All Forum Posts by: John Corey

Even better than a joker broker is when the NDA or other documents were assembled by using stuff found on the Web. Clauses that contradict each other, clauses that do not match what is legally allowed.

If you read the document, you can quickly learn who is not worth working with. They are living in the unknown unknows concerning their own ignorance. And they try to talk a good game. 

@Vlad,

The market determines the CAP rate. Vacancies and similar are ingredients to the NOI.

The CAP is relative to alternatives. Government bond interest rates are the zero risk, zero hassle, liquid alternative. So, an investor will only look at RE investments if they receive a better CAP rate than a bond.

Minor hijack of the thread. Is there any investor meets in the Wilmington DE area? I will be visiting family in a bit more than 2 weeks. If there are any meets happening, I will come by to listen to what people are doing locally.

That is not how the housing market works. In one way, the demand remains the same. The number of people in a market who needs a place to call home remains the same even if there is a crash or other major shift in value. If someone was an owner and they lose their home in a foreclosure, they will still need a place to live. Assuming they do not move out of the area, the net impact is small (1 unit becomes freed up and 1 unit is taken up). There will be a lag while the foreclosed home is being processed so you see the unit is taken up while the other property remains off the market. A fall in supply.

People who would have purchased will sit on the sidelines until they are sure what the house prices will do. This further pushes up the rental demand (tenants staying longer). 

Informally, I like to say that landlords win when prices fall because rents increase. Landlords win when prices rise as their assets go up in value. The key to making this work is to use lower levels of debt and just hold (do not sell). 

It is very simple and there are all kinds of subtle details I am glossing over. The key is to focus on demographics when you want to understand the housing demand. Keep your rentals occupied and most things will be fine long term if you avoid too much debt. Cash flow is what keeps you in the game when others go pop.

 Bring in a partner to the deal who has the funds.

Is the tax at the time of the sale, recapture or capital gains? I have not kept up on the topic.

Let's flip this around. If an investor is in the USA, what would be a good reason to look at Dubai and a rental investment market?

I can not name any reasons which are worth the extra effort of investing there compared to sticking to a specific USA market.

As a general guideline, the banks will not want to lend to you. Too hard to chase for payment given you are outside the USA. And you have no credit score.

Once your business has established income, credit, and assets, the banks will start to lend to the company with less focus on the individuals who own the company. Eventually, when the company is really well established, the banks will lend entirely based on the company's ability to pay. It will take a while.

You also will find that as you reduce the LTV, you can make it work. Risk vs reward for the bank. If the LTV is low enough, the bank will see the risk as being very low.

Tangent of sorts. If you wanted to be in the USA and therefore wanted a USD income, you could consider employing yourselves. Over a few years, you would build a credit score, you would start to show assets, and you would have an income that shows up with the IRS (annual filings, paying USA taxes). I am not saying this is the best route. It really comes down to your long term intention.

Follow Greg's advice. Family and friends are fine until it is not fine (SEC violation).

What does that mean? Net on paper including equity appreciation or 10% net, in cash at the end of each year?

A buy and hold strategy could be perfect for some investors yet they will not see a 10% increase in their cash position each year.