All Forum Posts by: Jeremiah B.

@Jon Klaus Oh how I wish I knew what bonds will return over the next 10 years!  There are lots of people more intelligent than I who could provide a far better answer.

If I had to guess, a federal-tax free bond fund (e.g. FLTMX) will return around 4%-6% over the next 10 years - beating inflation by around 2%.  Though I expect rates to increase for all debt (including RE mortgages) by ~2% over the next 2 years, so I would avoid buying bonds directly, and rely on funds.

ps - If you're considering P2P, check out this website.  It's a personal finance blogger who has been investing in P2P for a while.  He's tracked his returns, time commitments, etc. for a few years.

http://retireby40.org/p2p-lending-passive-income/

Assuming you are in great shape financially (and it sounds like you are), I'm a believer in being increasingly defensive with your money.  To say it another way, if I had the ability to take 14 months and travel the world, and still be on track for my retirement and long-term goals, I would ramp down the risk in my portfolio.  That means I would personally stay away from additional rentals or anything that has returns that correlate with rentals (notes, large apt buildings, etc.).

I prefer securities (index funds) to bonds.  But, if I were in a great shape financially and seeking low-risk and passive wealth protection - at the expense of growth, I would strongly consider some type of bond fund.

With all of that said, if you're an upper-middle-class, 30-something who has a long ways to go towards retirement and a net worth of under around 500K/passive income under around $40K, I would lean towards socks as you need the growth.  If you're a 50's something with enough cashflow to cover your expenses and a net worth of >$1.5M in generally high-risk assets, I would absolutely recommend bonds as you need the protection.  Granted, if me, you're a 30's something who hopes to retire in 17 years who is only generating around 20% of his passive-income goal, I need to be open to the risk of more real estate to meet my goals.

This is obviously hard to answer without a lot more information including a review your assets, incomes/debts, retirement plans, spending habits, etc. etc.  With that said, I'll take a shot!

If you want something that is passive, and you already have a fair amount of RE holdings, and you do not need the cashflow, I would recommend investing in stocks or bonds.  Here's why:

• Diversification.  The single most under-appreciated component in most RE investor's portfolio.
• Extremely passive.  Buy a fund, then don't touch or think about it for 14 months.
• Liquid/Accessible.
• Easy.  Forming a new business or forming a triple-net lease takes some expertise.  Investing in the S&P 500 just takes 5 minutes.

Generally speaking, you will get lower returns than in RE holdings, but it doesn't sound like returns are your key priority right now.

Great questions.  I haven't bought turnkey, but I've looked into it a ton.  Here are my thoughts:

Question 1: How to talk to multiple agents?  It would probably be easy to get tidbits of free advice - most agents will give you cliched answers for free.  It's a starting point.

A happy medium would be to connect with other investors who are active in the area.  I'll take a savvy investor over a novice RE agent any day!  

But for me, no joke - I would actually consider hiring a RE agent to act as your buyer's agent, and paying them out of your pocket.  If you work with them, it will probably be around 2.5%-3% of your purchase price, and they will be able to give you an expert view on the rent-ability, area, etc.  

Qyestion 2: How to find rental comps? I completely agree about Redfin for sales comps!

Not all states use the MLS to track rentals. And even if they do, a relatively small portion of rentals make it to the MLS. You're doing the right stuff and looking in the right locations. Zillow is OK. Craiglist's map feature is decent - though those are often outdated or inaccurate for one reason or another. I haven't had good luck with Rentometer or other automated comps.

So, two additional considerations:

It's counter intuitive, but I believe that if you have a good understanding of rental rates for the city, and the street/immediate neighborhood of your rental, you can get pretty dang close... even if the street doesn't have any comps year by.  You'll end up  much closer than the automated services...  For example, the going rate for a newer nicer 3X2 in Charlotte is 900 - 1500.  Areas with decent schools on decent streets tend to be around 1200-1300.  My place is on the NW side of town (not preferable) where housing prices and rentals are around 15% lower than comparable areas in the NE.  So, around 1100 is my number.

With all of that said, one of the reasons I would consider hiring an independent expert/RE agent is to provide a solid rental estimate.  My RE agent is also my PM, so she can speak to both in the same breath - and is easily worth that 3%.

Let us know what you decide/figure out!

Welcome to BP!

I live out of state, but invest in Charlotte.  I'm interested: you listed an interest in plexes - but I haven't found many listed.  Are they uncommon in Charlotte, or am I just not looking in the right places?

I've only been investing in Charlotte for around 10 months, but the market has already shifted significantly during that time.  With that said, there are still plenty of opportunities in my niche - though I'm worrying that I'll need to invest elsewhere if this trend continues.

whew!

Congrats John!  The first one is always the hardest!

It sounds like you're paying cash so this is a non-issue for now, but I want to highlight that I haven't been able to use a Power of Attorney for any financing. So, if you want to do a construction loan or the like someday, just be sure to double check if/how you can use a POA.

I haven't invested capital in a deal like this yet - but probably will within the next 3-4 years.

With that said, with no track record, 10% seems a bit low.  It would depend on how the upside is structured, but it feels like the lack of history is siginificant as it introduces more risk.

What is a common rate for established investors in your area?  What about for investors without the track record?

Also - i'm including Joe on this so he sees the reply above.

@Account Closed