All Forum Posts by: Chad Kastel

@J Scott

I have two questions . In the interview you spoke about "6 things to prepare for." One of those concepts was to "figure out a reasonable worst case scenario" and then build the deal from there. In the interview you talked about worst case scenarios as somewhere in the 15% range   This seems low to me, but I also use conservative numbers for worse case scenarios. My plan is to buy an 80k homes than need between 10k-20k worth of repair and then sell them for 140-150k (where the comps are now). I plan to sell them traditionally or by cashing out and refinancing. So what is a reasonable low? Or How did you determine 15% to be your "low"?

This brings me to my second question. My original plan for those $80,000 houses was to cash out refinance. But you specifically talked about NOT leveraging and keeping as much cash as possible for the down turn. My thought was I didn't want to pay taxes on the flip and wanted to 1031 out of the properties later on. Is this a poor strategy considering the potential market downturn? Almost all my money is liquid cash as of today, very little is in the stock market. I know you're not an accountant or financial adviser but you are someone who I am taking advice from directly.  If you need tangible numbers to make an assessment PM me and I can tell you how much cash I have.

Thank you for your books.  They have been an unbelievable help.

@Daniel Krantz    Obviously a great job.  It's nice when you take the required steps, make a plan, and it comes in to fruition.  Of course you would've been satisfied with a single but a Home run is always great.

Question: When you bought your first property, did you decide not to BRRR it because you figured it would be a more simple process? I am actually just closing on my first SFH, also in upstate NY, and it will cashflow 1k per month (on a 80k property). But after a few days of buying it, I realized why it's so much more in my interest to BRRRR and immediately started looking at other properties to BRRRR.

@Tim Swierczek  Thanks for the response.  So, in Miami area in February I could rent out my location with a weeks notice (and probably a few days) for 85-92% of the $300 per night rate and have good renters.  So I'm interested in being "greedy" because are in season and the demand to come to Miami is at it's highers in February and March.   So the different between Minnesota and here is that if I don't get a super bowl renter, I have no doubt that I will get a regular one.

@Robert Biggerstaff  Thanks for the response.

@Nick Flint   This is my back up plan.  But there are factors that are relying on this information.  So I'm trying to make plans.  If the house rents for $200 more per night but only for 4 days, it won't impact my plans.  But if it rents for an additional $1,000 per night and it rents for 10 days, it will.  So just trying to get a tangible idea.

Hey fellow landords and vacation rental owners,

I own a property about 20 minutes from Hard Rock Stadium.  The super bowl in 2020 is going to be hosted here in February.   For a vacation rental I normally charge $300 per night for a 3BR 2.5 Bathroom house (split up between a house and a cottage) with amazing privacy, location, and a pool.  BUT the time around the super bowl is no doubt going to sky rocket demand and I have no idea where prices should be?  It's also harder to compare with let's say  last year's super bowl in Minnesota because that is not a location that has a ton of demand in February.   Any info on pricing will help.

Warmest Regards,

Chad 

@Christopher Lane.   Chris,   some of the things your is saying are completely reasonable because  people are usually fearful of what they don't understand.  Some of the things she is saying are negative comments people should not say to each other who are in productive relationships with open lines of communication i.e. "I don't know why you're so obsess with this" or "why can't you just be normal"   There are two separate issues. The first is finding a common ground on your finances, she needs to understand investing. The second is for her to understand why you need support in this.

Any good relationship is about solid communication and support.  Financial problems are one of the most likely causes of relationship problems.  So it is very important to align your financial goals and risks.  If she doesn't understand the benefit of real estate (and you're successful at it) I would suggest asking her to start by reading "Rich dad Poor dad."   If you've ever read the book She sounds like a "poor dad."   That will give her a good foundation to understand the concept of money.  While there is nothing wrong with working a job for 100k, if you desire financial freedom it will never happen from just having a good steady paycheck.  Maybe she does not desire financial freedom, but that's something you may have to compromise over.    My gut is if she doesn't understand why this is great, then you haven't taken the time to explain it well.  Real estate isn't complicated to do or explain, it's just a lot of work.

As far as the ladder problems, I can only comment on what you've written.  I have no idea what kind of partner you are.  Assuming you are a good one, the things your wife are saying to you as not productive, but that's in the context of you being a great supportive partner.   Of course we want an honest and open relationship and you want your partner to be truthful with you, we don't want our spouses to be "yes men (or women) and tell us what we want to hear.  But instead of saying "I don't know why you're obsessed with this"  A great partner will support our passions.   

So you need to ask yourself is your wife not being supportive or are you so obsessed that you aren't performing your duties as a husband causing her to be discontent?  

Warmest Regards,

Chad

@Emmanuel Chirume   I imagine a lawyer could make an agreement work.  I would be more interest in the "eject button" assuming something goes wrong.  

@Emmanuel Chirume My guess is this situation is not unique from a sibling discord situation.    For me to want to get involved in this deal the potential headache would have to be worth it.  So it would have to be a home run deal.  All that being said, what does your gut tell you about this woman?   Doe she seem like someone you would want to be doing business with?

@Brian Ploszay Thanks for getting back to me. That is correct about banks. But banks will only lend up to 20 properties, what if I'm trying to scale to 100 SFH and am using private money?

I understand the concept of being overleveraged with-in an individual property.  My question is about if my portfolio is overlevereged?  Generally speaking my plan is to buy properties that are under the market value and must cash flow at least $200 per month.  I'm about to close on my first rental property. I am planning on Brrring  and then to rinse and repeat and rent out the properties for several years.  

How much debt  can I can on before I'm overleveraged (lets assume that I don't lose sleep at night over this and try to make this about the numbers)?  How much cash reserve should I have?   Should I have enough for 6 months? One year? Two Years?  Should this number grow as the number of properties I have?

I am trying to base this information on a crash in the late 2000's.  If something like this happened, how do I predict my vacancy percentage?   Do I assume it goes to 60%?  50% 20%?  

By knowing the worst case scenario for this information I can better determine if I'm taking on too much risk and can adequately take on cash reserves and plan for the worse.