All Forum Posts by: David Harriman

 Who did you end up using in Omaha?  Are you happy with your choice?  

@Aarron Light , I'm with you 100%. Equity can dry up in a rough market and/or **** can hit the fan unexpectedly with repairs or losses not covered by insurance. Without having good cash flow to help absorb those situations, people had damn well better have a lot of cash on hand or in savings to draw against. If you have a portfolio of 10 properties netting a combined cash flow of only $1,000, the rental market has a several month hiccup where you have 3 vacant units, all of which have turnover costs, and the housing market has come down (eating up your equity), are you able to comfortably float the mortgages, repair costs, etc. while you wait to get new tenants in there? It's a risky move. Being just equity-focused could quickly cost you not only properties but also reputation with investors. I have 5 SFR with a mortgage, tax and insurance cost of $3k/month. My rents bring in $5k/month. Even cash flowing $2k/month leaves me nervous. It's pretty safe, but certainly not all-weather safe. I'd be a nervous wreck if I had a $3k nut with only $3k in rents. I'd have no ability to sustain an 18-month soft market combined with a basement flooding and a failed furnace or roof. That's just my $0.02, but I value being able to sleep at night.

Thanks for the replies.  Very helpful.  Glad I found BP podcast!

I had good timing and got a good deal on a rental property I purchased in the Denver area about 2.5 years ago. I bought it for $238k, put 20% down. Rents are up to $1850/month in the area, but the home value is up to about $375k for the property. The way I look at it is, I wouldn't buy a home for $375k that I could only rent for $1850, so why continue owning it if money can be better used elsewhere? I know it's impossible to time the market, and the Denver area may have plenty more room for growth, but I'm more interested in the cash-flow game than riding the appreciation wave. Having said that, I'm torn between which route makes the most sense: Do I 1031 to save on tax, or do I pay the taxman on appreciation, but keep flexibility with what I can do with the cash?

The downside I see with 1031ing is that it forces me to get into a relatively move-in ready property since I can't roll my equity into rehab.

The upside for paying gains on my equity is that I have the flexibility to sit on the cash indefinitely while looking for a sweet deal, and could buy something that's needing some love, and have the cash to make it happen.

A little about me and my goals:

-My risk tolerance is about 5 or 6 out of 10.

-I'm primarily interested in building a portfolio of cash flowing rentals (open to multi-family or SFR). I'm more interested in the potential for cash flow than I am for appreciation (though both would be great!).

-I'd like to have 10 to 15 doors 10 years from now.

-I am self-employed and have a fairly flexible schedule.

-I'm open to having to hire out moderate rehab on a property I purchase if the numbers make sense.

-I'm most likely going to be buying in either CO Springs, or Omaha.

I'm new to this site, and appreciate your feedback. Thanks in advance!