All Forum Posts by: Account Closed

I had a tenant who wanted to repaint the downstairs of my townhouse. I offered to pay for supplies and he would do the labor. It worked fine. It was not necessary for the repaint but it was something he wanted and it did add value to me so that was a fair deal. In your case its different because you wanted it done irrespective so paying them something seems reasonable.

Its not about real estate, its about you. Most executive coaches hired by big companies get paid big bucks to work with top executives. Its about knowing yourself, how you think, what are your blind spots, how to be more effective etc. Its more like business therapy. This is different from your average real estate "mentor".

Nope. Go to Duetche bank and take millions more from then. Repeat bankruptcy a few times and run for President. Its all good! :-)

When I moved to the Bay Area in 1995 and bought my first house in 1998 I was horrified at the prices and my stomach churned as I paid a grand sum of...wait for it...$330K for a a 4 bedroom ranch house in San Jose. It took all our cash and then some to pull that off. What do you think that house is worth now? I dont know but Zillow says about $1.5M. My point is every market looks scary at every point in time. Even in 2009 when houses were going a begging people were scared to get in. You are young. The biggest asset you actually have is time. Time for assets to grow. Time to make mistakes and recover. Less responsibilities to kids and families. Take a risk. Whats the worst that can happen? 

Metrics are just tools. Just like anything else, the tool you choose depends on what you want to achieve. If you want to compare across investment types use IRR or ROI (a simplified IRR that ignores time value of money). That will take into account mortgage pay down and appreciation.If you need to live off the income, calculate total cash flow. That will ignore mortgage pay down and appreciation.

Yes you are correct. There is no shortcut and quick money here. In your example above you end up with a rental property that hopefully cash flows with little of your own cash in the game. Thats what people look for. If on top of that you need enough profit for the next down payment then you need a home run deal, which are unicorns. And yes investors doing PL usually expect the capital back in a year. But now if you have a good track record the same investor will re lend the cash to you for the next deal and so on so you build a portfolio with minimal input of your own cash.

You are correct. As a lender anything less than 100K loan is not worth the trouble for the absolute return. The typical model is more that the entire project is funded by the PL and refinanced out later on completion. No bank in the early stage. Also most lenders want first position on the house. This solves that problem also. 

My experience is exactly the opposite. C class is where the PM earns their keep. A class they just collect rent and charge you 10% for that privilege. All PMs love A class property. High rents mean high commissions. And very low effort. Unless you have a large portfolio there is no sense in using a PM for an A class property. But managing even one C class is gong to be more headache than its worth.

Im selling stuff that I bought at 40-50K and is now worth 80-90K. Its a no brainer for me. Cash flow was lumpy at best, a years profit could evaporate with one bad tenant or eviction. 

There are good financial advisors out there who are sophisticated enough to understand real estate and its role as part of a diversified portfolio. If yours is one of those, then heed his advice. Stress test your leverage. Worst case, likely case and best case scenarios of occupancy, rent and cash flow. Also evaluate the stability of your W2 income. It is so easy to ignore risk in a boom (bubble?) like we have right now. Especially here in BP where the "Refi till you die" crowd is loud and ever present.Only you know your risk tolerance and total financial situation. At the very least use your advisors feed back to look more closely at the situation. He has some distance and perspective that you may not.