All Forum Posts by: Eric James

If your "cash flow" estimate doesn't include vacancy, repairs, and cap ex then it isn't cash flow. Ignore the fantasy advice you're getting from some who don't know what they're talking about. Also ignore the cash flow claims of your friends with STRs.

In East TX right now a lot of properties won't have positive cash flow if financed, which means they don't make good rentals. It sounds like that includes most of your properties. I was talking to my local loan officer the other day who said they are making zero loans on small rental properties right now because the numbers don't work on any of them.

After all is considered it sounds like you have negative cash flow. If that's really the case you need to sell whatever is necessary to get to somewhat positive cash flow before you burn through your nest egg and start losing properties to foreclosure.

Agree. But whats your thoughts of a business line of credit or All In One Heloc loan? Use that as necessary. Long term building equity.

Unless it gets you to significantly positive cash flow you're eventually going to bleed cash until you fold. I focus more on building long term equity myself, but you need significant cash flow just to survive problems that will arise. It can also help you qualify for future financing (debt:income, coverage ratio).

1 Vote

Lubbock, Texas

0 Votes

Lubbock, Texas

Quote from @Henry Clark:

2. Your in Texas, use that to your advantage..

3. If in Wichita Falls start a trailer park. Rent the lots and not the homes. No zoning in Texas counties.

4. Texas property tax sales. Buy the unlisted properties. Pick nasty or strategic and flip. Land only and not houses. This is to get more cash around you.

That's not the way TX tax sales work.

Also, while there is no zoning in TX counties there are regulations on developing trailer parks.

1 Vote

Lubbock, Texas

Quote from @Jay Hinrichs:

Quote from @Eric James:

Keep in mind in TX you likely won't be able to get title insurance for 2-3 years on a tax sale property, so not a good idea to spend money until then.

can you do a quiet title to speed up the process ???

Even though there is only a 6 month redemption period, the previous owner could potentially contest that the tax sale never should have taken place. That's why title companies won't give title insurance for a few years. I don't know if they might give title insurance if the previous owner signed off that they wouldn't contest the sale.

0 Votes

San Angelo, Texas

Keep in mind in TX you likely won't be able to get title insurance for 2-3 years on a tax sale property, so not a good idea to spend money until then.

1 Vote

San Angelo, Texas

Quote from @Jay Hinrichs:

Quote from @Sarah Kensinger:

Quote from @Jay Hinrichs:

Quote from @Sarah Kensinger:

Quote from @Jay Hinrichs:

Quote from @Sarah Kensinger:

I feel your pain, very much so! It's great when a property cash-flows as a LTR as well as a STR, but it's a hard pill to shallow when you know the cash-flow could double or triple as a STR. But instead, a few people with their agenda pass policies that stand in the way.

to play devils advocate here.. What agenda ? folks that paid a lot of money for an owner occ house and a stable neighborhood might have an issue with the property being run as a hotel?
Seems to me those are pretty fair agendas to have.. also Seems to me STR should be in areas ZONED for it and permitted for it so homeowners if they want to buy there know going in that there will be transient use next to them. Seems to me its only an Agenda because your in the bizz and or you dont have to live next to it.. I would be Uber pissed off if one of my neighbors started to use their house as a STR. so other side of the coin.

I know in Charleston SC were i built quite few homes downtown its highly regulated as it should be and if your zoned and permitted then the price reflects it on the purchase side they are sold as income props.

Yes, but some of us deal with Karen and Karen so that changes everything. I'm surprised you're on this forum if that's how you feel about STR. Some of us are in vacation markets that only survive due to the visitors that frequent the area, and the STR that houses all the guests. If someone decides to live there, that is their choice. I would happily live next to the homes we and other similar operators host, much better than the guys that have the marshals show up and the house explodes! This is America with all the freedoms we are blessed to have, so that means some may do things to their properties that others don't appreciate.

like I said I was just playing devils advocate .. I have owned STR's myself. I dont particulary care to own them anymore i sold them.. too much work for me.. we moved to Mid term fully furnished I like that WAAAAY better. Perosnally.

I'm sure the MTR forum would appreciate your insights since STR are awful.

LOL too funny.. I think its somewhat irresponsible though to be touting this when folks take on such risks that we are seeing where they think they are going to make a bunch of money then they get their hands slapped.. which is my point about being correctly zoned and permitted .. do you think that is a bad thing ??

I understand owner occupants not wanting STR nearby. A third side of the coin is when owners bought houses for STR that was allowed at the time. Now, after the fact the regulations are being changed.

0 Votes

Jersey City, New Jersey

Quote from @Whit B.:

Quote from @Eric James:

Quote from @Whit B.:

@Dave Meyer it is hands down still the best asset class. As an investor and an agent I can put 5% down and get 3% (more or less) back in commission. If the property cash flows $0, gives me $0 in tax benefits and appreciates at 3% per year on pace with traditional inflation it’s still a massive winner. Let’s put some numbers to it.

$500k purchase price. $25k down. $15k in commissions on an 80/20 split yields a $12k commission. $13k net cash out of pocket (plus closing costs if you can’t get a seller credit to cover, I usually can).

3% appreciation is $15k per year on my original investment of $13k.

Show me another asset class where I can make 115% on my money. It simply does not exist. I did this 8 times in the last 8 years. It is simple and repeatable.

So you have a 0% interest rate, no property taxes, no insurance cost, and no maintenance/repairs?

Did I say that? I said cash flow was $0, so my rental income is equal to my PITI + vacancy & maintenance costs. That’s the basic definition of cash flow after all.

Yes. You wrote $15k appreciation on your $13k investment gives you a 115% return. That is only the case if there are no other expenses. And you're not getting 5% down on a rental property. That would be a primary residence.

0 Votes

Quote from @Whit B.:

3% appreciation is $15k per year on my original investment of $13k.

Show me another asset class where I can make 115% on my money. It simply does not exist. I did this 8 times in the last 8 years. It is simple and repeatable.

So you have a 0% interest rate, no property taxes, no insurance cost, and no maintenance/repairs?

1 Vote

I barely think about my monthly income, since I make enough to cover my simple lifestyle. I'm focused on what my net worth will be in 20-30 years that will go to my children.

3 Votes

Quote from @Peter W.:

I agree with you but for different reasons.

Engines of economic growth —> population growth and high density —> more liberal people.

But also

Engines of economic growth —> higher returns.

And

Also population growth —> higher returns

I consider the government policies to be at best secondary.

Just look at the Midwest where outsourcing led to and population decline led to stagnant or decreasing housing prices in cities like Rochester, Buffalo, Cleveland and Detroit despite all those cities being decidedly blue. The classic blue cities, SF, LA, Seattle, NYC, Boston are all the best deep water ports in America.

And something that seems to not get noticed is that population trends have been changing.

1 Vote

All Forum Posts by: Eric James

Eric James has started 22 posts and replied 2192 times.

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Post: I bought my first piece of land in a tax auction, how to develop?r

Post: I bought my first piece of land in a tax auction, how to develop?r

Post: Township changed ordinance rules for Airbnb, HELP!

Post: Is Real Estate Still the Best Asset Class?

Post: Is Real Estate Still the Best Asset Class?

Post: Whats your ideal monthly income? How many homes/doors will you need to achieve this?

Post: Investing in Blue States > Investing in Red States