All Forum Posts by: Doug Sah

@Doug Sah given that your current business are generating good cashflow, are you looking to dive head-fist into a new investing arena and start from scratch with education and networking? Or are you just looking to diversify a portfolio that's already performing for you? If it's the latter, why not looking into more hassle-free or even passive REI options? The tax advantages and long-term cashflow are still there, and there's much less of a learning curve.

Cashflow and capital preservation are not two strategies that go hand in hand.  Yield in an asset are a function of the risk of that asset and market. So the higher cash flow properties/markets have much higher price volatility, which is the opposite of what you seek with a capital preservation strategy.

I respectfully disagree, I don't feel like the competition in the DC market is overly "stiff." Over the last three years I have been able to pick up three B Class, 1% rule properties in DC, two of which were sitting on the MLS for months.

In regards to high prices in DC, isn't that the trend that you want?  That means the market is appreciating, versus a $75,000 house in Ohio that will still be $75,000 in 5 years. That's like not wanting to buy a stock because the price keeps going up and it keeps hitting new highs, and instead wanting to buy the stock that is cheap because the share price is low because the share price hasn't moved up for years.  I would rather buy a $1,000,000 property in DC that I know is going to appreciate than a 2% rule property in Ohio that will never be a $1,000,000 property. 

You have $500k, you can make it work here in DC.  With $500k you can buy 3 cash flowing DC rental properties in nice neighborhoods (no risky war zones or ghettos needed) and make about $8,000 a month in cash flow.  How do I know?  Because I did it.  Those last three DC properties that I mentioned above produce approximately $8,000 a month in cash flow. Cash to close on each of those three properties was about $150k to $200k, so with $500k you can definitely invest locally in DC and cash flow and get the benefits of appreciation which you aren't going to get by investing in Ohio.  

Doug, 

I like your general strategy but would suggest you start with a deal that it's more local.   What part of DC do you live in?   I invest in LA and Cincinnati. I bought a 22 unit apartment in pleasant ridge,  Cincinnati and did a huge rehab on it.   It was very hard finding people that we'd could trust to help us. I realize if I hadn't learned from my local investments I would not have been able to handle it.   Right now what you need most is knowledge,  your other business surely took a lot of study to perfect, this one does too.  

If I was starting from scratch (w/500k...I guess that's a lot of scratch)m here's what I would do:

1 - Learn how to analyze Markets to find the Micro Markets within the larger general markets

2 - Learn how money works

3 - Learn how to develop a plan based on specific financial goals

4 - Learn how the first 3 above must work together as one to reach success

5 - Apply the above within specific micro markets that whose profiles match the criteria required at the specific timelines within the Plan

6 - Develop my Power Team that includes:  Accountant, rehabers, lenders, partners, property managers, and a series of RE Agents (NEVER just one)

7 - Now, analyze the individual properties within the Micro Markets found in Step #5, making sure NOT to negotiate against myself

6 - Follow the  2 Golden Rules:  Never,EVER, spend your seed money (that 500k).  Use it to infinity, but NEVER spend it.

7 - Learn the meaning of this series of numbers: 1073741824, memorize that string, and apply it to every decision you make in your REI.

8 - Flip your seed money, take the profits and add them to your seed money until you reach the number needed at the time as defined in your Plan.

9 - Continue to flip your seed money (use it), but now spend your profits to eliminate personal debt, and to buy cash flow properties to cover monthly bills.

10 - Repeat 5 - 9 until goals are achieved in your plan, then...

...start another Plan with a different set of goals...using the seed money that you still haven't spent from the first Plan.

Incomplete:

1  Where exactly in these markets

2 - Exactly what will your rehab budget be?

3 - Why 25% down?

4 - Increase rents from what to what?

5 - Refi based on what values at purchase and refi?

6 - Repeat what?  Not enough of the blanks filled in to know what you will be repeating.

Why are these unanswered questions important?  You can't answer your main question without knowing the answers to mine, because without my answers...how will you know if it will work or not?

Well, I guess we can answer that question when you fill us in on what your strategy actually is.

@Doug Sah, I would move on then.