All Forum Posts by: Alex Zaboli

How would I go about verifying appreciation in a market that I'm considering purchasing a SFR property in?

It is an out of town market. Are there internet sources? What others way would I find out?

Obviously having an idea of appreciation would influence my decision to invest.

Thank you!

@Chris Mason i like this explanation a lot, thanks for providing it. What if, going into a deal, I know that the property is not going to provide much appreciation (looking at 1-3% only), but instead there's immediate and sustainable cash flow (10-12% return with PITI paid for) to be had. Would you see this as a worthwhile endeavor? Let's say I went ahead with one such deal, would this kind of buy and hold model be sustainable going forward with continued deals, or at some point this isn't going to cut it without real appreciation on the table?

I know that this platform has experimental bias, but I've gotten solid advice pointing to maxing out tax advantage contributions (e.g. 401k which allows 19k in annual contributions) and then simply index fund investing. 

Having a long time horizon (40 years) until retirement age, what are the key factors to differentiate wealth building via real estate rentals vs stock market investing? 

To more personalize this topic, I like the concept of cash flow provided by rental property units, but I want to better understand why I would opt for that when I could take a perhaps more simple approach and dollar cost average in the stock market where I could reasonably expect around 10% over the long haul. I've heard that I should target 10% cash on cash return for real estate rental investing. It's worth noting that I have a stable and growing job that allows me to live comfortably off earned income, so I don't need the cash flow to live off of. I want to understand what real benefit(s) that extra cash affords me - is it mainly that I could build out a rental portfolio quicker? 

Thanks for your feedback!

@Jon Schoeller thanks. I’m weighing this strategy vs investing in out of market single family homes for cash flow (with a proven and trustworthy realtor and property manager). I’d put 20% down in each home in the latter strategy.

I like that I’d be pretty hands off in both situations. Do you have any thoughts / advice?

Thinking about:

-Risk vs reward

-since it’s 2 different markets would you just go with the better market

I have a family friend with many years of experience renovating, fixing and flipping homes. I want to approach her with the BRRR strategy. What I bring to the table is good personal capital and willingness to handle all financing. Preferably, I'd like her to scope out the deals and then manage the whole rehab operation - both of these I‘m confident to say she's fully capable of doing.

With that in mind, what do I need to be mindful of if this kind of partnership should happen? And, what kind of cash flow sharing agreement makes sense for both sides? 

Thanks for sharing! 

Correction: Cash flow/month with CapEx budget = $139*. Resulting in 4.31% cash on cash return on my 20% down.

Let's assume $183/month to account for total CapEx useful life. Considering the property and all appliances, etc are brand new, does it make sense to include $183/month for Capex in the operating expenses portion of my cash flow projection? Then, use that monthly cash flow figure to calculate my cash on cash return?

There must be something to be said about this CapEx not truly affecting monthly cash flow. At the end of the day, it's a budget for the entire useful life. So, should I not include $183 as a monthly expense? Should I break down CapEx to the sub-components useful lives and account for costs that way?

Cash flow/month without CapEx budget = $322. Resulting in 9.97% cash on cash return on my 20% down.

Cash flow/month with CapEx budget = $183. Resulting in 4.31% cash on cash return on my 20% down.

Thanks for helping me think through this!

Alex