All Forum Posts by: David Fern

@William Miller

I have 2 SFH in my local market where for both, the PITI is $1,350 and they both rent at $1,750. One is a 3% mortgage and gets $400/mo principal pay down, while the other is a 7% mortgage and gets $100/mo principal pay down

The 3% SFH also is newer with less CapEx, and thus I'm getting approximately double the ROI on the 3% SFH compared to the 7% SFH. Even though they both have the same PITI and rent.

I’m considering selling the 7% SFH and moving it into sober living. If it goes well, my ROI for that move should double, improving scalability. 🤞 

I think you’re on a good track with your # analysis, I have learned a lot from your comments in this thread. It’s also important to remember that landlording is a long term game. I’m betting that rents going up over the next 20 years with my mortgage staying the same.

People who say buy a house a year usually save a lot of $ each year. They are usually high income earners and low spenders. Real estate is capital intensive, a point that’s often underscored in these forums. Focus on boasting your income and savings if you want to speed things up. 

I would gladly remove my shoes and be grateful to have a tenant who wants the property taken care of. 

If it cash flows nicely at 25% down, and negatively at 5% down, I would go with the 5% down, and keep the extra cash liquid for expenses that are coming your way.

I’m only willing to buy at a 20% discount off a property’s actual value in this market. Like @Dan H. is saying, look at the overall return.

1st aha moment: Buying first rental (off MLS in 2020). It got me out of a 3 year analysis paralysis. Luckily appreciated 30% year 1.

2nd aha moment: buying 1st "off market" purchase through a wholesaler, at a 20% discount with 60k equity. This blew my mind that it could actually be done by a normal human like me who has a W-2 and not a lot of REI experience.

3rd aha moment: losing 60k on a flip. To not get cocky.

@Jeremy Horton

I agree that opportunity cost says to perhaps sell and re-deploy funds. However, I also believe that investing involves character, and far too many investors are looking for a quick buck, and a scramble to the next thing if it doesn’t work out, and will never develop the character traits (like patience and tenacity to understand a investment category) to become successful investors.

@Nir H. good job reaching out for help. These forums have helped me out a ton, and I hope that you keep coming back. And I also believe you’re getting good feedback that can really help you out, I don’t believe people are here to tear you down, but really to help. You’re not sitting on the sidelines, you took action and bought some real estate, and you also reached out for help, so you should be feeling really good about that. I bet 90% of the people on these forums never get that far. Good job! Just keep learning lessons man, I’ve gotten much thicker skin after being a landlord the last six years. You’re gonna have to get thick skin too if you’re gonna last, which I really hope you do. If you want to sell and lose $ and try to make $ elsewhere, I certainly understand, but I think real estate should be part of almost everybody’s investment portfolio. Hang in there, maybe buy a little bit better next time, and let time do its thing. You’re on a good path!

@Jeremy Horton

I agree that opportunity cost says to perhaps sell and re-deploy funds. However, I also believe that investing involves character, and far too many investors are looking for a quick buck, and a scramble to the next thing if it doesn’t work out, and will never develop the character traits (like patience and tenacity to understand a investment category) to become successful investors.

@Nir H. good job reaching out for help. These forums have helped me out a ton, and I hope that you keep coming back. And I also believe you’re getting good feedback that can really help you out, I don’t believe people are here to tear you down, but really to help. You’re not sitting on the sidelines, you took action and bought some real estate, and you also reached out for help, so you should be feeling really good about that. I bet 90% of the people on these forums never get that far. Good job! Just keep learning lessons man, I’ve gotten much thicker skin after being a landlord the last six years. You’re gonna have to get thick skin too if you’re gonna last, which I really hope you do. If you want to sell and lose $ and try to make $ elsewhere, I certainly understand, but I think real estate should be part of almost everybody’s investment portfolio. Hang in there, maybe buy a little bit better next time, and let time do its thing. You’re on a good path!

A few suggestions:

1) make this a win: don’t sell, it will be profitable if you hold long enough. 

2) buy at a discount from now on, 15% minimum is my standard. 

3) Learn the lessons. You’re paying for your real estate education right now, we all start there.  

In the meantime: make a few extra bucks at your day job (if you’re worried about the short term $) and recognize this is a LONG term game.

Don’t buy anything at full retail. Get something at a 15%+ discount off full market value. That’s making money upfront.

All the other advice you’re getting is sound, especially about buying in good locations, but make sure to be “all in” at a 15%+ discount.

EG: yes it’s good to analyze cash flow, but don’t ignore developing the skill set and relationships that can help you capture $40-60k equity up front at your price point.

Get really good at assessing property values and rehab costs before buying. If you’re like me, you might have to ask local investors for help with this.