All Forum Posts by: Brad Gibson

Quote from @Jonathan Bock:

Brad you are not missing anything your belief is spot on its just AUM I'm hopeful your potential advisor believes he is doing the best thing but ultimately his livelihood depends on it do you really think his advice will not be weighted to securities?  It's possible but not likely unless he charges for professional services and is not just an investment advisor.  I'd recommend you look into another servicer and different financial planning options.  

 I am a biased party (fee based planner) but I have lots of opinions on this topic and have had the exact same prospecting pitch sold to me of why equities are so amazing and they can be of course you just can't compare your style of direct real estate investment to equities.  

If you are arguing as a prospect what will the relationship look like once he has your accounts?  

A random anecdotal story about the last decade of So Cal real estate pricing is certainly not evidence of any well researched strategy for investment purposes.  

Wish you the best and reach out with any questions

Jon Bock, CPA

 Hi John.  Thank you for the response.  In case you didn't gather, I don't really like the guy all that much.  I tend to get put off by the douchey guys and gals who make sure you know they look and sound the part of how purportedly wealthy they are.  The watch, the clothes, the artifacts in the office which point to their possessions.

I'm instead drawn to folks who listen first and then inquire for clarification...and then propose ideas and strategies to assist.

Aside from interviewing a metric **** ton of people in the space, do you have a rec on how to find someone who would fit more into the latter category?  This guy was recommended to me by a friend but isn't a fit.  I think as you noted, I should be looking for someone who is a fee for service rather than assets managed type person.

Quote from @Glen Wiley:

Find a different advisor. There are real estate focused financial planners out there - look for one who understands real estate and will partner with you on your portfolio.

We just interviewed a number of CFPs to construct our retirement plan and I found that many of them were great folks but simply didn't understand real estate. This is a deal breaker since 90% of my net worth is in real estate and after 20 years of landlording I have seen how SFH rental perform with my own eyes. No one is going to convince me that the past 2 decades of financial performance is a fantasy. Equities don't even come close.

Having said that - it is good to diversify and we are taking steps to increase our allocation to equities, but not by shrinking our portfolio!

 Thanks for the response.  I will get to work on finding a financial planner that understands real estate and investing in the space where 80% of my net worth is currently as well.

Thank you for your response and your patience with me not using the search feature.  Lol.  I'll peruse all of the old threads to see if I can find som insight.

I recently met with a financial advisor who wants to win my business.  The conversation was on the whole very good as there were some things that I hadn't considered that my wife and I need to tend to in order to shore up some potential areas for vulnerability.

Stuff like building a trust to secure our assets and make the transfer of not only financial instruments, but also real estate to heirs.

What was a less productive part of the conversation was his penchant for arguing that buying equities is a far superior investment option over a robust real estate portfolio.  

Here is his claim: Property bought in some of the best markets in Los Angeles (I live in Texas, but this guy spent some time in the military in Southern California before transitioning to financial advisor job in my area of West Texas) generally could be counted on to double someone's money in approximately 10 years.  He claims that equities historically have massively outperformed that type of return and have significantly less headache and hassle. 

His claim has me evaluating my own preference for growing my real estate portfolio, but I don't think it passes the smell test.  I think his comparison of the returns on equities vs real estate doesn't take into account the overall return and the role leverage can play in maximizing a real estate portfolio.  I not only receive monthly cash flow from my Long Term Rentals in the single family and small multi-family space, I get monthly growth in equity each time a mortgage payment is made.  I also get any appreciation for properties at the time that I sell the asset.  

My IRR's on stuff that I bought six to seven years ago is 30-40% on an annual basis. Less on more recent acquisitions, but I would expect that their performance will rise and hit a sweet spot too.

My question is this, what am I missing that makes this guy so confident about equities versus a robust and growing real estate portfolio?

To be clear, I invest the max in 401k for both the wifey and me, so we have a significant equity position, but this guy wants the non-tax advantaged investment dollars in equities instead of real estate.  What am I missing (aside from the fact he wants to manage those dollars which earns him more money)?

Quote from @Alicia Marks:

Bruce are you talking about a train line in Arlington? I had always heard that Arlington would never agree to be part of DART because they capitalized on the parking for events. I would love if they'd get a stop or two.

Arlington is famously the largest city in the nation without any public transportation.  After repeated public votes rejecting public transportation options, I don’t see that changing anytime soon. The irony is that the team owners capitalize on parking fees for events at Jerryworld & the Shed. 

That said, the old Texas Stadium location is in Irving which does participate in DART & the TRE already has train stops there along the old Rock Island railroad bed  that runs between downtown Ft Worth and downtown Dallas  

Fabulous insight and response all. Thank you. I walked from the deal. I’ll keep my powder dry and either invest in another area in DFW or more likely just add some more duplexes in Lubbock or additional MTR plays in the Midland/Odessa area. 

They ain’t sexy, but they cash flow.

@Andrew Postell Very truly, thank you for taking the time to pen a comprehensive response.  Everything you indicate makes a lot of sense.  I'll pass on the deal(s) & keep investing in West Texas and Western WA.

Quote from @Andrew Postell:

@Brad Gibson yes, we will all have thoughts and the thought is you should not be using that strategy in that part of town. You can certainly use other strategies but nothing mid-term at all please. 

Thanks for the response. What type of strategy would you suggest for that area?

Good afternoon y'all. I'm a pretty experienced LTR and MTR investor in Texas. I'm looking at perhaps acquiring two or three SFR's in the Fair Park/South Dallas area. I don't live in that area, but I frequently attend the State Fair of Texas and other events in the area...including the annual Texas/OU football game at the Cotton Bowl Stadium.

Dallas voters recently passed a new bond to invest additional moneys into the Fair Park to continue to have it serve as an attraction for in-town and out of town visitors.  On recent trips through the area, it is clear that what had been an underserved neighborhood is starting a transformation.  There are at least 10 new construction homes and an equal number of fix and flips on the market.  

The location puts it 5 mins from Deep Ellum (bar and live music district), 15 mins from Bishop Arts (one of the trendiest areas in DFW), 5 mins from downtown Dallas with no freeway time, and has the light rail green line running right through the center with the next stop at the Baylor medical center which is a large hospital complex.

Can anyone local to the area give some insight as to whether they see this as an up and coming area that will continue to gentrify or perhaps just a flash in the pan because the lots are comparatively inexpensive.

I'm considering purchasing two or three SFR to use as MTR's since STR's are now outlawed in Dallas. They will not be a cash flow monster or perhaps even positive, but should be break even. The play would be to hang onto them for 2-5 years while the area improves and then evaluate whether to sell or continue to grow the equity.

Thoughts?

Quote from @Chris Diltz:

Doing an online search, I'm only coming up with a couple PMs in Odessa. Hoping someone in this group is - or knows - a reputable PM. We have a 2-1 that is pending renovation, hoping to have it rent-ready before February.

Good luck. Very few manage properties and those that do are not good. 

Much easier money to represent buyers and sellers than to manage rentals, so few agents/agencies even mess with it. 

My experience is that even if the service is provided, the rentals are on the back burner as folks pursue larger commissions on sales transactions, so a prime unit that’s priced right could sit empty for months for lack of effort.