All Forum Posts by: Stone Jin

@Philip Orwig

We started looking at the Toledo market in 2018 after we couldn't find the returns we wanted in our local market. At first we couldn't decide what asset type to buy, we kept looking at cheaper houses however the numbers were never worth our time. I'm not saying the numbers don't make sense, they just weren't what we were looking for. Once we settled on an asset class (bigger SFH) we started shopping around for a realtor. I'm currently on my 3rd realtor in 2 years. You can use a site like zillow or danberry or some other local brokerage to query the MLS until you figured out what niche works for you, then find a realtor. Since you are a new investor, I'd recommend working with an agent that has some experience and integrity to tell you if its a good or bad investment.

I currently have a small portion of the portfolio with a Property Manager, we are not happy nor upset with them.  Once the tenants move out, we will take back possession and self manage.  Self manage from 2300 miles away is a challenge but it's not so bad if you look at what it costs you to hire a PM(on average 12-14% of gross rents) with our numbers it's thousands a month in fees.  I can afford to get a brand set of appliances each month in lieu of a person who collects a check and calls contractors as tenants call them.  We self manage in Phoenix so we have most of the systems in place to screen/lease/collect online.  The only thing we didn't have was someone to unlock a door, which I now have a few people in place to help with that.

Our criteria is pretty simple, we want at least $400 net cashflow and 10% Cash on Cash return.  The price is irrelevant, but generally our properties are bought between 100-180K and rents between 1400-2200 a month.

Let me know if you need more info.  I think investing in better neighborhoods is the best way for an OOS investor to invest.  I find investing in C neighborhoods too risky esp if you are not familiar with the city.

@Philip Orwig I graduated from Old Orchard and Sylvania HS.  I can tell you we currently only look at houses in Sylvania schools.  The rents in Old Orchard doesn't seem high enough to justify the purchase price.  In Sylvania the rent to price ratio is more favorable in my opinion.  If you have specific questions feel free to ask.

@Daniel Hyman did you take some time off and then start your business or did you already start your business part time prior to leaving your FTE?  I see that your business is still in the RE space.  I'm trying to figure which part of RE I like the most and try to work part time focused on that.

@Carmichael Lewis I don't follow the math.  Are you saying that your monthly payment went from $300 to $900?  Also you are not telling up what the market price is.  If the market price is still 35K then probably don't sell it, the market price is 150K then probably sell it.  

All,

Need some feedback from those of you who left your W2 or 1099 job after achieving FI.  We left the rat race a few years back however I continued to work to get capital for additional properties.  However I'm at a point now where I'm contemplating leaving my career and starting a new journey.

What did you transition to after leaving your job?  

TIA

@Rich Chen yes, rents increase, in Phoenix the rents have gone up 50-150% in the last 10 years depending on area and asset class. However, your PITI also goes up as taxes and insurance goes up. You can sign a 5 year lease with a landlord if you plan on being there that long. Some landlords may take you up, I wouldn't but some might.

I still think you are looking at it wrong, you are paying net 2K a month for rent with 3K subsidized by your rental.  The rent on your rental should also increase to offset any rent increases you may have.  If you buy, you lose the 3K a month in cashflow.  So you are net paying 24K a year in rent and 240K in 10 years assuming no rent increase.  The 360K you've saved from having to pay the mortgage can be used to invest and those investment will also throw off cashflow.  It's a very complex problem but it's still a math problem.  I think you just need to sit down with your family and decide what's going to allow you to have no regrets and sleep easy at night.  

 A landlord may rent a property that is lower than the current price points.  For example, I have a few properties that I bought in 2009 that I rent below market to long time renters, since I bought it a low price, I'm okay with a below market rent for a tenant that's been there a decade.   A lot of it has to do with affordability, 1.2M in Southern CA (Pasadena) probably is only a 2000 sqft 3/2 based on a quick zillow search, which rents between 4-6K as OP stated.  In appreciation markets some investors are willing to have negative cashflow as well.  

Either way, we are all trying to decipher the situation based on what the OP posted.  I think he has a good view from both sides now.

@Joe Splitrock I would tend to agree that in most circumstances that buying is better than renting, however @Rich Chen's situation does not prove to be so.

1) He would have to sell or cash out refi his rental, essentially eliminating his cashflow.  If he sells, he likely will pay significant closing costs (commission, title etc) and taxes (capital gains).  

2)Even after he gets the cash, it may not be enough for the down payment so he would have to come out of pocket some cash.

3)Even after losing his cashflow and coming out of pocket, his PITI is almost the same as what the rent would be.

4)His equity would be trapped again in his house vs a rental, net the same except he will have less equity (see point 1)

Given this, how is it better to buy? The 3K he is saving by renting Paying 2K in rent vs 5K in PITI, he can put towards investments and possibly a better quality of life. If they did lose their job, could they survive longer paying 5K a month or 2K? Besides, there are costs to home ownership outside of just PITI.

It totally makes sense where I invest in Ohio to buy vs rent from me. The PITI would be almost 1/2 of what rent is, so it makes a lot of sense. In these high priced markets, I would wager that the benefits are not the same.

You suggest essentially a house hack or to move into a part of the city where it's more affordable, however the OP stated he wanted to be in the better school district and have more space for his family.  I'm simply offering a suggestion that allows him to achieve both with less risk, IMO. 

@Joseph Miller is there any city where you boots on the ground or a competitive advantage.  We invest 2300 miles away because I grew up in the area and have roots and connects still.  Even if the return is a lower, having someone you can trust is worth its weight in gold.  Some times you just need someone to unlock a door.

@Erin C. you don't have to justify it to me or the forums.  I'm just simply saying that based on this post you knew about it prior to closing and didn't disclose.  What's the cost to bust up some concrete and redo the inspection.  Probably not more than a couple thousand.  

I just seems weird that the original builder would build the house on top of the septic.  Is it like an addition that is over the septic?