All Forum Posts by: Adrian Tjakra

Hello!

I am seeing if anyone knows of any good lenders to work with for a local bank in the California area . I am looking open a HELOC against my current home valued around 1.5m . I do not have a mortgage or anything against the home .

Would like to work off a referral maybe someone had a good experience with in the past.  Happy to provide more information, Thank you !

Well @Adrian Tjakra, as you can see you "chummed the waters". 

I think your going a very wrong, and very dangerous direction focusing on cash-flow and sacrificing appreciation, that's simply NOT the "play" in this market economic cycle. 

First of all, fact is appreciation creates cash-flow. Look around on here at every "old-timer"/"made-it" investor of any duration and we will all tell you appreciation is paramount importance. Cash-flow is a statement of a specific time, there is zero certainty that cash-flow will hold AND actually, every guarantee it WILL go down. Why? because of cap-x, that alone will 100% eat cash-flow at some point in time. Operational expenses. Not to mention an area with no appreciation is most likely in some phase of decline, and decline means lower revenues, right. 

When we invest it's not with a vision of weeks or months, it's with YEARS in mind. I don't care if something cash-flows even at a 35-cap today, if the vision is it's a falling-knife. What's the bigger #, your monthly rent or your purchase price?    Which is better, a property that has a 5-cap and 10% annual appreciation, or a 15-cap and annualized DEPRECIAITION of 5% after 7yr hold? Do the math, on a $300k purchase, the "cash-flow" play would loose you TONS. 

 There is a lot of people buying lead-boots today because they bought into this shiny "cash-flow" dream and give it a bit, in a few years there going to be whaling about how they got f'd because now the maintenance and operational costs have eaten all their profits, rents stayed flat while expenses gone up, and it's all "the markets fault".     No, it's not, it's their fault for doing a novice buy with novice analysis and novice advisory. 

Appreciation is as mandatory a requirement as tires are for buying a vehicle. So what if it's a 700hp "performer", it's gonna go nowhere without the tires. APPRECIAITION (the tires) is how you get to wealth, cash-flow is the result, like a speedometer on an auto, a gauge of accrual speed. 

15% equitable returns buys more properties, 15% cap rate buys more carpet. Which would you rather have? 

 Welcome! I’m in the Houston area, would you mind sharing what your two rental properties are (SF, MF? and what the deal looked like financially)? I am under contract for my first primary residence and am excited to enter real estate. 

Matthew,

It would be great to connect! Ill message you so we can swap contact info!

Hey all! 

I’ve been going to multiple showings every weekend in Houston with my realtor to give context as to where I am in this process. 
I understand that C class properties are generally the best middle ground when it comes to quality vs cash flow. If I’m not mistaken, most properties I’ve been looking at (C class) range between $165k-$200k with rents ranging from $1300-$1900. 
Playing around with numbers using first time home buyer down payments of 10%-15%, after monthly expenses includes taxes and insurance, I’m struggling to find anything that cash flows. Most cash on cash returns on the properties I look at are about 3%-5%. 
Being its my first property, I’m looking for homes that won’t require much rehab. 
This makes me wonder:

Am I looking at the wrong market? 
- I see a lot of investors look for $100k properties and then put in rehab. Are the discounted, run down properties what I should be looking for?

- Are the $165k-$200k move in ready properties with less than 20% down just not meant for good rentals/investments? 

Is it the high interest rate of the economy? 
- Obviously lower rates will improve my return but my concern is then that home prices will increase and then the “move in ready” homes im looking at in this price point will jump and be replaced with terrible homes 

In short: 
Should I be putting more cash into the property to improve monthly returns? (Higher downpayment) 

What kinds of properties do you look for as an investor? At what price point? 
I’m probably not providing all the information needed so feel free to ask for more details or make up your own numbers - mainly looking to learn about broader RE investment concepts for starting out.

Anything is helpful, thank you! 

Hi Adrian we invest in Detroit and do it remotely from Canada we are getting exceptional numbers there and have an outstanding team on the ground more then willing to chat and share what we have learnt