All Forum Posts by: Billy Zhao

From $153k to $230-$245k in one year is a whopping 50-60% ROI YOY. Maybe it's not a cash cow, the appreciation of this property is insane! I would wait a little bit and let it appreciate a bit further. At least it is cash flowing positively and section 8 should provide very steady income with automatic rent increase yearly. I don't see how you can find another property that do better.

Since you bought the whole thing with cash, why not just do a cash out refi, take out 75-80% of the $230-$240k, leave some money in there as equity. Use the cash to buy something else?

In terms of fix things up, hire a property manager to take care that for you. 

All that being said, I understand your desire to just not deal with all the hassle. Just to give you a perspective. I would jump on a deal like this if I can find a section 8 housing with $150k-ish pricing in my market. 

The conventional loans (mortgage) issued by banks (financial institutions) backed by the federal government (FHA, VA, USDA) are likely the type of loans that have the lowest mortgage down payment requirements (0-3.5%). A simple googling you will find relative information that gives you the right answer.

Here is one: https://www.rocketmortgage.com/learn/how-to-buy-a-house-with-no-money-down#:~:text=There%20are%20currently%20two%20types,for%20a%20zero%2Ddown%20mortgage.

I think you should call around and ask for mortgage lenders and banks to get more info. 

Honestly, saving up 5-10% down payment that qualifies you for a $150,000 mortgage is not that hard. Drive Uber eat or Instacart on the night and weekend for like 3 months will get you there, just one example.  

Seems like you made up your mind already, just need a confirmation from someone who got sick of his marriage, filed divorce, then went on building an real estate empire, happily ever after.

I am sure there are people like that, except the happily ever after part. 

It's a cultural norm from South Aisa that you bargain hard on things like room and board. They respect you more when you bargain hard in return (but respectively). The trick is you need to provide some sweetener no matter how immaterial but to make him feel that he's the winner. 

For instance, you can say something like we can provide you a supply of water and some refreshment once a month. In actuality, you can just go to Costco, get a case of water and stack it up in the fridge for him. $13 and done.

I was watching an investment show on youtube. The topic is whether the current stock market is in a bubble, and the impending crash will never come. One of the fund managers mentioned that most big investment funds/houses and Warran Buffet all miscalculated how the market will go: that they all predicted a deep decline to 30-40% in March and April. Instead, the market trending upward and just hit a record high last week. This prompts them all shifting strategies and starts buying more equities. 

While they disagree on whether there will be another major downtown in the short run, they all seem to agree, because of the large amount of liquidity (print money) from Feds, the dollar will be further weakened (inflation). So you are better off not holding cash but to buy something whether it's in stock funds or in real estate. And this is why real estate pricing also hit record levels.

I find this interesting since I do notice that for most markets housing is going up like crazy and people are worried that their cash will worthless so they buy up anything even above market price regardless of the cash flow situation. This puts pressure on the people holding the cash looking for deals to get nervous because they worried that they may miss out on deals, so they start to buying properties that may not be the most ideal cash flow wise. This looks a lot like a Dutch Tulip crazy at its hype but many people insist that this is not the same thing.

This is the moment that the famous Buffet quote "be afraid when people are greedy, greedy when people are afraid" doesn't seem to work. That is, people are afraid and greedy at the same time.

What's your take on this? Hold on to your cash waiting for the bubble to burst, or get something while you can still afford it?

@Mike V. What about offer the tenant an incentive to buy insurance (like you buy insurance I give you a voucher to the zipline part or nice steak dinner? People do respond to freebies and discount codes etc. 

Also, I am not a corporate lawyer here but I've heard enough about contract law that I think our notion of "rule of law" is totally flawed. In other words, contracts are meant to be broken and broken willfully all the time. Our president is the master of that.

Can you pay for the insurance as an incentive and self-protection? Just curious.

A duplex that had their deal fall through three times. I did the calculation. For it to have a decent cash flow ($150/mo per unit), the offer price will have to be about $50k below the asking price. And yet, the seller agent just told me that they went into contract the 4th time with 5 competing offers and all of them are above the asking price.

My guess is the investors from places like California are banking on the market appreciation to accelerate and within the next 5 years and the value increased plus the weak cash flow is still a good investment.

The appreciation of these properties is driven primarily by the availability of cheap credit. As long as the total availability of money supply is not reducing, then the price of homes will continue to rise. Sounds like a sure bet.

What's your thoughts on this?

It seems biggerpockets podcast investors including Brandon and David are all employing multiple real estate income generation methods. BRRRR is just one of the strategies. They do wholesale, flip, BRRRR, and buy and hold on a larger scale. Then they also generate more income by teaching classes, selling books, youtube, podcast, etc. etc.

So I think trying to figure out which one method is superior is perhaps missing the point. All these methods have pros and cons, and you can spend the rest of your life trying to analyze them and debate on them but still can't come to complete confidence that one is better than the other. 

A few general guidelines that are preached by countless successful people:

1- generally, growing assets is more important than growing income - though without a steady and sufficient income you are risking losing your assets due to credit and market risks. At the end of the day, it's the amount of assets you own that define your wealth, not your monthly income. 

2- diversification is one way to control risks but not able to eliminate them - multiple income stream, multiple strategies, multiple partners, other asset class investment are some of the examples

Am I missing something? 

Make sure you check out the podcast web pages on biggerpockets website. It has all the important show notes, links, speakers' bio and contact info, etc. I would mix up most recent and earlier episodes without a giving order because their show is not ordered by topic. Some shows have a lot more useful info than others.