All Forum Posts by: Alan F.

Joe I think one of the issues with rentals that need to be fed is how people have such a fixation on ROI and leverage . these issues are easily fixed by just putting more cash into them up front so your not having to feed them at the back end.. or better yet pay cash for them.

Buying in cash! Utter blasphemy, only "unsophisticated" investors buy in cash.

An experienced investor once told me "why use my cash, when I could just default on OPM"

I know its not popular thought on BP.. and of course ramp up requires it unless you inherit a ton of dough but as we age out I sure like free and clear and no debt.. just the hassle factor of having to make payments :)

Couldn't agree more! One day I'll have to meet my maker :)

0 Votes

Quote from @Jay Hinrichs:

Buying in cash! Utter blasphemy, only "unsophisticated" investors buy in cash.

An experienced investor once told me "why use my cash, when I could just default on OPM"

1 Vote

installing PSL flush beam

Some of my other favorites are undersized electrical services (particularly underground) aluminum and knob n tube rewires. Asbestos HVAC ductwork and HERS upgrades. Galv plumbing, clay flats. Sagging roofs and purlin retrofits. Coffered ceilings, low corner additions etc.

Anyone can slap lipstick on a pig, looking for high value add in high demand markets is where the $ is.

0 Votes

Quote from @Kyle Hess:

I'm building a list of tools you could have handy while touring a potential fix-and-flip.

Is there anything you would add to this list?

Flashlight
Tape measure/Laser measure
Paper/Pen/iPad
Binoculars
Receptacle tester
Level
Marble
Drone
Respirator/Face Mask/Eye Protection/Gloves
AQI tester
Water pressure gauge
Thermal camera
Endoscope camera
Knife

Good list, in addition in my truck; ohm meter, megger, magnehelic, steel ball, air compressor generator, plus stuff I'm forgetting

1 Vote

All contractors (no matter the trade) are businesses, and should be run as such. They set their own prices based on scope, cogs, o.h. etc. Their margins are their business full stop. The only people who see my books are my CPA & lawyer.

Don't like a companies prices? Shop around. Companies that know what they're doing don't get involved with the race to the bottom.

BTW "Unlicensed contractors" are the equivalent of an unlicensed REA.

2 Votes

Knoxville, Tennessee

I've been on the western slope for over 30 yrs.

I built my primary, its; Slab on grade, stucco, concrete roof, painted with E-84n roof soffits and tailings fire caulk (anti-ember) vulcan fire vents, 4 car wide concrete driveway, extra large house numbers, red 3/4" hoses on reals @every corner, completely denuded of vegetation 100ft. Off grid ground mount solar, battery generator, propane n septic. Even with all that it could burn down.

Insurance is still an annual dog fight via my broker.

Read your policy very carefully, consider replacement costs will probably be higher than estimates

Resiliency is a requirement here.

As far as sell or not....it'll depend on your determination to be here.

This ain't the burbs of the bay area.

Prepping for heavy rain right now.

0 Votes

Sacramento, California

Quote from @Scott Trench:

Quote from @Henry Clark:

OP We have been sitting on the sidelines the last 2 years.

It’s a good time to buy when the numbers work. But you also have to apply your level of risk aversion or risk adjusted return.

Will everyone else jump in then? No, since their risk aversion and their value analysis will be different than yours.

I would also throw in bandwidth. Both from a time standpoint but also a risk standpoint.
Lots of people’s bandwidth have shrunk with the higher interest rates.

We always have about 4 different projects either in motion or sitting. We might wait for the in motion project to get to say 40% completion or occupancy before we start the next one. This is for bandwidth and risk management.

For the last two years we have been sitting on the sidelines. Actually we have divested 4 of our 8 Self storage locations to get into a better LTV position versus my view of the economic world.

Example: Risk assessment. my view of the economic world is pretty pessimistic. We don’t invest at 9% or higher. Currently we would be at 8.5% interest rate. Stock market to me needs to revert by 50%. S&P500 index is propped up by about 7 companies that make no material value with P/E ratios of about 3% for the market average. Known Potential Black Swan events, numerous.

With the above said we have a 75 acre country subdivision coming online this spring. 100% cash. I tell people this is the worst time to do a subdivision. But REI is local.

Have another self storage development identified. Land priced right, zoned correctly, market analysis great and potential competition low. Build cost low. Financing is approved just need to sign the paperwork. Cash flow great. Value add $2mm after 2 years. Easiest project we have ever could do. Project on the sidelines because of my assessment of the overall economic risk.

So what do we do to avert the above concerns? We invest in Teak plantations in Belize.

It’s always a great time to buy. There are tons of deal flow out there. Even in housing.

I may have to Teak my strategy in light of the excellent advice you provide here, Henry.

I 2nd what David Fern said, your candor & humility are greatly appreciated, maybe your pun work needs a little tweaking thogh 😁

2 Votes

Quote from @Ben Howard:

Quote from @Alan F.:

Thanks Jay, theres still alot of slab on grade mcmansion going up from folsom t ok elk grove along grant line road....I mean alot!

Lathrop at I5 and 205 is the same.

Winters is seeing some the same.

Seems los banos n hollister building has slowed thogh

So many apartments are getting finished in the south bay! Lawrence expressway is a sea of stack n paks.

Youd be amazed how many apartments in campbell too, Bascom ave is getting gentrified like crazy

Nothing like living on Grant Line near the county dump and the south Sunrise Blvd. meat rendering plant.

Right! Lol

0 Votes

Quote from @John Lasher:

I've heard from so many investors that they have put a pause on their flipping business. Simply because rates are higher, homes are not selling, and deals do not work. Are you seeing the same thing in your market? Are you still successfully flipping right now?

I'm still flipping but I do live ins so only 1 every couple years, mostly San Jose. Margins are high, DOM is exceptionally low but finding them is really hard. Very neighborhood specific.

0 Votes

Quote from @Jay Hinrichs:

Quote from @Alan F.:

Quote from @Jay Hinrichs:

Quote from @Alan F.:

Quote from @Jay Hinrichs:

Quote from @Shiloh Lundahl:

@V.G Jason that wasn’t my experience. I knew of a lot of people that were investing between 2010 to 2017. The math for investing was pretty obvious to everybody that it would be hard to lose money by buying a home for 50% to 70% of the rebuild cost. But then as the home prices kept going up, they decided to get out of the market, thinking that there would either be another crash or home prices had gotten too high at that point. They then missed out on several more years of growth because they got out of the game and waited on the sidelines for things to look better.

2010 to 2012 was the period that cash investors were the players or those with IRA keep in mind investor loans were still basically non existent in those years for all those expect very well to do Investors beginners were not getting investor loans.

Myself I thought about 2017 was going to be kind of the end of the 10 year cycle and I actually put a presentation together called the Pivot looking at alternative ways to invest in RE. I missed that one.. But I kept doing what I have always done did not quit but thought things would change.

As for 2023 and 2024 those were by far the best years of my career.. And 25 is going to be just as good.. WE create value so different bizz model and my capital partners ( I provide the capital) have done equally well in value add.. in my mind what slowed was the vanilla rental real estate bizz.. we all know that rates rose higher than rent.. so cash flow got squeezed .. Also keep in mind when I started funding investment rentals in 2002 for CA investors 100.00 a month cash flow was the goal and accepted.. and even break even or a little negative was fully acceptable in markets with historic appreciation..

RE is always changing and if you have only one niche then well your limited in opportunities and subject to the conditions that exist at the time for that strategy.

I think you brought up a great point with the 10 yr cycle. I know it's not necessarily clad in stone but things are certainly different.

Everyone; what's your take on the 10yr cycle and where we are?

I'm not trying to time the market. ..just interested in people's opinions

for me it was based on my experince I started in RE in 1975 and the 10 year cycle seemed to hold true right up to the GFC at least on the left coast.. So in my mind we are at year 13 or so from 2012 bottom. ??? And I was thinking the 2017 10 year was based on the market starting to really crash in 2007

Thanks Jay, theres still alot of slab on grade mcmansion going up from folsom t ok elk grove along grant line road....I mean alot!

Lathrop at I5 and 205 is the same.

Winters is seeing some the same.

Seems los banos n hollister building has slowed thogh

So many apartments are getting finished in the south bay! Lawrence expressway is a sea of stack n paks.

Youd be amazed how many apartments in campbell too, Bascom ave is getting gentrified like crazy

I remember taking Grant line road as a back way to get to 50 and then south lake TAhoe.

I also grew up in cupertino when Stevens Creek and Hwy 9 were still gravel and 280 was not yet built :) I worked for a syndicator in the late 80s and we had projects in the foothills and did the last phase of Lake Wildwood.. those that dont know CA have no clue how much development is there and there is no way its going to crash like a detroit or something.

I know, why do you think I talk to you like a local lol.

I used to swim in steven creek reservoir!

1 of my kids went to prospect high. I just did a commercial TI on Wolfe rd a month ago

I've got a house by Tahoe....pioneer trail

0 Votes

All Forum Posts by: Alan F.

Alan F. has started 14 posts and replied 870 times.

Post: Is promoting buying rentals due to a conflict of interest?

Post: Is promoting buying rentals due to a conflict of interest?

Post: Planning a Home Renovation? Think Beyond Design!

Post: What tools would you bring with you when touring a potential flip?

Post: Rates for a GC

Post: Bought in a Fire Prone Area, should we sell and consider renting?

Post: Those of you on the sidelines

Post: Those of you on the sidelines

Post: How is the market where you are?

Post: Those of you on the sidelines