All Forum Posts by: Caitlin Logue

Great question here! Always good to begin with the end in mind. When I bought my first house, I wish I had an exit strategy.

A couple of thoughts:

1. You mentioned you don't want to sell but are considering exit strategies? Typically, an exit strategy would be considering selling a property down the road. If you want to buy other properties, I would place that under a business strategy or business goal.
2. I think what are you asking for is help with an entry strategy into entering the landlord business of either short term or long term rentals. You can even do a house hack in your current home if that is doable for you. That won't cost you alot unless you do a basement build out or something of the sort. Many landlords start here. Since you newer to the business. I would suggest starting there.
3. I agree with @Nathan Gesner, I don't think borrowing money to borrow more money is a good idea. What people don't talk about is you will find yourself upside down very quickly if you don't have experience in real estate and have enough to cover the debt service. You can take the proceeds from house hacking to put into your next property if you wanted to.

**I know this is all going to vary based on everyone's unique goals, timeline, and life situation**

But I am curious to know how you think about your real estate portfolio and how you approach your strategy. I am asking about a real estate portfolio specifically, not your overall portfolio that may consists of stocks and/or bonds.

Do you build your RE portfolio based on a predetermined percentage of each asset class (ex. 50% residential properties 50% passive funds)? Or do you go for cash flow only? How do you diversify your portfolio within real estate?

Managing rentals is really about managing your costs. That includes planning for and anticipating large repair items and having a reserve for that. It also means planning for potential increases in debt service, depending on the type of loan that you have. I work with landlords all the time as I help them analyze the performance of their portfolios.

We recently had a client who owned 8+ properties under a portfolio loan. Everything was going fine until he realized he couldn't refinance in this current interest rate environment. He quickly found himself in a bad position with a balloon payment coming up fast. He might have to sell the properties to pay off all the debt. This is just one example of managing the upside and downside of risk in a portfolio. Plan for all scenarios. Challenge your assumptions. Always have an exit strategy from the very beginning.

I considered owner financing when I was selling my house. I didn't end up doing it and here's why:

In seller financing, many things can go wrong when you are the bank and you might find yourself in a risky financial situation. Unless you have experience with this, consider talking to an attorney. You need an iron clad contract and an attorney who knows how to handle seller financing. 

That's just my 2c!

@Stuart Udis It is important to remember that the MLS is an advertisement at the end of the day. All facts, figures, and numbers must be verified such as verifying the HOA fees or the annual property taxes by looking at the city's website.

The MLS offers a place for agents, buyers, and sellers to go so there is tremendous value there. I can understand the reasoning behind only purchasing off market properties - less competition for buyer and that often means they get more leverage. Whether a deal is "on-market" or "off-market" investors should stick to their deal box and find the best deal for them as outlined by their own unique goals and objectives. If it is a good deal, does it matter where it comes from? 

Awesome!! I also had a personal goal of analyzing properties, specifically learning how to underwrite multi-family properties.

Wallstreet prep has a great course on how to analyze real estate deals. I would check that out so you and your family can learn together :) DM if you want to learn more. I purchased the course for myself and have no affiliation with them. Just a good resource

I think in the long run this is going to have an adverse effect on the tenants. This bill was about non renewals, which is very different than an eviction. Landlords are going to leave the business because it's not profitable for them to stay in it. The legal exposure is far too much with everyone suing each other and now the laws in Denver are more tenant friendly. A tenant can pay rent late without consequences in certain scenarios, trash the place, or refuse to move and the landlord has to deal with that. Now, landlords are basically required to auto renew their tenants. Why be in the landlord business if the protections are few and the risk is high with low returns? This is going to mean fewer options for tenants so that is going to decrease accessibility. Decreased accessibility will therefore increase rent prices. Increased rent prices end up hurting tenants because they will have to pay more for rent. Additionally, this is only going to create more legal cases if landlords don't want to auto renew a bad tenant. 

SUCH GOLD @Chris Lopez! This is so important for anyone in real estate to know, not just landlords.

The For Cause Eviction Bill, HB 24-1098, is going to make it more difficult for landlords to operate effectively in this environment. Unfortunately, the legislation is going to deter landlords so I could foresee many landlords leaving the business altogether.

@Paul Mitchell What's in your deal box? Single family home? Multi-family?

I'm in Denver, CO and I know the Denver market. We have had rapid appreciation here the last few years. Additionally, Denver has a growing population and low unemployment (factors I look at when considering a market). But the best market for you and your goals might be different. 

This is a complex topic so totally understandable you are feeling overwhelmed. 

I had a similar goal to yours where I wanted to learn how to underwrite multifamily deals. I found a really helpful course on WallStreet prep. Just google Wallstreet prep real estate financial modeling. It takes you through underwriting. This is a great start. I think it's $400.

It's an extensive course and requires a decent time commitment but I would start there and use their templates.