All Forum Posts by: Alex Forest

Quote from @Bill B.:

Either you missed a zero or they are misleading you…

1 in 5, 20% are owned by “investors” but 90% of those investors own 3 or less homes. Mom and pops

“Wall Street” big institutions own about 2% or 1 in 50 homes. 

We could discard the constitution, take away the rule of law and force them all to sell, throwing all the poor renters out on the street to help the middle class afford homes. But they might be better off just forcing everyone to sell their vacation homes. 

I agree. The one in five has to be for all investors. I've seen some of the reports recently in how they characterize this, and there are certain criteria such as the buyer has a different primary address or the buyer is listed as an LLC or other entity, etc. Essentially it is a non primary buyer, which is also a term that has been used to describe these type of purchases. It almost sounds as if some of the news outlets picked up on this and started calling these buyers 'Wall Street' or instructional investors, conflating the analysis, whereas the majority are mom and pop small investors.

A number of folks pointed out that putting these numbers into context is needed. I agree, Here is one plot showing months on a national level.. June was above late 2018, and didn't surpass the Apr of 2020. Not local but some context.

Quote from @Jay Hinrichs:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Stagflation, STAGFLATION, STAGFLATION!

How many times must this be said before the fact get's drilled into peoples reality? 

Market crash is NOT, N - O - T happening, not on horizon, not in forecast, not in mathematical realm of potential UNLESS you can kill off 32+ million Americans tomorrow or get Harry Potter to wizard up 4/5million new units tomorrow. 

Check out the below from NAHB, the group of people who are in commend/control of the # of new housing units. Do you see '23' and '24' rate projections? Let me guess, you say "see, see COLLAPSE!". Uhmmm, how long does collapse last, 2 years? AND what happens in economic collapse or recession, interest rates LOWER. That's the very bedrock action/relation of rates and economic activity, rates lower as activity lowers, rates rise as activity increases. EXCEPT in stagflation. 

 Tell me who wins the world series in 2023 and 2024 and I'll accept your "projections". "Projections" are like statistics, "There are lies, damn lies & statistics". That came from my statististics prof. He was a funny guy. ;-) 

By the way. More importantly, there are always "Black Swan events". We just don't know what the next one is.

 Not my projections, as I said in post, I got that directly from NAHB (National Association of Home Builders), the people who control new unit supply. I am rather confident in what those who control the supply of housing have to say, and there billions upon billions of capital they have placed too such. 

 well prime goes to 9% that will put a big brake on a lot of construction. 

Jay,
In addition to construction, what other types of impacts do you potentially see from a 9% prime rate, if it were to materialize?  Any thoughts on why the spread between the fixed mortgage rate and the prime beginning in 2023 compared to the years prior when they seem more in lockstep? 

Quote from @Garett Biondo:

Quote from @Scott E.:

Quote from @Garett Biondo:

Quote from @Scott E.:

I struggled with the same identity crisis when I worked in Corporate America. It started at the age of 25, and I didn't end up leaving until the age of 35.

During that window of time I invested in real estate mornings, evenings, and weekends. I made a bunch of money, saved a bunch of money, and got myself mentally comfortable with the idea of "leaving the rat race" to pursue real estate full time.

I'm not saying that you should stay in your engineering job for another 10 years, but you should definitely get some investing experience under your belt before you leave.

In the meantime, learn to love your job. I made a point to appreciate my coworkers, my team, my salary, my benefits, and the routines that came with working a job in Corporate America. That made it to where I didn't make a rash decision to leave before the time was right.

 Thanks for the reply, Scott. I know that I can't stay in engineering for another 10 years if I want to keep my head. It really isn't for me. It sounds like sucking it up for the next few years is my best bet for early FI though.

You keep saying "FI" and I think you're referring to financial independence.

Don't take this the wrong way, but you will not achieve financial independence within the next few years. Unless you hit the lottery, it's just not going to happen that fast.

What you are looking at doing here is making a career change, you're not looking to achieve financial independence.

I think it's important to make that distinction so you don't set yourself up for disappointment.

Let me clarify. I wasn't implying that I'll only need a few years to achieve financial independence. I guess what I'm trying to do is kill two birds with one stone. I want to find a career that I love and will provide me with decent income that I can invest so I can become financially independent eventually. I figured since I love learning about RE and want to start investing that it might make sense to immerse myself in that industry with a W2 job. I absolutely am looking to achieve financial independence and I know it will take time. That's why I want to enjoy the journey.

 Have you checked job boards at those type of companies or looked into the positions and roles they have within?  Maybe something like CBRE, Costar, local developer, etc? It would be a career change for sure. I don't know what type of backgrounds some of those large companies l typically like to pull from, but wouldn't think engineering (with it's analytical nature and work ethic that typically are associated with this background) would be a negative.  Just a thought.

Quote from @Garett Biondo:

Hey BP community. I come to you with a predicament that I'm hoping to get some outside perspective on. I'm a structural engineer with zero passion for my current career path. The only reason I studied engineering was because my strength in grade school was math and I didn't really know what I wanted to do. It wasn't until a little over a year ago when I discovered BP that I realized what I want to be and that is a full-time real estate investor.

I have consumed a lot of pages and podcasts in the past year so I know how helpful it is to have a high-paying W2 to fast-track your way to FI. An engineering career path can provide that, but it requires a PE license and quite a bit of experience. I'm at the stage in my career where there is pressure to study for and take the PE exam. However, I feel like I'm living a lie working in a field that makes me unhappy just because it'll provide me stable and sufficient income to invest in RE. Also, if i do get my license, it would feel like a waste of time and money when I jump into this thing full time. I'm at a crossroads and I want to follow the path that rewards me with both enjoyment and the tools necessary to become a successful investor. If you were in my shoes, would you switch to a career within the real estate industry due to your passion in REI? If so, what occupation would make the most sense? Or would you stick with engineering and invest until you can quit when you hit FI?

I really appreciate any suggestions/guidance you can think of!

- Garett B.

Hey Garett, my two cents is try changing jobs and probably location. Maybe even look at a a job that can utilize your background but is not what you think of as a typical structural engineering job (forensics, disaster recovery) if it might be of interest. Change it up. Move close to the area you want to live and look for a job that can work while you use your free time on REI. At the same time, seek to get into REI, that W2 will be useful, and network. Another thought as you network, Is there a way your background and PE can compliment others in the field and add value?

Change it up, leverage your income to leverage loans.

@Elias Barend Westhof

Sitting in central Virginia, it's hard to imagine a $1M remodel. A couple thoughts to spitball here.  
Have you solicited estimates from other Contractors or have you all been stuck/set up with just one?  I'm wondering if it's the latter.  What is the remodel, can you simply describe it to a contractor or write it down in bullet points in a word document and ask for an estimate with that?  With a full blown set of plans, that conveys big money is ready to be spent in my mind (and maybe the contractors too).
In this situation with family involved, look for another third party that is outside and independent that the parents and you will listen to and which has significant expertise if possible. What about looking to hire a real estate consulting professional to help navigate and provide some fresh eyes, that can independently look at this situation from afar, hear the objectives, run the numbers and help you all come to a solution? Maybe if you put out a few possible REI consultants, and let the parents pick. Then work with that professional to drive the process, facilitate, and hopefully land on a viable solution that works for you and them (presumably ROI and many other metrics would be part of that analysis).

Quote from @Brad Hunton:

@Alex Forest

I used to say no pets on any of my rentals, but most people are just dishonest by nature and would bring pets in anyway. I started just charging a pet deposit of $350+$50 for each additional pet. Every tenant has paid without question and it gives me extra money to repair unit once they move out.

 I went through an experience last fall whereby had to do quite a bit of renovation after the tenants and several cats moved out. It was the same condition when I bought it, with tenants staying for a long while before moving, so I knew what I was walking into. Nonetheless, I did not realize how bad cats could mess things up and how intensive a process it is to rid the unit of odor.  That changed my perspective on what (some) pets (and cats which I had thought of as benign) are capable of and the damage cost.

Quote from @Nathan Gesner:

Does your lease state - in writing - that pets are not allowed? If so, this is a violation and she should be fined or you demand the dog be removed.

However, she probably knows how to play the game and can get a doctor to write a letter designating the animal as an ESA. If she provides the evidence, you'll have to allow it.

 Nathan, how would you determine an appropriate fine ($200, $500, $1000..?)  and/or subsequent pet deposit and fee, if the Lease stated No pets but they then got one?  I have wondered about this for units where it clearly does not allow, and so no additional pet deposit or fee is included.  A post incident pet Addendum with this information for both parties to sign and agree to ...or if not agreed to the final alternative being breach of Lease and ability to give notice if it's really that worrisome to the Landlord? 

Or in the future, include the pet addendum at lease signing even if policy is no pets? Doing this at lease signing just seems to give a message that at one point you'd be willing to consider and that it's an option.

Quote from @John Teachout:

Being an old geezer that has been through multiple economic cycles, I believe we're in for some challenges over the next few years. I don't see a housing crash. Home prices have a correlation to new construction. If you can build a new house for less than what you paid for an existing home you're likely to be upside down. I see home prices flattening but not dropping in any significant way (other than a few crazy markets mostly on the coasts). I think many homeowners have refinanced to lower rates and are not going to want to move unless required. So they won't be purchasing homes but they also won't be selling their home thus the impact on inventory is negligible.

As always, real estate comes down to the numbers and I've seen lots of discussions where people are discounting investor rules of thumb because they won't work at the present price structure. I feel many "investors" have ignored common sense and purchased properties hoping appreciation will pry them upward and they may be hurting if there's no positive cash flow or their "cash flow" was built on overly optimistic data. So continue to look for the deals out there and carry on. There's money to be made in any market situation but be wise.

 This is what Mr. mcbride, author of the calculated risk seems to see as well.  A stall nationally in home prices year over year (ie flat), but not a noticeable drop, other than specific certain markets which could see that. Ify you look all the way back to1976, there is only one big drop. And he compares now to 78-82, not 07-11.

https://calculatedrisk.substac...

inventorY iS up, But 50% below2019

This is a recent bill introduced to establish a workgroup to explore a program that would subsidize low income, very low income, and extremely low income tenants with long term rental assistance such that tenants would not pay more than 30 percent of their income.  The workgroups report is due out end of 2022. It will be interesting to see if anything materializes from this and the effect it would have in Richmond and other parts of Virginia. It must carry a hefty price tag, but is one of a couple measures trying to address affordability.
https://budget.lis.virginia.go...