All Forum Posts by: Allan C.

My guess is that people involved in active activities tend to spend their time in the business while folks involved in passive activities have more discretionary time to hang out on the forum. When I was actively flipping the last thing i wanted to do was to engage in social activities that didn't directly affect the flip. 

flipping & wholesaling are jobs while landlording is more about investing. 

Your sub 3% interest loan is one of your best assets, so keep that until you have more than 60% of your principle paid off. 

I agree with others that you should sell your 8% rental. If that is a SFH, I don't think you performed proper underwriting since you should not be $2k out of pocket each month. Did the property tax escalate more than you expected upon purchase, or were you expecting $2k out of pocket? Typically in socal you'd expect to be negative cash flow for a few years, but I'd say between $5-10k. It wouldn't be out of ordinary for a 4+ unit property to be $20k/yr negative CF, but it doesn't sound like you have a MF property.

I'm inquiring about your underwriting because you might find yourself in a similar position if you don't fix any issues you had with this last investment. 

The narrative hasn't shifted in over 40 years, so I'll remain bearish on that market... or at least I don't think the risk/reward fits my parameters. But I love your enthusiasm, and I believe you have presented logical reasoning behind your position. You seem to be doing well, so I sincerely wish you all the best!

While there may be some positive fundamentals, there's still one factor that makes me skeptical - the incompetence of local leaders. Cities cannot thrive when nepotism and corruption weigh you down. Tax dollars are wasted, crime remains rampant and education is bottom of nation. LA used to claim you're better than MS, but not sure if that's the case anymore.  I'd be curious about your stats starting from 2012 (let's call this stabilized city post Katrina). 

With zero appreciation potential, your cash flow is consumed long term by capital expenditures. You basically have to play a game where you cash cow the asset for a 5 year period and sell to a non-sophisticated buyer before deferred maintenance catches up to you. 

investing in Nola violates to the location, location, location addage. 

If single member LLC then I'll say no. You likely won't be able to operate the entity with the discipline and rigor needed to maintain protection. You likely also don't have the net worth that's worth protecting by the LLC, and adequate landlord insurance + umbrella will suffice.

do some more research on cost differences for insurance, loans and other franchise fees to get a better grasp on ongoing cost burdens of operating an LLC. If you pursue the LLC path, then be ready to purchase the property and secure the loan under the LLC (not some janky quit claim after buying in personal name).

If you purchased after 2021 your scenario makes sense. It's also unlikely you'll find another market that will give you a better outcome since you'll be purchasing at retail values. Rents in Phoenix are softening and will continue to soften due to oversupply. 

you can either wait it out a few years until the market recovers or sell and put your funds in another vehicle aside from REI. No one will give you a clear path so you'll have to determine your risk appetite.

one thing to note, while you are not cash flowing, it doesn't mean you are not generating a return, assuming your mortgage includes principle payment. It's just a low return, so the effort you'll need to take on is determining what return is with your effort and risk profile. 

I hear you - that's a big capex burden in one year. Ideally you spread out your replacements over time or you keep adequate reserves to handle all the deferred maintenance. 

unless you're replacing 10+ units a year I suspect bulk purchases won't be getting you far. Your working inventory costs would negate your wholesale savings. Good luck!

It's inflation. Just accept it as cost of doing business. Your rents have inflated more than cost of goods, so you should be able to offset it. 

I'm sure you're seeing similar cost escalation in everything else, from general maintenance costs to insurance. If you're running an efficient business your opex should be 30-40% your gross income, thus your net should still be ahead.... 

after 10 yrs in the Phoenix market without a vacancy lasting longer than 1 week, I'm seeing 2-3 month vacancies as well. 

I wouldn't MTR it - MTR is just another fad that will get oversaturated by all the STR operators looking for another straw to grab. If you believe in long term fundamentals of your market, drop the rent and LTR it. You can try selling as well, but you'll likely face long DOM. Think about what you want to do for the long game and hold to your strategy.

That being said, condos are not good long term investments. I would sell the condo and buy SFR or MF. Likely good opportunities to buy in Phx over next 18 moths.

The issue with Chicago burbs is plentiful land, so appreciation is limited. The good thing about Chicago burbs is good schools, especially in the SW where you're at. You're basically investing for cash flow, so you'll need to find properties that are newer and don't have much deferred maintenance. 

if you want to invest in the city, study the CRLTO extensively as you are highly exposed with strong tenant laws.