All Forum Posts by: Brad Jacobson

Too scary to ignore.  I would follow everyone's advise here and immediately call a lawyer and then move swiftly to appease their concerns immediately.  Don't let this potentially hurt you!

Hey Luis!

Note that you're already miles ahead of most considering you're only 18 and you already understand the potential of real estate so DON'T GET DISCOURAGED so quick!

My two quick tips that really got my investing train moving are these:

1. Get out and network.  Be consistent in attending your local REIAs and don't be afraid to spend $20 on taking out mentors to lunch on a semi-regular basis.

2. Be frugal.  Yes, it's possible to invest with little to no money down but it's WAY easier and safer to invest with some or a good chunk down.  Be frugal and smart with your money and put yourself in a position to make a move when an opportunity it presented to you!  It may take a year or two but that's very little in the grand scheme of things.

Good luck!!

Hey James, 

You're getting 1,000 responses and they're all great but I want to throw in one more concept that helped me choose my own path.

Inflation kills cash value and inflation kills debt value.

Inflation works against your 401k but it works in favor of any leveraged property!  If you're funding a 401k with the intent to retire in 10, 20, 30, whatever years, inflation works against you heavily.  However, if you're buying and holding real estate for 10, 20, 30, whatever years, you're going to have a freight train of returns that a 401k can't complete with!  

Instead of just getting the stock 5-10% annual return minus inflation, you get the return on inflation against your debt, the house appreciation, the cashflow, the tax benefits, etc.  Though there's a crazy debate on what these numbers are I would guess that the stock return minus inflation could be 5%ish and the rental return plus inflation is probably 30% or more.

Make real estate the priority!

Good luck,

Brad

I lean towards agreeing with a few other comments already made here.  RK frequently predicts crashes and beats the same drum of inflation and "worthless money."  I agree with him that it will happen eventually but with rates where they are, refinances still booming, the RE market barely reaching stable prices, I think we have a ways to go.  The market won't have a dramatic shift this year unless interest rates spike.

Hey Jeremiah, I lean towards selling the property because that's exactly what I did when I first started getting serious about investing and that first sale put me in a great position I couldn't have achieved otherwise.  I kept the first house I ever bought, made it a rental when I purchased the duplex I live in now, rented it out for about a year, then when the market shot up I sold and made about $80k all tax free.

I then used that $80k to buy another rental and flip a house.  The $80k grew and it allowed me to purchase quite a bit more. I now own several properties and a few other investments like crypto and a small business.  All that enabled me to leave my W2 to do real estate full time which was my original goal.

After seeing very little new home construction for about 10 years after the 2007-2008 crash and now seeing unprecedented amount of new home construction, how long do you think the housing bull market will continue?  How long will it be until we: 

(1) catch up to the current demand

(2) overbuild and threaten another bubble

Have we already caught up, overbuilt, have 1-3 years to go, or have longer than three years to go before we see another significant dip in prices?

Personally - I think we're getting close to having caught up to the demand because most first-time home buyers have either bought or unfortunately been priced out of the market.  However, I don't think we've yet overbuilt because there are still a lot of hungry house buyers who need more affordable inventory on the market.  What do you think?

Hey AJ, I love the dilemma and frequently visit this decision in my own life. Here's a few thoughts I hope prove useful to you:

1. If you're goal is cashflow (try to leave W2 work, retire early, etc.) then I recommend a short term rental.  They cashflow better and give you a fun place to visit when you want.  You can also potentially qualify for a 10% down second-home mortgage.  That definitely beats the 20-25% that currently is required on most rentals

2. If you want instant equity (quicker build net worth) then I recommend buying local fixer-upper and managing a rehab. This will also help you get some of your investment back immediately unlike buying a turn-key STR

3. I own a few turnkey rentals (traditional) in the mid-west and the lack of appreciation and lower cashflow (due to the PM managing all repairs at a premium) has steered me away from buying more. I love the high cashflow of my STR and I love getting the big paycheck at the sale of a flip or cash-out of a BRRRR.

Hope these thoughts help!

What’s the minimum spread you look for when choosing to flip or not flip a property?

Here’s my current situation that I would love some feedback on:

Purchase opportunity: $260k

Est. Rehab: $30k (cosmetic throughout, bathroom overhaul, and kitchen update)

Est. ARV: $330

Additional costs: $10k-ish? (points, interest, closing costs, etc.)

Is entertaining a spread of $30k or less too slim? Especially when considering a BAC and all? I’m licensed so can resell myself without a commission.

I don’t want to let a good opportunity pass by but I also don’t want to take too much of a risk since I know there isn’t an extraordinary amount of meat on the bones on this one. What are your thoughts? Go for it at $260k or let it slip if I can’t get it for less?

@Konrad R. I personally make my denials very impersonal and simply say something like “Thank you so much for applying, unfortunately several applications were received and another’s application has been accepted.” Or something like that

@Shrikant V. never choose to wait. I would much rather buy real estate and wait than wait to buy real estate. I know it’s brutal out there but make sure you’ve got a savvy agent who’s consistently putting homes under contract so he or she can guide you through a winning offer