All Forum Posts by: David McKelfresh

@Account Closed I work as an agent in Denver and work with investor clients frequently.  Funny enough, I actually do a lot of my investing out of state.  I would agree with some of the comments above, what are you specifically looking for b/c if you're looking for cashflow you're going to have a hard time with that in Denver.

Some interesting opinions here.  There are a lot of theories but I think the best thing to do is break this down into simple Supply vs. Demand.  This will be market to market, but in a lot of markets around the country the supply of homes hasn't been keeping up with the demand.  Over the last 6 weeks, we haven't seen a disproportionate decrease in either of these metrics, we've just seen that fewer buyers want to buy & fewer sellers want to sell.  With that type of a market prices won't change much.

What will be interesting is how economic factors affect supply & demand.  You'll likely have some people that have to sell because they've unfortunately lost their jobs and others who can't buy because they lost their downpayment in the stock market.  But the affects of those situations on supply & demand will likely be less drastic than the flood of foreclosures we saw in 2006-2010 due to bad loans - where supply sky rocketed.

The FED knows they need to keep interest rates low, which will prop up demand.  We will likely see some stagnation in prices for move-up buyers & Luxury homes, but the buyers that are the engine room of the real estate world (first-time homebuyers) will likely remain strong because their decision remains the same....."Cost of Renting vs. the Cost of Buying".

I don't think the future is all roses, but until we start to see some drastic increases in supply, I think prices will remain strong.

I've actually had several clients do something like this. They buy a SFH and convert it into an up/down duplex with a shared laundry area. The ability to access both spaces from the laundry allows them to sell it in the future as a single family home.

My biggest concern would certainly be the insurance piece, but I suppose that's dependent on your risk tolerance and what your insurance provider can set-up for you.

I love the variety of answers here.  Honestly, I would agree that it's really hard to give a silver bullet answer.  There are just too many options based on your situation, risk tolerance, access to cash, etc.

What I would say is that you need to focus on 2 things:

1) Pick one thing to get started with, laser focus on it and get really, really good.

2) Get started...

Good luck!

My first purchase was a house hack. We live in Denver where prices are pretty expensive, so we bought a home that also had an ADU/Carriage House. Renting that out we saved a ton on our mortgage so we could buy additional properties.

Good luck!

@CJ M.

Thanks for the info.  Do you mind giving a ballpark on the terms of some of those portfolio loans?

Also, is this a lender that is located in your hometown or in the area where your properties are located?

I understand the 10 loan restrictions for Fannie Mae / Freddie Mac as it relates to home purchases & refinance options.  Once you've accumulated 10 loans, it sounds like the best options on the purchase side of things are portfolio loans & private lending.

I'm curious if those are also the best routes when it comes to cash-out refinances (BRRRR) or if there are different options investors should be looking at?

I'm looking for further insight into why some investors struggled through 2008 that may be less obvious.  I'm hoping myself and other investors can use those moments to get through future recessions.

I understand that 2008 was a unique crisis because it was a "housing induced" recession.  But I'd love to get some insight from investors who were using the buy & hold model that ran into issues even if they were following these guidelines:

- Had minimum 25% Equity in properties

- Minimum $150 Cashflow on each property

- Minimum 6 months of reserves

These are the main areas that I've seen investors bring up for why they have struggled to get through tough times.  

I know it's not this simple....cities can have mass unemployment, net negative migration, etc.  There are tons of factors that can affect rentals & rental demand.  I'm curious if there are any other factors that investors may have noticed like smaller markets, specific rental classes, etc. 

Any additional insight from 2008 would be awesome....thanks!

--David

I've got 8 months+ of reserves set aside for all of my properties. We've also got a HELOC that we can tap into if needed for anything crazy that may happen. So far we've never run into a situation we can't handle with those two safety nets.

--David