All Forum Posts by: Brian Ploszay

Normally, I say just do it.  Because of the pandemic, you might want to wait a bit.   You are headed to a cold season, where renting usually slows down.  Maybe you can do this in March.

@John Erlanger    Reread my post then.  California benefited from high home prices.  My parents for example who have a paid off expensive house.  And then I put in parenthesis (or suffered).  That would be those entering the housing market.  Am I high?  Not yet, it is too early.

California has benefited (or perhaps suffered) from very high home prices.  So yes, if someone is locating from California, they are flush with cash from selling their house.  Let's step back a bit.  California has high home prices, not because it is a popular place to live, but because housing stock was not allowed to grow in relation to newcomers for almost 30 years.  It is the hardest state to develop new residential housing in the country.  So with constrained supply, the prices are very high.  Not surprising, the lower income people in California have suffered.  The state leads in impoverished citizens and homelessness.  The high housing costs are the number one factor for creating poverty.

Now onto Austin Texas.  It may be the number one city for growth in the next ten years.

Do not keep the old tenant's security deposit.  I pay for extermination at my properties.  One of the best ways to lose a tenant is mice / rat / roach and beg bug outbreaks.  It happens.  Making a tenant pay for it is a quicker way to lose that tenant.  For the old tenant, you really don't know they brought it in.  Pay for it.

For your first investment, invest in your backyard, which I think is NY metro area.   There may be some good deals coming up there.  And I do believe NYC will rebound in time.  It is not a good entry level market though.  But either is Austin or Seattle.  If you move to Austin, great, invest there.  

I think in the long run, I made more by appreciating properties.  

Real estate is capital intensive.  35K can be a downpayment on a property, but you'll need better credit.  So I'd say work on fixing your credit and continue to save.

@Adam Odom He used the phrase "passive income." Residential rentals fall short of that definition. Again, it is a business. Stocks and bonds or NNN real estate is passive.

I am a contrarian to what you have said.   First, real estate is not passive.  Rentals are a business and it comes with work like any business.  A tenant of mine had a sewer break yesterday and I had to be there.  I have one vacancy and it has to be filled.  I have a pile of bills on my desk and I have to pay them.

For those who hire property managers, at best you have to be on top of them.  More often, they do not take care of properties as you would.

The returns for quality real estate is actually pretty slim.  You have to have quite a few doors to make a decent living.  And you have to have capital to get to that level.  Properties also pay themselves down slowly.  If you have a 30 year loan or even 15 year loan, it just takes time.  I find that a few properties of mine every year have a major capital need.  That wipes out the cash flow for awhile.  Roofs are expensive.

Here is a positive:  real estate may be the best retirement.  Long time landlords that I have met, who have patiently paid down their buildings are sitting a lot of equity.  They have owned the properties 20, 30 years.  But it took time.  At age 30, most of us are towards the beginning of our landlord careers.  Astute investors can trim down their portfolios in time to keep low maintenance high yield properties.  And have a semi-early retirement where you work 15 hours a week.  Now that is realistic.

That is the sign of a seller who is not realistic.  I've ran into someone like that before.  He had an apartment building in a great location, but asked a bit too much for it.  Took it off the market, then relisted a year later at a higher price.  After several years, the property still had not sold.  This seller was intent on beating the market.  Or he thought his property was gold.

Price per unit.  Then size of units, as I stay away from one bedroom units.  And then condition of the units.  If these nominal metrics are attractive, usually the financials are positive.  Location is rarely a thought because I do not go outside my zone.  

To all investors, I encourage you to create a detailed financial analysis on a spreadsheet with all expenses.  My initial metrics are just for sorting through the noise as I cannot analyze every deal.