All Forum Posts by: Alex W.

Hi Jane, I am an out of state investor based in Northern Virginia and primarily buy Multi family and Single Family Homes in Cleveland. With the budget that you have, I think Cleveland or some of the mid west states might be a good option to buy another property. Feel free to reach out and we can discuss. 

How are you calculating that 1% return?  Are you getting 1% return on the units you are not living in?  If so, I think you are calculating it incorrectly.  "House Hacking" is a different animal from a traditional investment when it comes to calculating "return".  For example, if you have a Quad and live in one and rent each for $1,000/month (making $3k the revenue) and your expenses are $2,980/month, you are NOT making $20/month, you are making $1,020/month.  This is because you don't have a mortgage (or rent).  Because that's $1,000/month you aren't spending to live elsewhere.  In fact, it's probably more because your insurance/taxes, etc are all included in the quad.  I do not live in any of my investments, which means I have a mortgage on my primary home.  I don't factor my own mortgage into those numbers.  You have to kind of take the same approach.  If you can live "rent free" and make 1% return on the remaining units, that sounds like a great deal.

On the flip side, if your expenses on that property are $3,980, I think it's a "bad" deal and I wouldn't do it.

Make sense?

@Alex W., if having a mortgage with expenses can be cheaper than what you'd otherwise have to pay in rent ANYWAY - why wouldn't you buy? I hope your question was largely rhetorical? Cheers.

Nope.  I was just making a general statement.  I have certain returns I look for and if the deal doesn't meet them, I walk away.  To clarify, I look for a certain cash flow return in my deals.  The other metrics are "less" important to me (but not overlooked), but that's just me.  Everyone has their own goals.  So don't get too crazy and ask if I'd buy a property that was expected to be worth half in 5 years just because it cash flowed well up front :).  The answer there is I doubt it.

And I think a "hot" market is a relative term.  If by hot, you mean a seller's market where sellers are getting top dollar and it's expensive to buy in that market and returns are 1%, I'm not in that market, nor would I consider investing in one :).  I did get your assumption on wanting to invest locally if I was in a market like that but it's a stretchy assumption.  If I did not want to invest out of my area and I didn't want to entertain elsewhere and that's what I'd be stuck with, I either wouldn't be investing or I'd have to leave the area.  And yes, we can play all day with where the "line" is, but it's probably too objective to really discuss.  Again, being a numbers guy, there are a ton of factors that would play into it.

It's just my opinion but while equity can be a powerful thing, if it negatively cash flows I would never do it.  It's too easy to find deals with cash flow and equity.

Moral of the story : when you start from little of nothing you have to dig deep to find answers and/or avenues for overcoming whatever situation you find yourself in.  Creating a life by design and not by default requires resilience and ingenuity.  I am now well on my way to the success I was intended to achieve.  If you're already there and are truly interested in helping folks who haven't made it yet, try not to be so judgmental in your approach.  Telling people they shouldn't be in business if they can't afford it is the opposite of what I thought this site is about.  If you want to help folks become successful, then share your experience...but don't discourage people because you can't relate to their struggles and circumstances they've encountered.  It's more helpful to just remain silent.