All Forum Posts by: Gregg Cohen

This will be a great event!  Our team is excited to be there!  Thanks for all you do @Glen Friedman!

Zillow just released data on the fastest growing neighborhoods in the state of FL.  The fastest growing neighborhood is in Jacksonville with 47% appreciation year over year.  In fact, 9 of the 21 fastest growing neighborhoods are in Jacksonville.  Only 5 cities made the list (Jacksonville, Tampa, New Port Richy, Lakeland, St. Petersburg).

Now is the time to be investing in affordable neighborhoods in affordable real estate markets. This is where your investments are poised for the most growth over the next real estate cycle. Affordability has always been a big driver of population growth and demand but with the the rise in home prices that has already occurred, it will become an even bigger driver over the next 10+ years.

https://www.bizjournals.com/ja...

Hi Artem, I run a turnkey company in Jacksonville, FL and I'd be happy to help in any way.  Your purchase prices in Jacksonville would be roughly $180-$275k so you'll be close.

There's a big difference between a "turnkey" and a "vertically-integrated" investment company.

A turnkey company sells you a property. Some may also do the property management in house, but most outsource it. That company typically operates in multiple markets because they are in search of inventory.

A "vertically-integrated" investment company is a much higher threshold. And this higher threshold translates into higher risk-adjusted returns on investment over the long haul.

A vertically-integrated company buys the property, builds or renovates it in-house, and does the property management in-house. But here's where a vertically-integrated company differentiates itself.

A vertically-integrated company is committed to one real estate market. They are major players in the social, political and economic policies and initiatives in their market. They invest their own money to develop land, buy downtown buildings, and serve on local boards so they can be in the "know." They're efforts help to create a runway for future investment opportunities for their clients and also attract jobs and talent to the area in order to raise median incomes. This allows rents and home prices to continue to rise which will increase returns on investment over a full market cycle.

Want to know which neighborhoods are positioned for rent growth and home price growth over the next market cycle? Look for where a "vertically-integrated" company is buying and selling. Odds are you want your money to be where they are.

@Nate R. - Thanks for sharing your real-life experience in investing in rental properties.  Sometimes things don't go according to plan but it is critical to work with a team that has your back during the good times and the not-so-good times of investing.  

Even though we prepare all clients for the risks associated with investing, our client service team felt that we really wanted to go above and beyond to make sure your first experience as a client was positive.  So we decided to cover your mortgage payments for the roughly 8 months where you didn't receive rental income.  We have also covered any expense associated with the costs of turning the rental property (above the security deposit that we recovered for you.)  We have also agreed to waive your next tenant placement fee.

I hope this shows you how much we care about your experience and how much we value your relationship.  The eviction moratorium was a real challenge for investors and property managers but we're thankful the worst is behind us.  You have an incredible asset in a growing real estate market and I expect it to perform very well over the next full market cycle. 

Thanks for being a client!

@Dennis Maynard Now is the best time to invest in hard assets like cash flowing real estate. Interest rates are low, inflation is high and prices in most markets are expected to increase at a higher rate than normal over the next 1-3 years.

Remember, financially free beats debt free.

Buy the cash flow property.

@Daniel Correia Thanks for the support! Yes, rent escalations are huge and can be accomplished within a 2-3 year lease.

@Account Closed - I appreciate your perspective.  It seems like you had a great experience with the recent property that turned over and I'm happy it worked out for you.  I've owned and managed rental properties for 10+ years and I could also share dozens, probably hundreds, of examples with 0 days on market and $0 maintenance costs of the turn.

The $5k-$6k average cost per turnover comes from a data set of managing over 4,100 properties in Jacksonville, FL for 10+ years.  It includes the opportunity cost of lost rents, the average repair costs to put the house back into great rental shape and the subsequent tenant placement fees that you will incur if you work with a property manager. 

Too many investors have rosy-colored glasses when they get into rental property investing and then they end up frustrated with the lack of consistent, positive cash flow.  I take a different approach with our clients.  Prepare for the worst and hope for the best.  

Hey @Nick Henry - Congrats on getting started.  My advice would be to focus on all 5 profit centers when buying and holding rental properties.  Most investors only focus on cash flow but the other profit centers will actually make up more of your total return on investment after you hold onto your properties for a full market cycle.  The 5 profit centers are:

- Net rental income (positive cash flow)

- Tax savings

- Principal paydown

- Home price appreciation

- Inflation-hedging

I've been investing in Jacksonville, FL since 2006.  I love this market because you get enough positive cash flow but you also have much higher home price appreciation than in other cash flow markets.  Here's Jacksonville's measureables:

- home prices 27% below the national median

- gross rents .3% above the nation median

- 19% more home price appreciation than the national average since 1991

Look for a market with similar numbers if you want to maximize your 5 profit centers. Most investors get so focused on cash flow that they invest in markets that are slow or no-growth. This ends up costing them hundreds of thousands of dollars over a full market cycle. And all of this data is readily available from your local MLS, the US Census, and the Federal Housing Finance Agency (www.fhfa.gov.).

Good luck!

I'm always surprised that more folks in the BP community don't see the advantage of long-term leases.  For our clients and my own personal rental properties, there's no question that signing a 2-3 year lease with a resident results in a win for the property owner and a win for resident.    

When a property turns over, it costs the average property owner $5k-$6k in vacancy cost, maintenance costs, and a new tenant placement fee. The reason most rental property investors are not successful and end up out of the investing game is because they work with property managers who only sign month-to-month or one-year leases and investor incurs this cost every year or so. However, if you sign 2-3 year leases and focus on a strong lease renewal strategy, your average duration of resident stay might be 3, 4 or 7+ years like REI Nation and @Chris Clothier.

Just look at the numbers:  

All-in cost of prop turn: $6k per turn (vacancy costs, repairs costs, tenant placement fees)

Potential rent escalation per year: $600 - $1,200 (typical for most cash flow markets)

Would you incur a $6k expense every year to potentially make $600 - $1,200?  Of course not.  

*And here's the kicker...we STILL get these rent escalations during the 2-3 year leases so I fail to the see the downside here. 

I'm with @Chris Clothier.  The way to win in rental property investing is buying and holding for a full market cycle (10-20 years.)  You need consistent income from rents to help you stay in the game that long so you can maximize your 5 profit centers.  Long-term leases are the foundation of why our clients are achieving consistent passive income.