All Forum Posts by: Jahan Habib

Well stated Mike. I do quite a bit of investing in other asset classes, however never saw RE as an asset class on the same level as the stock market. You're perspective is the right one, I am going to learn as much as possible about out of state investing before pulling the trigger.

@Tom Conant Precisely. I guess you can say that I am a lot less aggressive with offers, do not feed into the mania of "have to buy now or else will be priced out."

I would say that cap rates/cash flow are lower in southern NE because places like Boston Metro/Fairfield County, CT are doing well and there is greater investing activity. The deals are definitely out there, however require some extra leg work (more property evaluations, offers etc.).

Portland ME, Worcester MA, and New Haven CT are all good areas to look into. I would say that you should spent a few days in each city investigating neighborhoods, talking with RE professionals etc. Good luck!

 Tom, thanks for starting a great thread. I would say that I am moderately bearish at this time. Deals are definitely becoming harder to find here in NE. The reason that I am moderately bearish is because I am a contrarian by temperament, recognize that market cycles last 7-10 years, and this unbridled growth will come to an end at some point. Whether it's a downturn or a crash remains uncertain, however I will say that I preparing for any downturns by:

1. Building 6 months of cash reserves for all my properties (buy and holds)

2. Not embarking on any capital spending/improvements (can wait till later)

3. Being very careful with offers (50%-60% LTV)

My view is that even if I am wrong (and I do hope I am wrong) about a future downturn, I will have significant capital amassed to rest easy at night.

Please feel free to direct me to the correct sub-forum if this is not the correct one.

I have been steadily investing buy and holds in southern New England (MA, RI, CT) with some decent success. However, when I look at the Midwest (primarily Indianapolis, Canton-Akron, OH markets), I really like the price stability, cash flow, and the opportunity to purchase many high quality single and multi-families (Class A-B areas).

Some additional background, I truly enjoy my current (non-RE) day job, prepping for the CPA exams, so my time is limited. I went ahead and created a pros/cons list:

New England Pros:

• Close to home base (drive within 2 hours max) and comfort with the region (know the cities/towns)
• Good opportunity for price appreciation (not that I am looking for some huge increases)
• As a result of price appreciation, I am considering taking out a HELOC to do more deals.

New England Cons:

• High acquisition costs (purchase price/down payments/reserve requirements)
• Lower cap rates/slim cash flow
• Expensive repair costs

Midwest Pros:

• Great cash flow/cap rates
• Price stability (prices don’t increase or drop significantly)
• I can scale the portfolio and really achieve my goals rather quickly (more on that later)

Midwest Cons:

• Investing distance (I’ll need to get on a plane rather than jumping in a car and going to see the houses, whenever)
• Low familiarity with the region. I will need to make multiple trips to get comfortable (which is fine) however I would still not feel as comfortable as areas change, industries leave etc. With New England, I live/work here and can visit very frequently. Please keep in mind, I have been busy with the non-RE endeavors.

What pros/cons list would be complete without a goals discussion? My goal is to achieve $5,000/month in cash flow (post tax money in my pocket). Thankfully, I don’t need that kind of money live on, as I have my day job, however I would like to accelerate the payoff on that expanded RE portfolio with the mindset that all mortgage debt payoff will entail my retirement.

I would love to get your thoughts/critiques regarding my plan. In particular, if you have invested in the Midwest/outside of your home region – I was gearing up for it earlier this year however my partner ran into financial issues/got cold feet with respect to the Midwest.

@Ida Saidkariev I am definitely cautious about the potential downturn, however that has not stopped me from chasing deals. If I am able to find a good below market deal that cash flows well, then I am pulling the trigger. 

My strategy is to continue to make deals happen through 2018, while also saving aggressively/having cash reserves. It's worth it to have cash on hand in case there is downturn, however waiting to time the market is not a good idea either. The key is to search for deals that work for you right now - which is more challenging because there aren't as easy to find compared to right after 2008, however it's well worth the effort.

I would like to add some additional information for others who might be interested in pursuing the SD IRA + FHA/HUD Financing:

• Most lenders are looking for a loan size of $1M+ for Multi-Family (5+ Units). I had one lender willing to go as low as $700K.
• The application processing time frame is 3-6 months. Which is challenging as most sellers don’t want to be on the hook for such a long time.
• Most lenders initially stated that the loans were non-recourse however when I would prod further, they would allude to carve outs, when pressed.

I am getting the sense that SD IRA + FHA/HUD financing would be great for a distressed asset/instances where the sellers are willing to wait for the bureaucratic paperwork to be completed.

For my deal, I don't think that FHA/HUD Financing will work, so I'll see if the other lenders are going to be willing to finance the deal.

I’ll continue to add my insights as I move forward.

I appreciate the additional insights @Carl Fischer and will be in contact with specific questions. Right now I am doing the necessary research to become better informed.

 Thank you so much @Kevin Harris

I'll talk with Camaplan to see what they offer.

Great link @George Blower

I am contacting each one of the lenders on the list.

Thank you so much @Brandon Ingegneri I'll definitely speak with McLaughlin Quinn.