It seems that folks talk and talk about almost the same thing, ad nauseum. Reality is this. The world recently lost one of the best investors of all time: Charlie Munger. He was a billionaire who didn't buy real estate but bought companies and stocks of successful companies. Was he wrong? Its pretty obvious that he did exceptionally well. And then you have Gerald Hines, who is a billionaire making money off real estate in Texas primarily. Who is wrong? They are both obviously correct. I would like to revert back to KISS and I am not talking about the band. Keep it simple stupid. I have to remind myself of that, even though I have a masters degree. Buy good assets. There are bad real estate properties and there are also busts in the stock market: Enron. One can't categorically say that one segment in the future is worse than the others with accuracy and if it was so easy to predict then we would all be billionaires.  

Real deal example and is  probably the best buy and hold deal that I will ever made. Bought a duplex using the va loan in Austin Texas with no money down. Lived in one side while attending the university. Realized that I made a home run and kept that property for 15 years or so until my horizons broadened to bigger things. Bought it for 80k sold it for 440k with zero down. Infinite returns. I could go crazy looking for that diamond in the rough via Value Line in the stock market but its not going to happen. Good buy.

Its all risky though but its not as risky as putting the money under your bed and losing value. Choose wisely that meets your comfort zone. If its little risk that you want then buy treasuries or cd's and sleep well. Personally, I like a little risk and the thrill of pulling off a big deal. Truth be told though, its all about meeting the demand in real estate. If there is demand for your product then people will rent it out or buy it so there is little risk. But if you build or lease out a property with little demand or a myriad of issues then you will have problems moving it and therein lies the heartache and possibly bankruptcy depending upon the gamble: Donald Trump with his casinos. 

@Madhan S.  Boots on the ground is critical. I am not privy to any particulars of the deal at all. The array is located on Burton Drive. Burton drive is in the rapidly gentrifying Riverside/Oltorf corridor. On the surface it looks great. Underneath the surface its a little more dicey and one has to be very calculating. That particular area is known for clay deposits in the ground that can really mess up foundations. Buying a property with foundation issues is not necessarily a problem if the purchase price is reflective of the risk. With foundation issues, one could have plumbing, drywall, flooring and even roof issues and alot more. I rebuilt a house in the area a decade or so ago that had cracks in the walls that I later discovered had a 6 foot diameter bee hive in it. That was a grand slam home run deal because it was purchased right even with those unknown issues. Foundation issues are very very real there and can really destroy returns if not careful.  

Be specific with your source.... Saying freddie mac without a link to the actual article or the research is not credible. 

Folks migrate for jobs. Texas is and has been a job creating machine for a very long time. 

@Carlos Ptriawan Its a shame that you hate on Austin metro so much with out real concrete on the ground evidence with unemployment numbers/building permit data/employment growth or any real data backing up assertions. Why will prices fall in the Bronx? Philly? Austin? What are their respective levels of inventory? Is there segments that are doing better than others such as are 1 bedroom condos doing better than 3 bedroom townhomes? 

Point 1. Speculation. How do you know that interest rates will be cut with certainty? 

2. Speculation and localization is very different in CA. LA is not Sacramento. Each metro has their own economic drivers. Austin's economic drivers are very different from the cities mentioned previously. What are the months of inventory and how are the main economic drivers doing? 

3. Speculation. Even within Miami you can't just throw a dart on the map and say that its a good deal. Little Haiti is very different than Coconut Grove. Why not Fort Lauderdale? 

4. True. Inventory is always the name of the game. Sellers market is typically defined as having less than 6 months of inventory. Buyers market is over 6 months of inventory. Austin is at 3.2 months of inventory btw. 

  

I have no idea why folks spend a ton of hard earned money on these "guru"  classes. It seems not the best way to spend money. You could have used that $8800 to possibly have partnered with someone locally that is already doing the subject to deals to figure it out first hand. "Gurus' make money off chumps imo. Do you know of any so called guru's that has become a billionaire from real estate? Please educate me if you know of one. The real real estate billionaires aren't doing that stuff, fyi. 

Please give credible sources...good grief.

Sam Zell worked as an attorney for one day, I believe. He went out on his own and made billions doing real estate hitting home runs, so to speak. If you don't have time then hit some easy singles by by buying solid long term single family residentials. 

@Daniel Tisdale Just playing devils advocate here. What if the city of Austin figures out a way to control the STR business? This is a big risk. Keep in mind that many of the bigger hotel players had a major position in controlling that business from airbnb types as it directly hits their pocketbooks. This is a big risk, imo.

In regards to building, do you have any experience building in the city of Austin? The city is notorious for dragging its feet and getting permits approved. Once approved they are notorious for causing construction delays with the inspection process. 

Since you are considering a hard money loan be very very cautious and do your math not once but 7 times for good luck, to be certain. If you have experience then  you don't even need to go with hml. There are local banks wanting that business that have much better terms than those folks. I am getting terms from local banks that are half of the hml. 

I have used hml many times in past projects and will never use them again. I have seen some hml try to charge 5 pts origination....dude that outrageous no matter how you gauge it. But apparently some folks fall for it since they are still in business the last time I checked. Egregious!  The main lesson learned is that hml can kill your deal and sometimes, if you haven't done your due diligence, you will find that you did all that work to fatten the hml folks instead of your pockets. Fyi. 

Measure twice, cut once. 
 

Protest your property taxes. Its really easy to do. Folks act like they can't or shouldn't or whatever. Its super easy. The investors that I know in Austin do it. If you don't then that is on you. Shop around on your insurance too. You would be surprised what an insurance agent will do to keep your business.  

Get your financing in order. Financing mobile home parks are difficult. There are many more growth sectors than energy. Texas is big. We have many economic drivers besides energy.