All Forum Posts by: Chen Avnery

@Michael Dumler PM'd you

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

@Joe Villeneuve

1. These rules are not to be used in order to measure a successful deal, but rather finding a suitable deal in the first place. The deal would have to be in a safe location and the operating activity in the business itself could be self-serviced.

2. I'm interested to hear about any REI strategy, with properties located in safe neighborhoods, that yields better than the 1% rule minus operating expenses. I'm open to anything and have only stated that I can be proactively involved in the business to reduce operational expenses.

Buying some properties for an Airbnb kind of business can be one example of such, as long as one knows from experience that it yields better than the standard 1%.

OK.  Now, with that in mind, please answer the questions I posed.

OK - 

1. I'm not. Feel free to add more or suggest different ones. Your opinion will be welcome.

2. I'm only seeing one rule (safety). The safety rule is a personal preference. I prefer to avoid D/F neighborhoods. Not sure about the second rule you mentioned.

1%, and 35% operational cost are the two rules you are using.  My questions above apply to them.

 Ah, finally got you. :)

1. The 1% rule and the 35% operational expense rule serve as benchmarks to quickly evaluate the potential profitability of a real estate investment. While they are indeed somewhat arbitrary, they provide a straightforward framework to filter out properties that are unlikely to meet my investment criteria.

• 1% Rule: This rule helps ensure that the property generates sufficient rental income relative to its purchase price. If a property meets the 1% rule, it typically indicates that it can cover its mortgage and other expenses while still providing positive cash flow.
• 35% Operational Expenses: This rule helps estimate the proportion of rental income that will be consumed by operating expenses, excluding the mortgage. By keeping operational expenses around 35%, I aim to ensure that the property remains profitable even after accounting for maintenance, CapEx, property taxes, and vacancies.

2. These rules are not the be-all and end-all, but they serve as useful guidelines to streamline the initial evaluation process. Here's how they impact my REI situation:

• Quick Evaluation: They provide a quick way to assess whether a property is worth further consideration. If a property fails these benchmarks, it’s likely not worth the time to perform a deeper analysis.
• Risk Management: By adhering to these rules, I aim to minimize the risk of overpaying for properties or underestimating operational costs. This is particularly important as I prefer to self-manage properties, and accurate cost estimations are crucial for maintaining profitability.
• Scalability: These rules help in maintaining a consistent evaluation metric across multiple properties and markets, aiding in scaling my portfolio systematically.

That said, I understand that each investment should be evaluated on its own merits and that these rules may not capture the full picture. I am open to exploring other metrics and strategies that might offer better insights into profitability and ROI.

I’m curious to know what metrics or strategies you and others have found to be effective in evaluating and maximizing real estate investments. Any shared experiences or additional tips would be highly appreciated!

Thank you again for your questions and looking forward to more insights.

No, you didn't get me.  I understand what the rules are supposed to do.  The definitions are a lot of words, but they don't really mean much when applied to each specific investor.
What my questions are based on is this:  How do these rules specifically help you?  How do they specifically apply to you?  The answer should NOT be a re-wording of what you defined above.  Those definitions are generalizations using a lot of words to make them sound more impressive.  I'm looking for how do these rules, which are numbers, impact your specific numbers, of are they just arbitrary? 

Well, unfortunately I'm quite sure I didn't yet understand where you're going with this, but... they are the basis of how I can achieve net yearly ROI of ~8%. No more than that. If any investment achieves better numbers, then these rules appear arbitrary and insignificant.

my goal is to find other strategies (rent by room, Airbnb, etc.) That yields better than net 8% yearly. I don't care about the "two rules" - they are just my benchmark.

After an endless number of messages and misunderstanding of your main point, I'd appreciate you sharing your thoughts and mindset. I'm here to learn.

Quote from @Michael Dumler:

@Chen Avnery, 

Niche market: metro Atlanta
Investment strategy: rent-by-the-room 

Feel free to message me if you're interested in learning more. If you're unfamiliar with co-living properties, research PadSplit and HomeRoom. 

Definitely a path I wanted to explore! PM'ing you, thanks Michael!

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

@Joe Villeneuve

1. These rules are not to be used in order to measure a successful deal, but rather finding a suitable deal in the first place. The deal would have to be in a safe location and the operating activity in the business itself could be self-serviced.

2. I'm interested to hear about any REI strategy, with properties located in safe neighborhoods, that yields better than the 1% rule minus operating expenses. I'm open to anything and have only stated that I can be proactively involved in the business to reduce operational expenses.

Buying some properties for an Airbnb kind of business can be one example of such, as long as one knows from experience that it yields better than the standard 1%.

OK.  Now, with that in mind, please answer the questions I posed.

OK - 

1. I'm not. Feel free to add more or suggest different ones. Your opinion will be welcome.

2. I'm only seeing one rule (safety). The safety rule is a personal preference. I prefer to avoid D/F neighborhoods. Not sure about the second rule you mentioned.

1%, and 35% operational cost are the two rules you are using.  My questions above apply to them.

 Ah, finally got you. :)

1. The 1% rule and the 35% operational expense rule serve as benchmarks to quickly evaluate the potential profitability of a real estate investment. While they are indeed somewhat arbitrary, they provide a straightforward framework to filter out properties that are unlikely to meet my investment criteria.

• 1% Rule: This rule helps ensure that the property generates sufficient rental income relative to its purchase price. If a property meets the 1% rule, it typically indicates that it can cover its mortgage and other expenses while still providing positive cash flow.
• 35% Operational Expenses: This rule helps estimate the proportion of rental income that will be consumed by operating expenses, excluding the mortgage. By keeping operational expenses around 35%, I aim to ensure that the property remains profitable even after accounting for maintenance, CapEx, property taxes, and vacancies.

2. These rules are not the be-all and end-all, but they serve as useful guidelines to streamline the initial evaluation process. Here's how they impact my REI situation:

• Quick Evaluation: They provide a quick way to assess whether a property is worth further consideration. If a property fails these benchmarks, it’s likely not worth the time to perform a deeper analysis.
• Risk Management: By adhering to these rules, I aim to minimize the risk of overpaying for properties or underestimating operational costs. This is particularly important as I prefer to self-manage properties, and accurate cost estimations are crucial for maintaining profitability.
• Scalability: These rules help in maintaining a consistent evaluation metric across multiple properties and markets, aiding in scaling my portfolio systematically.

That said, I understand that each investment should be evaluated on its own merits and that these rules may not capture the full picture. I am open to exploring other metrics and strategies that might offer better insights into profitability and ROI.

I’m curious to know what metrics or strategies you and others have found to be effective in evaluating and maximizing real estate investments. Any shared experiences or additional tips would be highly appreciated!

Thank you again for your questions and looking forward to more insights.

Quote from @Joe Villeneuve:

Quote from @Chen Avnery:

@Joe Villeneuve

1. These rules are not to be used in order to measure a successful deal, but rather finding a suitable deal in the first place. The deal would have to be in a safe location and the operating activity in the business itself could be self-serviced.

2. I'm interested to hear about any REI strategy, with properties located in safe neighborhoods, that yields better than the 1% rule minus operating expenses. I'm open to anything and have only stated that I can be proactively involved in the business to reduce operational expenses.

Buying some properties for an Airbnb kind of business can be one example of such, as long as one knows from experience that it yields better than the standard 1%.

OK.  Now, with that in mind, please answer the questions I posed.

OK - 

1. I'm not. Feel free to add more or suggest different ones. Your opinion will be welcome.

2. I'm only seeing one rule (safety). The safety rule is a personal preference. I prefer to avoid D/F neighborhoods. Not sure about the second rule you mentioned.

@Joe Villeneuve

1. These rules are not to be used in order to measure a successful deal, but rather finding a suitable deal in the first place. The deal would have to be in a safe location and the operating activity in the business itself could be self-serviced.

2. I'm interested to hear about any REI strategy, with properties located in safe neighborhoods, that yields better than the 1% rule minus operating expenses. I'm open to anything and have only stated that I can be proactively involved in the business to reduce operational expenses.

Buying some properties for an Airbnb kind of business can be one example of such, as long as one knows from experience that it yields better than the standard 1%.

Hello all,

I'm seeking advice on achieving a higher ROI in real estate investments beyond the 1% rule and maintaining around 35% of monthly operational expenses (including Cap-ex, maintenance, property tax, and vacancy).

To the best of my knowledge and abilities, the 1% rule with 35% operational expenses seems to be the best I can achieve today. However, considering gross monthly income and operational expenses, I'm looking for strategies or types of properties that can provide a better net ROI.

Here are some key points:

• Location: At least a C neighborhood that is safe for driving around at all hours.
• Cashflow: Investments that can deliver superior cash flow.
• Involvement: I have the time and willingness to handle maintenance and operational activities myself. This includes property management, purchasing houses, etc. For example, if someone suggests Short-Term Rentals (STR) or Mid-Term Rentals (MTR), I can manage them personally since I have the time.

I'm open to various strategies, including single-family homes, multi-family properties, or niche markets, as long as they fit the above criteria.

What types of properties or markets have you found to offer the best cashflow and ROI? Are there any particular strategies or tips you can share to maximize returns while keeping operational expenses manageable?

Your insights and shared experiences would be greatly appreciated, and I'd love to expand our conversation privately.

Thank you

Hi everyone,
I am a real estate investor and entrepreneur focusing on strategies such as flips and BRRRR. Alongside my two partners, we are venturing into the realm of new construction projects in the US.

As we embark on this exciting journey, we are eager to connect with fellow entrepreneurs and seasoned professionals who have experience in new construction. We believe that the collective knowledge and insights from this community can be invaluable in helping us navigate the complexities and opportunities in this field.

We are particularly interested in:

• Understanding the key challenges and best practices in new construction projects
• Learning about effective project management strategies
• Insights on securing financing and managing budgets
• Tips on choosing the right locations and markets
• Experiences with regulatory and zoning issues
• Networking with potential collaborators, contractors, and service providers

If you have experience in new construction or are currently involved in such projects, we would love to hear from you. Your stories, advice, and any resources you can share would be greatly appreciated.

Feel free to respond to this post or reach out to me directly. Looking forward to connecting and learning from this amazing community!

Quote from @Robert Ellis:

Quote from @Chen Avnery:

Quote from @Pat Parrillo:

Hi Chen. Welcome! 

What has led you to switch your focus from Ohio to Milwaukee, WI?

What caught your eye about Milwaukee? What were you looking for in other markets that you couldn't find and you believe makes Milwaukee a better fit?

I've been investing in Milwaukee for over a decade, so I'm all for it. Just curious what led you from your initial search to MKE. Knowing these details may help us point you in the best direction.  

 Hey Pat!

My end goal is building a portfolio of houses using the BRRRR method.

To do that I need a good yield for the rent price which is something Columbus OH is not very good at. I've heard from a friend who has been investing in Milwaukee for a few years that it's a solid place, landlord-friendly, wide range of prices to fit all, and good yield for the rent price to cover funding costs.

What do you think? I'd love to hear your thoughts on the matter.

 saying columbus doesn't cash flow is a little farfetched. what's your "yield" you are talking about? 

 I was aiming at >10% and was seeing less than that. 

What are your thoughts on the matter?

Quote from @Daniel Brown:

Quote from @Chen Avnery:

Quote from @Daniel Brown:

Hey Chen, welcome to the world of real estate investing. Lending would be something else to focus on , the more options you have the better! Are you going to be looking at just turnkey properties or BRRRRRRR finding under valued deals and improving them? 

 Hey Daniel, thank you for the kind words!
Definitely looking for BRRRR findings - My goal is to have a portfolio of 30 houses in 3-5 years.
Any thoughts? Is Milwaukee a good place for this kind of strategy?

 Yeah I think its a good spot, I have a ton of borrowers that do brrrrrrrrrrrrrrr there. I really think most anywhere in the middle of the country is great. Most states are land lord friendly and prices are still in a good range to cash flow well. 

I grew from 0 to right at 47 doors in 3 ish years. Reach out with any questions. 

 Wow! I'd definitely love to hear more. Sending a PM.