All Forum Posts by: David Fern

Cash

I only gave this about 30 seconds of thought, but here’s my shoot from the hip answer ⬇️

I’d invest it in 2 different OOS markets (for diversification) that have high likelihood for appreciation. I’d pay cash for all the homes, putting $500k in each market. These would be markets that my family and I would want to visit for travel, and also to check on the properties from time to time.

I know this would not produce the greatest return, but I am 42YO with younger kids, and that immediate cash flow would really free up options for me and my family. I’ve got other mortgages in my local market that are more of the long-term play. Plus, I could refi and pull some cash out if mortgage rates ever get back down in the mid/low 4’s.

Fun to dream about!

In my market, I come across about 1 strongly underpriced new listing per quarter on the MLS. The last few were actually inherited properties that needed $5-10k of cleaning/updating (same $ as most of our tenant turnovers) and were listed at about $75% of ARV. And the agent was out of town or inexperienced and didn't know its value. Both times, the inheritors just wanted it to sell fast.

I have alerts on the Zillow App, and after walking the property with my agent, I’ve made a cash/no inspection offer within 3 hours of list on the last 2 I’ve seen, and was able to snag 1, but lost out on the other when someone acted faster. I’ve tried the 90+ days route and it’s often been delusional sellers so I’m kind of tired trying that:

Agreed, you definitely have to know your market really well in order to do this.

@Zoe Brennan I recommend you focus on increasing your income and saving more. Get to where you can save $25k, 50k, or 100k a year. REI is capital intensive. Learning to make money is a VERY important skill set and an often overlooked point in these forums. 2nd tip… house hack once you've saved more. Good luck!

While it is good to protect your assets, it sounds like OP is overthinking it and also making up worst case scenarios in his head. My advice is to form 1 LLC, keep it simple, and move on. Stop making up boogeyman scenarios in your head. I've been there done that, it's not worth it. Everything has risk, but you're in a good spot. If you want to mitigate all risk, sell your real estate, and hide the cash under your pillow, and don't get out of bed ever. Na, JK, that's no way to live.

Don’t do it. I don’t allow aggressive dogs in our rentals… ie pitbull, Rottweiler, bulldog etc, no way man. We put “all pets subject to owner approval in our rental listing”.

Absolutely 110% charge a $250-$500 (these are the normal ranges) nonrefundable pet fee + monthly pet rent. I charge $250 + $25/mo. Good pet owners certainly understand this. This is unlikely to be profit, this is to cover your costs on the backend at move out.

Secondly, find a good pet addendum and have them sign it. Be willing to hold them to these standards.

One of the best things I ever read in these forums was to be firm, but fair. You’re exposing yourself to risk if you allow certain pet breeds. Don’t do it, be firm, but still find a way to show tenants you value them.

@Benjamin Ying I recommend you take time to read through some of the horror stories that have happened to some who’ve tried OOS long distance investing that are in these forums. Don’t get me wrong, some people have been very successful with OOS the last 10 years, but today is a very different market from 2012-2020, and I think you owe it to yourself to understand what can go wrong.

People who are successful versus failed with OOS tend to follow certain patterns. Successful people buy quality property in good locations, have a long-term perspective, adequate reserves, realistic expectations, and a great team to manage the property. Many who fail fall short in these categories. At least those are my observations.

If you’re comfortable knowing the OOS risks, and still want to move forward, then great job, now you know what you’re getting into, which is part of due diligence. I personally would never ever invest in another market that I can’t drive to within 1/2 a day on my first investment. As they say, you don’t know what you don’t know. 

IMO, BRRRR can be a decent strategy for the right person in 2025, and it's what I'm doing right now. I certainly understand it's not a "home run", and it's also not as good as it used to be in 2012-2019!

I am in my working years, not relying on rental income, and am focusing mostly on improving my overall net worth (not as focused on living off the cash flow). Once my net worth gets high enough, I’ll probably 1031 into higher cash flow  investments.

In my area, a quality B class SFH is worth approximately 300k, so if I'm all in 240k, my net worth went up. I am getting a mortgage for about $175k, putting 70k down, and the rent of approx $1900 is a near breakeven cash flow investment when I self manage.

I am sure there are investors out there getting better returns than this, but I am a busy working man with a family and I am playing the long game. I can always sell if I change my mind, and hopefully make a few bucks, worst case break even, since I am buying at discounts.

With BRRRRR, an often ignored benefit is the security (if done well) of being all in 75-85% of ARV. I've lost a lot of money on my 3rd deal, and it was very distasteful.

I am keeping my eye open for better strategies, just haven't found one that's fits me better than BRRRRR at the moment.