All Forum Posts by: Fred Maul

Ryan Tucker What do you consider an emerging market?

I have two rental homes and so far I have been very lucky. They usually don't stay empty more then 2-3 weeks. I worry that with multi-family units that could be worse. I am sticking to the 50% and 2% rules to help widdle down the options out there.

I had a similar situation. My rental house caught fire and I had a reserve of 6 months payments built up for emergencies (didn't know about the 50% rule at the time). It allowed me to pay my mortgage and do upgrades to the house. Thankfully, I have an awesome insurance company and I was fully paid for lost rent and the house looks way better then before. I think I would have been freaking out had it not been for that specially designated reserve.

Shanequa J. I will attend. Can I get the location?

HELOC are for short-term, not multi-year investments. You can't control the interest rate risk over time. Investments have risk, taking loans is risk. You have to manage risk... or take calculated risks by putting controls in place to mitigate catastrophe.

There is a ton of information on how to invest money in real estate around here. Do have an idea what direction you want to take? I assume you are looking to buy property to rent (versus private lending or flipping).

It's a numbers game.

Leverage = risk; what is your risk tolerance?
Leverage can amplify your returns or losses.

IMO, you want your money to be working for you. Equity is is generally dead money. If you refi to 30 years at 3.75% (loan constant around 5.5%), then take cash out to buy another income producing asset. Based on the above example, that asset should earn more then 5.5% plus a risk premium to make it worth while for you to do so. Or you could possibly take that money and work with a hard money broker to loan your money and make 9-12% interest. Is making 3.5%+ on the spread a worthwhile risk premium?

Also, make sure you consider all your assets in your portfolio and determine if it's within your overall risk tolerance. IE, stocks, bonds, money market, real estate, life insurance, etc. Take a wholistic approach. If buy taking on additional risk, you can't sleep at night then its not worth it.

I'm 36 and had some of the same concerns you do. This place had really helped me to put together a game plan. Good luck!

Most of the flippers on here seem to advertise so that property owners call them. The only bad thing I have seen is potential competition from hedge funds buying thousands of properties for rental purposes. If you poke around here, you can find a lot of info. If you look under "learn" and select "flipping" article, you'll get some overview. In real estate marketing section, you'll learn how they get properties and resell them.

Black Stone Group is buying 15,000 homes in Tampa to rent. They are looking at single families from $100k-$170k with under 20 years of use.

I honestly think that the hedge fund manager in OPs posting is an idiot. I doubt any hedge fund could buy all the property out there. They are acting that way to try to get people like him to sell their portfolios.

My belief is Tampa. Low prices and decent rents.

I can back this up with the following reference. If a large hedge fund with people way smarter then me see the same potential, then I think I am looking in the right place. :)

http://www.tampabay.com/news/business/blackstone-groups-says-its-looking-at-tampa-bay-for-rental-properties-but/1252829

What should I factor for repairs and maintenance. The renters pay their own utilities and mow their own lawn. Is 10% of rental income a good estimate? Their hasn't been a vacancy in two years. I want to set a realistic long term expectation. I know the worst case is that I end up replacing septic systems (I had to do that in my first house in Tampa and it was expensive).

Thanks for your reply. Just to clarify, the septic already exists on the existing mobile homes. They need to be added if you add more homes to the lot. I will have it checked regardless. If I think it's worth while I can continue adding to create a portfolio. If it's too much work for me, I can move in a few years.