All Forum Posts by: Christopher Abele

Good to know who bought these! 
I was eyeing them both for some time as I really like them and they are within my buy zone. When they hit the market together I simply wasn't positioned to make an offer. Congrats - its a great area! Should you ever decide to 1031 out into something different, you have a potential buyer right here. 

My wife bought me a 1 year subscription only to have BP Publishing cancel it on my second issue.

Are any refunds being given???

One of the things I see in a lot of posts is the argument that one strategy is better than another. Cash flow vs. (speculative) appreciation also seems to be a hot topic. I personally believe that appreciation is speculation and have commented elsewhere as such. It doesn't necessarily make it bad; its simply an acceptance of what it is. 

The point that I see most people missing is that different markets behave differently. Here in the rust belt, home prices have risen (in percentage terms) but not nearly at the rate that we've seen in growth market. For my personal strategy in my market, cash flow is king because, historically, we've not seen the rapid appreciation of other markets (Prices are up currently, and rather dramatically, but that's the same everywhere; its a seller's market.) Too often I see OOS investors looking at the Toledo market, thinking it will behave like other markets "once it catches up." That 200K house in the Toledo area might be worth 210k in 3 years. The same house might be worth 260k in a different market. 

Maybe its better to ask, "What strategy works well given a particular set of market criteria" than "which is the best strategy?"

I agree with @Nathan Grabau.

One of the bigger “aha” moments I’ve had from BP is that a lot of people invest to build wealth through appreciation. The Toledo market does not appreciate like other parts of the country. Our local politicians are not business-friendly and instead seem to cater to a union mindset. Moreover, cities like Chicago have a master plan for the city to attract businesses; Toledo has a slogan (that they dug up from around the 1930s and reused.)

Thus, populations have been declining. We have our “Eds & Meds.” (I forget what book I read that referenced this concept.) Two major State Universities, Promedica, and the Medical College. Owens Corning is also headquartered here. 

Until the pandemic, appreciation was occurring but at a much slower rate than other parts of the country. 

Conversely Toledo is a pretty decent place to live. We have great Metroparks, a world class zoo, minor league hockey & baseball, etc. In the new economy, Toledo has potential to grow due to the low cost of living and amenities. If people don’t need to live where they work, their dollar goes a lot further in Toledo than other parts of the country. There are things happening here slowly; time will tell how they pan out.

All this requires a strategy change. I honestly believe that no one sets out to become a slumlord, but that it is the logical result of misunderstanding our market. If you’re banking on appreciation that doesn’t occur at the rate you were hoping for, the next best return is cash flow, and in business every dollar of cost equals a dollar of lost profit.

My investment strategy and mindset is often misunderstood by OOS investors. I choose to leave a lot more cash in deals and you’ll often catch me saying “appreciation is speculation.” I do this because it increases the cash flow on the investment so that the rent income will cover a major expense like a furnace or a roof. It might wipe my profit for the year, but the tenants are at least taken care of. It’s a very conservative approach that also results in very slow scaling. Should appreciation happen at a rapid pace it will be a welcome surprise. Until then, my investment strategies are built around business fundamentals.

@Account Closed
You’re looking right in my wheel house.

What you're calling "apartments" are condos / townhouses. Most people talking about "apartments" are referring to purchasing a multi-family building. Condos & Townhouses are going to be tricky to rent, as you also have the HOA fees & the additional "needs a roof" or "needs painted" charges. You lose a lot of control doing that.

If you’re finding SFHs in 43614 for $50-$60k make sure you know the streets and neighborhoods.

North of Glendale, home values and rent rates drop dramatically. I’ve considered the UT area but, again, you have pockets of high crime and then pockets of nicer neighborhoods.

Have you walked any of these $50k properties with a realtor yet? I can tell you firsthand - we missed opening up the electric panel on my most recent purchase. That was a $4,500 mistake after seeing what we’re actually dealing with. Furnace goes out? You might be looking at $5k. It’s important to have reserves to cover this kind of stuff early on, so that if you have something go wrong you can recover.

Hi!

Fellow Toledo investor here.

$12-$16k is not enough to get started and have enough to protect yourself when a furnace goes out, roof needs repair, etc.

At a price point of 64k for a duplex, you’re looking at class D neighborhoods. They might be cheap, but you’re potentially going to struggle to collect rent.

I would definitely recommend joining Toledo PIN, and spending some time learning more so that, when the capital is available, you’re ready to make the right move.

I’m going to be dropping 1500 sq ft of LVP in a couple of weeks. I’ve installed it in the past, but this is the largest project I’ve done as I have access to do the entire house up front.

I have a couple of transitions due to subfloor height changes. There are also marble transitions already that I need to work around.

I’m not sure what the types of products I’m looking for are called specifically. Can anyone point me to a write up or video that explains how to manage transitions with LVP? Standard T molding won’t seem to work because of the heigh changes (1/4”.)

You mentioned that you can just hire it out because a lot of money is coming from a family member.

I’d challenge you to think about stewardship. That is, are you being the best steward of the money that you have been given / have access to? 

I would continue trying to do the small stuff on your own, but look for a property maintenance company. (Message me later today - I’ll give you a bunch of names.) Give them a couple of projects and let them know you are interested in growing a business relationship with someone. Don’t look for the single guy looking for sidework; you need someone big enough to work with your scale.

We’re both in the same boat & market and I’d normally text you this, but thought I’d post because it might help other people.

I’d definitely spend some time in the area first. Properties can be less expensive than other parts of the country BUT that doesn’t always mean that it’s a good investment if rents don’t support it. You also need to educate yourself on the lead paint ordinance and potential impact and familiarize yourself with the nuances of the neighborhoods. A good realtor can help.

Have you spent time in the market yet?