All Forum Posts by: Jeff S.

@Sam Huang the title of your post says you are a wise and successful person. People with good incomes have historically done well in either the market or real estate over the long term.

For myself I cannot stomach the gyrations in the stock market so for me RE is less risky but I am not living entirely off it either. 

@Jonathan Greene 100% agree but sometimes people (like myself) have to learn the hard way. 

Now it used to be if you got a job with the government and could count on a fat pension then life could be good and with a few rentals excellent. Maybe not so much anymore. 

Now as far as unplugging toilets just call a rooter and write a check. If you own long enough you should not have to lift a finger. 

@Hector Espinosa when will you hop on a plane and check out your investment? Will it be after it has been stripped of all the appliances etc etc?

Go to the neighborhood at 2 in the morning and see what is going on. Maybe take a cab and ask the driver about the area. If the cab driver is scared you should be too.

Cash flow is not a static number you can't predict with any accuracy what it will be. It can look good on paper but reality is another story. 

@Jay Hinrichs how about one stop shopping at Costco.

My other thought is that RE brokers should not cooperate with other brokers but sell their own listings for 3% and handle the financing. With prices what they are the commissions are huge. We used to do all the qualifying as agents, push the loan officers who didn't want to work to get the job done, give comps to the appraisers etc. etc. Now they write the offer and send it online. Too many people involved to do a relatively simple transaction.

@Eli Kantor 

The complex I still follow having invested and owner occupied is over 30 years old and has 340 units. Many older owners bought new when starting retirement or before and have aged along with the complex. Compare those owners with younger owners who have higher incomes and more desire to build large reserves for the future with the older folks who won't see the future and you can see the problem. Imagine these older folk's financial planners did not plan on high inflation. 

Looking back 10 years this complex had dues increase for most years at around 3% but for 2023 it was 18% and 2024 19%. 30+ year old complexes really start wearing down and many times were not the highest quality construction. At one time they were trying to figure out how  to finance a $10,000,000 roofing and siding project but got bogged down with attorneys and all the mess that goes along with a project that size. The can just got kicked down the road. 

While condos might be all someone can afford to owner occupy or invest in enter at your own risk and if they are talking about future special assessments you will likely scare future buying prospects away. 

As everybody has noticed the increase in materials and labor has skyrocketed which has thrown a wrench into condominium reserve studies. Since reserve studies attempt to forecast replacement costs of items over a 30 year period they are having to recalibrate since the reserves they are now using did not use the latest increase in construction costs. This is not a lot different than the problems syndicators have had. 

Dues increases and/or special assessments will be part of the deal going forward. I feel for these older folks on fixed incomes where large increases back to back are painful. And investors can get hurt if you love condos.

@Ginger Vaadi I would agree the 50% rule probably more accurate over time. Try not to have your PI payments exceed 50% so assuming 50% expenses and short and long term cap x you might be safe. You can make adjustments along the way. Cash flow is gravy but don't count  on it.

@Jonathan Greene I don't mind them generally but when they raise huge amounts for syndications that go south that is another story. Always consider the source. Buyer beware!

@Kevin S. I like one of our attorneys viewpoint (from our REI) who owns lots of property, He holds properties that have mortgages in his own name and holds larger properties where he has partners in an LLC. Your advisor is right on in my book.