All Forum Posts by: Dan Williams

Hello,

I would love to hear some stories from people in the Real Estate industry who have seen it change and evolve over the last 40-50 years.  Real Estate from the 70s and 80s through today is vastly different.  I see a lot of multifamily from the 70s and 80s and then a steep drop off until more recently in the 2020s, why is that?  The neighborhoods I see and the types of builds are like doing an archeological discovery to see what happened in Real Estate over time which I find fascinating.

If anyone would share their experiences in how real estate has changed; I'd love to hear first-hand experiences and perspectives.

Regards,

Dan

Not over supplied in OKC.  I'd love to buy some MF deals but they are scarce here.

Quote from @Steve Vaughan:

Until last year I had 35 rentals and can tell you there's no such thing as passive retirement with rentals.   

You're plan is realistic other than thinking it will be easy to keep up with so many homes.  

Over a few years I consolidated my shotgun portfolio of dmalls into a few larger multis, then sold them on IO contracts to syndications at ridiculously low caps.  

 I don't know if I think it will be easy, but something to keep me active/engaged after retirement where I have freedom and some activities to do that I like.  I'd rather take care of houses than golf :O

Quote from @Randy Rodenhouse:

I like that you put a lot of thought into your future and are making a plan and work b the plan.  That being said right now it looks like you’re making just over a little over $400 per unit. Now over time the houses will pay down and the cash flow will go up but remember you always have to pay taxes and insurance.  So to make $2000 clear after TI you would have to have houses that rent for around $2500/month roughly.  What house price would get you such a rental rate in your area? 

The rents can make $2k now, but taxes and insurance are included in my calculation in this bullet point.  $40K is the gross.

* 20 x $2,000 is 40K after tax, insurance, and expenses more like $25K a month.

Hello All,

Goal: to provide a fatFIRE lifestyle at a typical retirement age.  Currently, I'm 43 and my retirement age would be 68.  My wife and I own 2 duplexes and 9 SFM for 13 units, we cash flow about $5,500 a month free and clear after mortgages are paid, etc...

Stategy: by age 68 would be to own 20 SFH that each cash flow $2,000 a month completely paid off. In my area, this will ultimately require about $4M - $5M in equity.

Rationale:

* Ultimaely no leverage, less risk, I sleep better at night.

* 20 x $2,000 is 40K after tax, insurance, and expenses more like $25K a month.

* My wife and I self-manage and we can manage about 20 SFH with the help of handymen and service companies. This is our limit for what would allow us to live our lives with some work here and there.

* SFHs are easier to acquire 1 at a time over time.

* Newer B-class properties and tenants are easier to manage and less hassle.

* SFH tenants stay longer. Turnover is our biggest time and money cost.

* Our children can inherit the houses and most likely have an easier time selling them.

My questions are:

* This strategy seems realistic, especially since we already have 13 under our belt, is this strategy realistic?

* Am I making the most of my capital considering time/effort tradeoffs?  I realize one can grow forever using leverage but that increases time, effort, and risk as well.  

* Your thoughts or recommendations?

Thanks for any insight,  I really enjoy hearing from experienced investors that have been in real estate for decades.

Regards,

Dan

Quote from @J. Mitchell Bernier:

@Dan Williams

That maybe so, but how much are you typically putting down on each deal? I think you said in another forum about 40%? 

If you take that same dollar amount, I bet it will come pretty close to matching your cash flow numbers, and with zero risk. 

 I'm typically putting down 25%, the 40% is from growth without refinancing and 1 cash offer.    My recent purchase was $54K down including expenses and is $450 profit from Rent/Mortgage.  That's 10% (450 * 12) / 54K but of course, it doesn't include repairs and any vacancy although my vacancies are typically low.  The repairs should be fairly low since it's a remodel (superficial) with new appliances. 

Honestly, I don't even consider this a very good deal, I might have pulled the trigger too soon.  The house was just super clean in that it was newly painted, new flooring, 3 bed/2ba, in a good neighborhood, brick exterior (durable) and priced at 200K  so I was quick on the buy.  I think going forward I need to find a little bit better deals to make it worth it.  The deals I found back when interest rates were low were awesome, but they were for everyone. 

Quote from @J. Mitchell Bernier:

I actually was running a scenerio yesterday that i think many investors will start to look at. Most people will say they need to net cash flow 150-300 a month in cash flow. And with most people buying rental properties around 150k-250k that would mean you would put down roughly 30-50K in down payment to get that cash flow. 

If you put that same money into a 3 month or 1yr Treasury you get similar cash flow of 120-200 a month, risk free. 

Again, this doesn't take into account the added gain in principal paydown and appreciation, but the treasury also doesnt have vacancy risks, repair issues, slow pays, or falling market. Also the short-term treasuries are more liquid. 

So if you are looking for just straight cash flow, there are better options out there than real estate. 

 I'd say that's the bare minimum in cash flow return.  I'd be looking for at least double the cash flow are the numbers you've given for real estate. 

Quote from @Dan H.:

Quote from @Russell Brazil:

Ive been buying properties for almost 15 years at 0.5%. Ive done just fine. 

 In 2021, why would you have purchased a property  with 0.5% ratio?  Even in San Diego I was finding 1% ratios in high appreciation areas that had good value adds.  

 1% rule, high appreciation, and good value add?  That's quite the property in CA or anywhere really.  My skeptical hippo face is forming...

Quote from @Tyler Warrick:

Quote from @Jonathan Taylor:

@Dan Williams yes and no. Relationships are a crucial key to success in this business but not the end all be all in terms of lending. Rates, terms, depository relationships play a part as well. Also, sticking with one lending option/institution limits you as banks only offer the products they originate. Its always good to shop, have a broker in your pocket and look around for every loan that you do. 

In terms of portfolio lending, most banks/lenders are not offering this product as they are unable to sell portfolio loans on the secondary market. Some lenders have them but prepayment penalties are stricter. 

Side note, how do you have 13 conventional loans when the limit is 10?

 Came here for your side note question -- sounds like a great relationship to have if they are offering conventional rates with 10+ financed properties!

They are split between myself and my wife. 1 Duplex is paid in cash, technically it's 9 SFH and 2 duplexes that make up the 13, but it's easier for me to just say 13 SFH. That's 10 Conventional loans (split between my wife and me) on 11 Units (9SFH 1Duplex) and a cash purchase on 2 Units(1Duplex).

 Having said that, the limit is 10 per person.  I made sure on our financing we did them individually.  Only on 2 properties did we do joint financing.

Quote from @Marcus Johnson:

Quote from @Dan Williams:

Real Estate is getting far more competitive.  The promotion of wealth and business through Real Estate Podcasts and Books is quite high compared to 10 years ago; not to mention AirBnB rentals coming into the fold.  David Greene has mentioned a few times in his Podcast that 10 years ago you could practically do no wrong.

 What about prior to 10 years ago?  Did those investors get lucky?  My parents have owned farm land and housing throughout the 70's, 80's and 90's and made a killing by making good choices long term.   My point goes to show that cash flow continues to go down hill and IMO it's the appreciation that is important.   I'm glad I got out of this current market and plan to get back in when I think I can make good money again.

I meant anything Less than 10 years ago, 40, 30, 20, 10 etc...  Without the web, fewer people were able to know about all of the Real Estate opportunities and ways to get paid.

Good luck getting back into the market.  There are a whole lot of inventors from Wall Street to Mom & Pop waiting to gobble up good deals.  As I said, much harder to find deals now.