All Forum Posts by: Gary L Wallman

Quote from @Ned J.:

Way to jump to conclusion..... you all immediately concluded that this person had a prior criminal records that would have prevented them from renting this unit...... and the local government is responsible for all of this happening....

So law enforcement never gets shot at while serving a warrant/evictions in "red states"?....

Conformation bias at its finest...

We can argue the merits/pitfalls of the ordinances as much as you want... there is a lot of it I disagree with........ but the "you got what you asked for" attitude is just plain ignorant

 Dear Ned:

Law abiding citizens don't usually shoot police officers. Oops, there I go jumping to conclusions again.

Incidentally, why would any government think they should be able to tell me that I have to rent my property to a criminal? This is precisely what they're doing when they don't permit you to check.

City is transforming in to a cesspool. Why anyone would invest in rental property there, is way beyond my comprehension.

Respectfully,

Gary

Quote from @Mike Schorah:

I heard they’re trying to make wholesaling illegal in Maryland.

I guess you’ll only be able to do 2 deals a year in Maryland. It looks similar to the Illinois law, but you’ll be able to do 2 deals a year, not 1 deal a year.

Realtors are jealous. They think wholesalers are making too much money and stealing clients.

It’s already illegal in Oklahoma, Illinois, Philadelphia. And I think Arizona made it illegal last year.

It’s unconstitutional. Right in the constitution, it says that every US citizen has both a right to make and assign any contract. Big mortgage companies do it all the time. My mortgage was sold twice and behind my back. At least I’m assigning contracts right in front of people’s faces.

 We could always outlaw everything. Think of all the potential victims we could save./s

Quote from @Shane Craig:

I'm writing this post to get everyones opinions on a deal I'm considering.

All of my previous deals I have purchased were for cashflow. This deal I'm considering has minimal cashflow( 1K-2K a month) but has a high equity potential (500K). 

Deal break down: 17 houses ( 3bedrooms/ 1 baths) that have been maintained very well by the same owners all within in a mile radius. Each house rents for $750-800 a month. The seller will sell the homes for $1,275,000( $75,000 a house). I'm a realtor and I know the market well each house is worth 105-110K. Also the seller has sold two homes for $105K each over the last two years. 

This will be my biggest purchase and I'm worried on the low cash flow. 

What are your opinions on cash flow vs equity ?

Shane,
If these properties are rented at $750-$800 per month and you acquire the properties at $75k each, you have exceeded the old 1 percent rule. This is extremely difficult to do these days. Add in instant equity of over a half a million dollars and I think you would be foolish to pass on this deal. If your super worried about the minimal cash flow (I would not be) then you could always sell off a couple of properties and have a nice cash cushion.
Gary

Quote from @Mark S.:

@Gary L Wallman just curious – which REITS are paying 10% currently?

 Not condoning any investment or giving investment advice, just a cut and paste from Yahoo finance of top yielders:

Company	Ticker	Dividend Yield	How Much You Must Own To Yield $100/mo
Chimera Investment	CIM	16.45%	$7,317
Annaly Capital	NLY	15.84%	$7,594
New York Mortgage	NYMT	13.31%	$9,022
Ellington Financial	EFC	13.12%	$9,160
Necessity Retail	RTL	13.11%	$9,160

Quote from @John McKee:

@Gary L Wallman I have a lot of respect for someone who can manage 154 SFH's. How do you do it? Is it time to cash some of those out and deploy your equity elsewhere?

 John,

I employ a full time person to manage my properties (she's an amazing lady) and 3 full time maintenance men. Have a small crew of 4 and some subs for reno work. 

I'm also a car dealer and my son's manage that business and also help oversee the rentals. I'll be 68 in a few weeks and am trying to work only 2 or 3 days a week. Tried going to Florida half the year but nearly went nuts. Now back at it a bit.

Gary

Quote from @John McKee:

A lot of us our sitting on the sidelines as the market has peaked and interest rates are driving us crazy.  Personally I'm still hunting for deals but realize this is going to be a difficult year to invest to make the numbers work.  I'm transferring capital into a 3 month CD for now as I continue to look at all asset types including non real estate assets.  

I'm an investor with a 154 paid for doors, primarily SFH's, two of which I closed on this week.

At current market levels, even though I'm a cash buyer, deals are starting to not make sense. Even the 1 percent rule, which now is nearly impossible to find, doesn't replicate the net yield of many passive stock market investments. Financing your purchases with mortgage rates in the 7 percent range makes it even more difficult.

With BDC's and REIT's yielding 10 percent plus and Index funds that do covered calls yielding 12 percent it's hard to justify real estate purchases in this environment. Sure, some market risk but no hot water heaters and HVAC systems failing and definitely no new roofs required.

Gary

Quote from @Mike Dymski:

Quote from @Chad McMahan:

Quote from @Mike Dymski:

You can get a CD right now that earns 5%...same for US Treasuries (with no work or learning curve involved).

5%? That's less than yearly national inflation

Annualized inflation is less than 3%...and has been negative or zero for 5 of the last 7 months.  Use the month over month chart rather than year over year.  https://ycharts.com/indicators...

Commercial and residential cap rates in most locations are 5% or lower.

Commercial and residential interest rates for investment property are 7+%.

I'm a buyer and have a big real estate investment in process but the opportunities are few and far between, particularly with no experience.

 Mike,

It appears to me your link is to a monthly inflation report.

The annual inflation rate for the United States is 6.4% for the 12 months ended January 2023 after rising 6.5% previously, according to U.S. Labor Department data published Feb. 14.

Gary

Quote from @Amby Bhagtani:

I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining. 

 Amby,

Not sure they do in real terms. In 1950 a median priced home was $7,354 and median household income was $2,990 or about 40% of the home's cost.

In today's term that would mean a household income of 120k owns a 300k house. Pretty spot-on in most parts of the country. Of course the coastal areas are the exception.

In 1930 a veal cutlet dinner cost 15 cents in a NYC restaurant.

One thing you can ALWAYS count on is government recklessly spending money that it doesn't have and constantly debasing the currency.

So, you have some issues of constrained supply increasing costs in highly desirable locations like coastal California. These locations may far outpace inflation. Everywhere else, short the area completely self-destructing (think Detroit), housing is simply a hard asset being chased by a fiat currency that is constantly getting weaker. A silver dime is now worth almost 20 times as much as when it was issued.

For this reason I'm still a buyer. Under contract for 2 more SFH's as we speak.

Respectfully, Gary

Quote from @Chris Seveney:

I am sure many of you will disagree with me, but I am seeing a lot of posts talk about “today’s high interest rates”

I believe there are many of us who view today’s rates to be more of the norm versus the outlier.

If you look at the current data, interest rates are not going to be dropping significantly in the near future. Could interest rates get back potentially into the 4’s, yes.

But I believe the days of the federal rate being at 0% and mortgage interest rates in the 2’s and low 3’s is not something people should bank on in the near future.

It’s not only goes for acquiring property, but for those who have invested in syndications where the exit was a refinance at a low rate.

Let the fireworks begin

 Here's the problem as I see it. The United States is the biggest debtor in the world. The current annual interest payments for the US exceeds 213 billion dollars and growing. This amount is more than the military budgets of of every other nation in the world, except China at 270 billion dollars.

As this debt rolls over into higher interest debt, that number will soar. Further, as the world's biggest debtor, inflation is our government's friend. They get to pay back their (our) debt with cheaper dollars.

Our government has no desire to reduce spending because that's how our (sic) representatives buy votes.

My bottom line? Interest rate increases will moderate and then trend downwards because there is no fiscal responsibility in D.C.

Gary

Quote from @Eric M.:

Quote from @Henry T.:

Since gas will not be available in new homes then electricity usage will increase.  Where does electricity come from?  61% from fossil fuels.

https://www.eia.gov/tools/faqs...

So you are saying it sounds like we can cut the fossil fuels by almost 40%?  Since when is that a bad idea?

But it is not mostly about cutting gas consumption. You do realize the issue is apparently the gas stoves leak gas in the home and can cause health issues for you and especially your kids? Why do people not care about that?

 Eric,

I guess we can be afraid of everything. What if you or your kid put your hand on an electric cooktop that has been recently shut off? Quite the nasty burn.

Natural gas has a component added to give it a strong odor, Hard to miss if it's leaking. Also, most building codes require CO/Gas detectors if any gas is installed in the home.

Bottom line is natural gas is way more efficient then electricity. Electricity creates heat by resistance, which create a huge electric demand and consumption. While heat pumps can alleviate this issue somewhat, they are not effective in most parts of the country that have normal winters. Even here in climate moderate SW Ohio, the emergency heat kicks on constantly when we get below freezing. Emergency electric heat is a resistance element like in a toaster or hot water heater.

So, while we think we are being "greener" we are actually burning way more fossil fuel, unless you live in an area with hydroelectric or nuclear power generation.

Respectfully,

Gary

Gary