All Forum Posts by: Chris John

 Excellent post, imo.

@Bryn Kaufman

I think you're pretty correct.  Obviously, many disagree with us, which is fine.  I looked into syndications, but was immediately turned off by the prospect of paying the management finder's fees, management fees, exit fees, etc.  They can't lose even if the syndication is a giant failure.

I also looked into commercial real estate around 2021 or 2022.  When it was explained that the loans would adjust at 5 years, had a 20 year amortization, etc. I was out.  It seemed obvious that rates were as low as they could possibly get, rents had gone up like crazy, and that the potential issues of that loan rate resetting in five years were problematic.  I'm not very smart, but I could see the writing on the wall.  I'm not sure how these syndicators missed it.  Oh wait, that's right.  They got finder's fees, management fees, exit fees, etc.  

Please understand that I'm not saying all are bad, but I'd rather be in stocks and mutual funds if I'm going to be relying on someone else because of the liquidiy that you mentioned.  30 year fixed and personal ownership are where it's at, imo.

@Shiloh Lundahl  I think you're gonna need brighter colors on that 834 Cholla St house.  Something that people can see from the street.  At this point it kinda disappears into the landscape.  haha.

Seriously, they both look like great deals.  Well done.

@James Wise

I probably shouldn't laugh at that, but ya got me with that one.

This post is to get off of the number of posts I was on, which is a number that I really, really don't like...

Man, this thread went off the rails quickly.  Call me crazy, but I think I agree with @Sam B. and @Joe Villeneuve

Personally, I don't think the deals are worth fighting for.  The people getting them are working way harder than I want to.  However, I do believe that there are deals out there for those hardworking, clever, and industrious enough.

I'll just fund mutual funds until the fish return to the barrels so that I can shoot them the way I like.  There's way too much BS in real estate to not get a premium with less effort, imo.

@Carissa Atendido

Here's some advice from an extremely casual investor that's probably worth exactly what you're paying for it.  This may sound defeatist, but I don't think it is.

If you want "good deals", be prepared to compete with absolute professionals that do this for a living (to the point that you may as well be a professional yourself).  This market is beyond picked over at the moment.  I get so many calls and mailers each week trying to buy my properties that it's beyond annoying, but it lets me know what I'm up against trying to find my next deal.

If you're ok breaking even or more likely losing a little money for a while until the market changes and you eventually become a winner, go ahead and grab the best property you can and just wait.

If you're lazy like me and don't want to make a job of this, invest in an index fund instead and wait for a better market.  When one comes, act without hesitancy (with confirmed numbers, of course).  

Eventually, prices will stall for long enough (or even drop a bit), rates will drop, and/or rents will increase to the point where the numbers make sense again.  When they do, you'll be in an awesome position to act on it.

Best wishes!

@Ray Pantle

When I got into real estate, my wife was at home with three young children and I was barely making enough money to pay my bills. I refinanced my house to pull out as much money as I could, pulled the cash value out of my whole life insurance policy, and even took "seasoned" money that I'd already been taxed on out of my IRA. I went all in and told my wife we were going for broke.

However, it was 2009 when you could buy a 80k house that had sold for 270k a year earlier.  Rents were $900/mo and mortgage payments were $450.

Obviously, numbers like that don't exist now (and probably never will again).  This is a long way of saying that there's NO chance I'd pull money out of my owner occ house to seed my real estate portfolio right now.  The numbers just don't add up.  Even if you show a profit on paper, there's a vacancy, new roof, water heater, or HVAC around the corner to eat up years of profit.  

Like, if you show $300/mo on paper, how many years would it take to recoup a two month vacancy with a $6,000 turnover?  Three years of everything going perfectly?

Anyway, I'd just think long and hard about putting a loan on my owner occ right now.  Best wishes!

@Brenden Sperl

I'd DEFINITELY check the APR. That should give you the true cost of what you're borrowing as it includes fees. I'm guessing it will be quite a bit higher than the stated rate. Best wishes

@Aja Sellers

I would strongly consider pulling out of this deal.  Pro formas are great, but often inaccurate.  Especially if you have trouble getting reliably paying tenants that treat your property well. 

I'm assuming that you've reached out to professionals that know the game and know their market.  If their experience, contacts, and knowledge tells them that the neighborhood is a no-go zone, I'd strongly consider that it's for a good reason and that a newbie might even have less luck with it than they would.  Even if you can find someone to agree to do it, it will probably end up being a more difficult deal than you're imagining.  It doesn't take much for one bad tenant to erase years of profit if they're in the mood.

I'd consider interviewing some of those property managers that turned you down to see which neighborhoods they think are good and worth investing in and go from there.  Obviously I have no idea, but I feel like the flags on this couldn't be redder.

Best wishes and good luck either way!