All Forum Posts by: Alex Owens

@Christian Hutchinson I completely agree with your diversification strategy - IF you have the money to do it. Everyone knows diversification is lesson one in finance and investments. The problem is that a lot of people don't have the money to properly diversify. Therefore, my advice is to pick real estate over any other asset class first so you can establish passive cash flow streams that you can then take and invest in a diversified portfolio. 

@Andrew Johnson my whole point is volatility... if the stock market went up 500 points this week that would exactly prove the point I am trying to make. 

I wouldn't change my "investment thesis" if the stock market gained 30% this year and real estate prices fell 10%. I will take REAL assets that produce stable cash flow over equities I have no control over any day of the week. If my stock in Apple starts to slide, what are my options? I can't change Apple's investment or business strategy; my only options are to sell or hold on in hopes that management figures something out. On the other hand, if my apartment complex starts to show falling yields I have total control over my response and have direct hands-on control of working to push the value back up. 

Glad we could agree on Cryptos though! Haha 

@Alexander Felice This is exactly my point... the stock market has ups and downs and crypto is incredibly volatile. The point is that neither of those investment vehicles will put a consistent check in your pocket every month like rental income. 

Also to your point on the S&P, sure the "value" may have rose more than the "value" of real estate over those 8 years. But you are not going to realize any of that value unless you sell your position. Real estate, on the other hand, is paying you each and every month and your debt on the property is decreasing each and every month. The appreciation or "value gained" over 8 years is only icing on the cake as apposed to the main course with your equities. 

@Christian Nachtrieb I am not saying the US Stock Market will go to Zero. Of course that is absurd. I am saying the likelihood of any one individual stock going to zero is exponentially higher than an individual piece of real estate going to zero. Even if your house burns to the ground with no insurance, the land still has value. A bankrupt corporation cannot say the same for it's stock 

@Christian Nachtrieb I can still bet you that it will not be worthless. And if "interstellar" travel and relocation of the human race is the only thing you can think of to make my property worthless, then I think I will be alright. 

@Caleb Heimsoth I don't consider it an over statement based on historical data. The stock market corrects itself, crypto currency is 100% speculative at this point. Rental rates tend to move quite slowly and generally in an upwards direction. I don't think we will ever see a nation-wide rental decrease of 4% in a single day as the DOW did today. Additionally, I don't think we will see rental rates decrease 65% in any 2 month span as Bitcoin has just done.. 

If, for example, I decided to accept BitCoin or my December rent, it would now be worth less than half of the original value.  I was just trying to make a point as to which investment vehicle has the best proven track record. 

Things that have occurred today:

Today the DOW dropped 1,175 points - marking the largest single-day decline in the index's history. The stock market has been on an absolute tear over the last year and many point to today as the beginning of the inevitable market correction.

Today BitCoin dropped below $7,000 - a decline of 65% since its peak just 2 months ago.

Today I received checks in the mail. Not for dividends on stocks I own or crypto currency proceeds; but rather for rental income on real estate that I own. I say this not to brag, but to put into focus the underlying and most fundamental aspect about real estate investing. IT IS REAL, IT IS TANGIBLE, and IT IS NEVER GOING AWAY. The stock market could go to 0, BitCoin could go to 0 - but real estate never will.

I say all of this because I hate seeing people dismiss real estate as an investment vehicle because it takes too much time and money to see results. I am tired of all of the "get rich quick" investors (speculators) out there who think they are on the ground floor of the next big investment. Look at what happened just today: your stocks fell, your BitCoin fell, my rental check remained the same. End of story. 

Just a thought for the next time you contemplate throwing $1,000 into BitCoin instead of Direct Mail. Results in real estate have been proven time and time again, you just have to be patient and trust the process. 

"I am not looking to get rich quick, I am looking to get rich for sure" - Grant Cardone

What's going on Eric, welcome to BP!

I am curious why you are starting with the auctions to pick up properties? I have been to dozens of real estate auctions in Oklahoma over the last two years and I have found them to be highly competitive and rarely do I ever see someone get a good deal. The problem is that typically in Oklahoma the auction sales price cannot be lower than 2/3 of the appraised value of the property. In addition, everyone and their mom thinks they are a house flipper out here and the purchase price tends to get bid up way beyond what I would pay for a deal at auction. 

If I were a private investor, I would not lend to you if your strategy was to pick up properties at auction. These properties are sight-unseen and it is impossible for you to give someone an accurate estimate of the work that needs to be done to get the property where it needs to be. I would recommend working with local investors as either an apprentice or partner on some of their projects first before I try and pull in investors to back your business. 

As an investor, what I would want to see is a proven track record and concrete data/numbers supporting why you think a property will be a good deal. For example, if you come to me and say you think the rehab will be $40k, I need to see at least one - and preferably 2-3 - written estimates from qualified contractors. In addition, I would want to see a full CMA to show what the ARV will be for the particular property. Even further, I want to know that you have a "Dooms Day Plan" in case everything hits the fan. If everything went wrong: rehab went over budget, sales price was lower than anticipate, and days on market was over extended I want to know that we are still protected and this is still a good deal.

Your first few deals are going to be the most difficult to bring investors in on because you have no experience or proven track record. However, once you have a few successful projects under your belt, finding private money should become easier and easier. Good luck my man! 

Scott England it’s funny you mentioned the influx of investors to our state. I met with two Israeli investors just last week who are looking at the OKC market to invest several million dollars. They chose OKC over Florida, California, and Texas because of how far your dollar will go with our local real estate. I’m cool with the Cali investors hating on us, I hope they stay away and keep competition lower. The fact is that you could buy an 80 unit apartment complex here in OKC for the price of your $2MM home in Cali. If you are a true investor, I don’t see how those two investment choices can even compare...

Hey Amanda! 

I am going to take a wild guess and say that you are looking at the duplex on 19th St that just came on the market. I was actually just looking at that property myself this morning - props to you for jumping on it so quick!

I have not done a full in-depth analysis of this investment yet so I am just going to keep my comments general. The first thing I will say is that based on what you are saying needs to be repaired on the property, you could be looking at $20k in repairs - adding central heat and air will cost you a pretty penny. 

The other thing I will add is that I am not entirely sure how realistic your $700-$800/month per unit is considering it is a one bedroom. 

I would run your numbers based on a lower rent rate and see if the deal still make sense. If you think the property will eventually appraise at $150k, you may be able to pull of a BRRRR strategy on this one. You could purchase at $100k, put $20k into repairs and closing costs and then in a year if it appraises at $150k, a bank should lend you $120k on it which would pull all of your cash back out. This strategy may make sense for a property that does not have a huge cash flow potential, but has the potential to give you an infinite cash on cash return after a refi.

Hope this helped! I am not personally interested in purchasing this property so if you would like to discuss the numbers in more detail, I will be happy to do so!