All Forum Posts by: John Barrett

@Alex Silang just about anything requiring you to get a permit these days could take 3 to 6 months or longer depending on the scope of work and number of departments that need to review and sign off on the plans. This doesn't even take into account the wait time if you need an architect to produce plans.  Most cities cut staff in their permit offices and the backlog of work to get done is taking an inordinate amount of time for the small number of staff remaining.

John

@Kirsten Crotts We invest in Marysville and $2k a month would be on the high end of what a unit with those specifications would go for.  If the unit is fully updated and comes with a garage or covered parking, you would have a better chance of getting your desired rent.  Currently the market is very hot for all types of properties and demand for the rentals is still quite high but I think at that price your unit would take longer to get rented out.  I agree with @Eric Turner's assessment that your rental range is $1,600 - $1,850.

Marysville is a lot like any other city at the moment, it really depends on where the property you are looking at is located in the city that will determine your experience with crime and homelessness issues.  Your experience and that of your tenants can be very different street to street.

John

@Anna Bee Interest rates are simply one component of a real estate transaction.  While the interest rate on the loan is important, it shouldn't be the that factor that breaks your investment.  As others have stated, you need to look for ways to drive up the value of the asset you purchase.  This could be any combination of better / different operations or upgrades the drive higher income.  Additionally, interest rates are notoriously hard to predict.

@Anna Bee It really all depends on what inputs (assumptions) you are entering into the sheets to determine what they will spit out for results. With regards to ROI, there are a number of great websites (like investopedia) that will walk you through both what the calculation is designed to tell you as well as its limitations.

I generally look at the cash on cash return for the rentals that I am going to be holding. For the ROI, I think of that generally when selling a property but I also like to use IRR as it accounts for the amount of time your money was invested.

Ultimately, metrics are just points of data organized in some specific way.  The key is figuring out which metrics are telling you something relevant to you about the investment you are considering.

John

@Robin Brown We have used leverage to scale our portfolio.  Originally, I was extremely debt averse and was working to aggressively payoff all debt.  While I am still averse to having consumer debt, I have become much more comfortable with mortgage debt.  We live in a high cost of living area, saving to purchase property outright would have dramatically limited our ability to grow. Given the speed with which properties have been appreciating in our market, we would have never been able to save fast enough.

While I am always mindful with leverage, I see it as a valuable and necessary tool for investing.  Additionally, with all the money printing going on currently, I see debt as another tool protect against inflation.  None of this works unless you can ensure you have high enough profits to service the debt and sufficient liquidity to manage unforeseen events.  The last 18 months have been an opportunity for all investors to test our contingency plans and comfort with the current structure of our portfolios.

John

@Sherief Elbassuoni Is there any liability that you would need to factor in? My understanding is that regulations were passed increasing the time for condo owners and HOA's to assert material defects in construction. However, these may only apply to newly built properties.

Just curious if you happen to know.

John

@Nathan Leger Action is the cure. Do some small action that moves you closer to your goal and it will get easier to take the next steps. One step at a time and you’ll be on your way to your ultimate goal.

Best of luck,

John

@Arslan Rakhmankulov Congratulations on getting started early on your investing journey.  There is a ton of information about the buying your first property here on BP.  The market is extremely hot currently so even properties that need work are selling for high prices.  That said, buying something you can house hack will still allow you get started for the least amount of money and the first $250K of gains are tax free.

Go to local meetups in the areas you are thinking of investing in.  This is one of the easiest low costs ways I know of to find out about what other investors are doing and their challenges and successes.  Networking in this way will also help keep you up to date on which areas are improving and you could target.

Best of luck,

John

@Manju Nat I would suggest you look up RHAWA or WLA as both organizations can provide you with the guidance you need.  If you are planning to substantially rehab the property, you would need to issue a 120 day notice and there are state, county and potentially city ordinances that you will need to abide by regarding relocation assistance for your tenants. 

This is a tough situation for everyone involved and you want to be respectful of your tenants.  That said, the best thing I think you can do is be clear with both your tenants and the housing providers.  Unfortunately, based on how the laws are written, I believe you will likely not have much wiggle room as otherwise you might be open to accusations of discrimination.

Do your best to treat everyone well and understand the assistance you need to provide in order to help these tenants move to their new home.

John

@Daniele Locke The current "Bridge" eviction moratorium is set to expire at the end of September.  The current best information is that the Governor will extend his most recent proclamation again (likely through the end of the year).  There is currently a legal challenge to this so it is possible that this policy will be invalidated sometime between now and when all government restrictions are removed.

As for your question, the easiest answer is to take possession of the property vacant.  That is not always possible given the ever changing rules and when sellers need to close by.  That said, you are still currently allowed to issue notices to increase rent or 120 day notices for substantially rehab of a unit (RCW's will apply for relocation assistance).  Depending on the city / county your are in there could be additional restrictions or requirements that you need to follow.  

There are many great resources from both RHAWA and WLA that can assist you in this process.  The key is ensuring you are following all of the rules and understand the timelines.

John