All Forum Posts by: Cheng Chu

As a example, if you had 200K in cash, you could invest this in real estate with these 2 options.

Options 1: buy a house worth 200k in cash.  No mortgage.   Let's say you can cash flow 1200/month

Or

Option 2: buy 4 houses each worth 200K but using leverage, 75% LTV(50K down payment, 150K mortgage, 30 yrs loan at currently 7% interest rates)

let's say after PITI, you cash flow 0 under ideal circumstances(no major cap ex, no prolonged vacancies)

What is the better investment with higher returns long term?  I think it would depend on the location and whether you plan to hold for the long term or cash out at some point. 

decision making can be different in these 2 scenarios:

Scenario A(high appreciation/high rent growth area):  If your house appreciation + rent growth outpace 7%, perhaps option 2 might be the better choice and leverage may amplify your returns.  Although more house means more things that can potentially break and need repairs.  And in "hot markets", there's a risk of property prices going down and you run the risk of being "overleveraged" if vacancies go up.   

Scenario B(low appreciation/low rent growth area):  in this scenario, I think option 1 might be a better investment.  at current interest rates, it just doesn't make sense to leverage if you don't expense house prices to go up.  

Am I thinking about this correctly?  A lot of people say debt paydown is another benefit.  I think with 30 yr amortization, the paydown on principal is minimal in the first few years and I don't see much benefit.  If you are going to a hold house for 30 yrs, capex expenses also each up much of your cash flow as the houses get older.  

since we are on BP, I suspect more people will skew real estate.  For some people, RE is just a lot of work dealing with agents, tenants, and taxes/insurance.  Putting your money in an index fund and get your 8% return a year is simple and less stressful. 

Do you really think property values are going to fall 50-60% from peak?  asking prices are still high and 2008 was more like once a generation type of event.  

just curious if OP pulled the trigger and bought a STR

I'm an out of state investor looking at mckinney due to reported population growth. For property owners in this area, what have you seen in terms of supply and demand. I'm looking at SFH. How many bedrooms and what sq ft do you think has the highest occupancy in this area?

 I own a cabin in broken bow.  I think the area is pretty saturated with cabins right now and not enough visitors to keep up with supply.   I would say it's way past the point of "up and coming".  

 What demand drivers are in Sherman?  How much are people willing to drive to get to work every day.  For me, I can’t imagine more than 40 min.

how about prosper, Celina, and McKinney.  Has prices run up too much already?

It seems like the general trend of population growth is northern Dallas.

I'm an out of state investor who frequents dallas area.  How is the RE market currently?

What suburbs of dallas would you look into investing that has strong job grow, but prices are not super high.

I think prices of properties are still high.  Would it be cheaper to build?  Does anyone know the going rate for price/sq ft to construct a beach house?