All Forum Posts by: Abdul Azeez

This may seem like a strange question, but why do you want to invest out of state.?I also live in NJ and all of my properties are within 45 minutes of where reside and work. There are plenty of opportunities in the Garden State.I can go to them and keep my finger on them. I don't have to worry about what is going on with my property a thousand miles away. If your strategy is working out for you, that's great! I am just wondering what that strategy is

I'm invested in Memphis and I have some people who might be of interest of you.

Reach out to me. Lets connect.

Abdul, what did your attached home finally rent out for? 

@Abdul Azeez

1. - FPU is for people who want to be average. Is that you?
2. - the market will NEVER deliver 10% returns consistently! Don't be a turkey on thanksgiving day. Instead read: Antifragile by Nassim Taleb
3. - SFR's have an achilles heel that most don't talk about or properly forecast: turnover costs of tenants.
4. - TK providers charge you "retail" for the asset. When the housing market corrects again (see Turkey comment above) you'll soon find you have no equity; or worse are underwater.
5. - syndication might be an avenue but you need a lot more education on the subject matter first. 
6. - PM me if you want some good reading material for apartment syndication.
7. - it's worth saying twice; get educated.
8. - **If I had money in paper assets like the stock market; at this time I would be converting most of it to cash and gold (for liquidity) and apartments. Oh wait... I already did that! ;)

Ivan thanks but I am sufficiently educated on sfr acquisition and financial analysis, hence the  reason for the question. Ihave readjusted my projection with 8 pct historical average returns. Sfr does have an issue of turnover and I agree with you on tk. What specific avenue are you recommending? Syndication? If so I can reach out to you via pm.

I do NOT DO OUT OF STATE RENTALS, period. When I did try, they were through my Roth IRA LLC, bough in Phoenix SFRs all cash ... what an operations disaster that was ... fired 7 property managers in 5 years trying to find one that was competent and willing to do their job for a reasonable sum that left me a bit of cashflow without trying to pick my pockets every time, but never found a single one and sold ... to give you some idea of how bad that can get, I negative cash flowed a property that exceeded BP's beloved "2% rule" upon purchase and had NO MORTGAGE on it ... try to wrap your head around that one ... so yes, I was VERY GLAD I had no leverage on those, and if you see me discouraging OOS investments, you'll know why. FYI, I had a decade of REI experience managing my own stuff before I tried that, so it is not like I was a newbie either. I wish you luck with it if you try.

As to the leverage vs free and clear trade off ... it is largely personal preference, but I will share the system and rationale that has worked for me. Leverage is for growth, so when you have no or a small portfolio that you need to grow, you use sensible leverage. Free and clear on the other hand is for safety, at some point if you are like most people and your investing is successful, then your portfolio grows to a point where it throws off enough profit that you can live comfy off it even if you stop growing your portfolio, and gets large enough where you start to care more about protecting what you have already more than growing it ... that is when you start to look at free and clear. So, putting it together for me at least, I used sensible amounts of leverage to grow my portfolio to such a scale that it could cover my expenses pus some reasonable margin (2x expenses for me) ... once I hit that point, then the leverage has done its job for me in growing my portfolio and I "flipped the switch" from "growth mode" to "safety mode". This means instead of saving up for the next property purchase and leveraging up with each new acquisition, I focused all my savings and all my cash flow on paying off those mortgages ... then, once everything was free and clear, I'm done ... the cash flow from then on is mine to do with as I please be it live off, invest, or save. Once I hit that point, though, I do not leverage back up (unless it is non-recourse debt) to buy more properties ... this is because (paraphrasing Warren Buffett) I don't believe in risking something I already have and need in order to buy something that I don't have and don't need. Another favorite Buffett quote that fits this philosophy is "It is hard to go broke if you don't owe anybody anything" :) There are many philosophies and strategies out there, but this one is mine ... I stole bits and pieces of it to piecemeal together, so please feel free to steal it in part or whole from me if it makes sense for you, or ignore if not. 

 Dave in general is great at helping the reckless and the uninformed.  I used his snowball plan to pay off $87k of consumer debt and my wife and I went to FPU even.  So I hear what you are saying.

Dave was burned by commercial loans that were called on him back in the 80's. He is like someone that was burned once by a hot stove so they recommend nobody cook with a stove anymore.  If he had 15 or 30 yr fixed rate mortgages, they wouldn't have been called. 

This isn't 1986 in the depths of the savings and loan crisis anymore.  It's like a great depression survivor that still re-uses toilet paper or something.

Paying off or carrying little debt is never a dumb decision (see my 'another commercial loan bites the dust' thread today), but it is a slow way to go with high opportunity costs.  If I had followed Dave this whole time, I would have 1 or 2 rentals that are paid off, not 19.   

I'd put 20% down on my primary.  That's even ok in Dave's book.

I think Dave Ramsey provides good counsel to people with low financial skills or deep in bad debt. I grimace when Dave advices someone to sell a cash flowing property to be debt free or to save cash to buy the first investment debt free.   There is a sweet spot between no debt and maximum leverage that each person needs to find based on their personal risk profile. 

All I know is (I'm about 15yrs in to REI) my net worth increased 50% in the last 18 months with rentals only. I was even surprised. Hadn't bothered looking but was doing a refi and had to update my PFS. My paper securities are up a fair amount in that time, but not 50%.

But I don't do TK and am as about as DIY as you can get.  

I have stocks, etfs, mutual funds, etc and they don't touch the leveraged control or the returns I get with real estate.

Question @Abdul Azeez - why put 47% down on your primary? I'm pretty debt-averse also (just paid off my 19th door yesterday), but wouldn't do more than 20% down on my primary. That would allow you to avoid PMI, but take advantage of as much fixed low rate, long-term debt as possible. That may change your projections if you had 27% more of your dp in the market.