All Forum Posts by: David Schach

 I have done a little bit of digging in LV for vrbo figures and its a mixed bag. You're vacancy rates will be a compete unknown in your calculations, so go VERY conservative, assume you are empty 50% of the time. Second, the place will get trashed at various points along the way from party people etc. Take into account higher than average repairs as well. Also factor in PM fees as well as cost to clean and refresh after every guest visit. These figures usually come out on par with just getting a standard lease at less money with fewer man hours involved. IF you find otherwise please let me know. Very curious if this can pencil out, especially on 20% down with financing. All cash is another story.

Interesting article about population trends. I was shocked to read that 47 of 83 counties had declining population. And doesnt look good in the long run either.

http://www.freep.com/story/news/local/michigan/2015/03/26/census-population/70463986/

 good point. last time i paid an appraiser it was closer to $200. but i think dropping $600 and not getting a deal done would be wasting time and money.

I read a lot of posts here about deals and buying and selling etc. And most people seem to look at their team as Broker/agent, GC, broker/lender, equity partners, PM, maybe a title company is discussed now and then. But no one ever talks about finding a great appraiser to give you accurate ARV #s etc. Why is this?

Right now, I am thinking that finding a good appraiser to evaluate my deals could be worth its weight in gold. At the end of the day its the appraised value that matters, not the BPO or someones guess etc...

thoughts?

Yeah, that is the key point that is being missed in some of the discussion. Leverage is great to get moving and all, but at some point you can easily be over leveraged and insolvent if 2008/09 comes back. What happens when the rental market takes a nose dive and rents drop 20% or you have extended vacancies etc. I guess for me, the real issue is how much can I leverage (ie how high can my debt payment be) versus what I pencil in as worst case scenario for rents and rental loss, plus all the related costs of ownership. If at my most leveraged point I can ride out the worse combination of all factors than I am okay. BUT, if under the worse case scenario I am going to tread into late payments and foreclosure then I need to either increase my capital in the bank or purchase with more cash in. Joe has a nice strategy on paper, just need to make it work in the real world, where every market is different. For example that would NEVER work in SF Bay Area where at 75% LTV nothing will cash flow.

to me, investing in $500 houses in Detroit is all about playing the LOOOONG game. you are buying dirt, hoping that something reemerges from the ashes.

Are there any las vegas wholesalers who understand MFR or at least 4 unit buildings at the smallest. Looking to network with a few people and get a first hand view on whats happening in the market right now.

 And there in lies the rub. Its all about the individual and what they are comfortable with in terms of risk exposure. But you arent arguing that you can achieve X without leverage faster than someone else can achieve X with leverage. What you are arguing is that it takes more risk to speed up the process. And everyone agrees with you. The american way is to get rich quick remember, and then default and make someone else clean up the mess. Or win the lottery, which ever comes first.

 Adam,

what i think you are missing and what you eluded to is 100% cash equity vs something other than 100% cash equity to start building a real estate portfolio. 

If you only have X dollars to start with how do you  grow your portfolio to increase your cash flow? You either buy 1 property and MAX out cash flow or you buy as many you can given underwriting guidelines.

And yes, 100% cash ownership of a house will always cash flow better than 20% equity and 30% better than 20 and so on. Just forget about the value of these house for a minute, just assume you can borrow up to 10 SFRs, would you rather have 5 or 10? or 1 or 10? 

Take all the money you can get if you are cash flow positive on each property after expenses and debt service. Use your cash reserves to weather a storm or whatever. And remember you now have 10 people paying off 10 mortgages instead of 5 people or 0 people. Make someone else work a W2 job to pay off your debt.

 thanks for that clarification.