All Forum Posts by: John Mullen

I'll sum it up in two graphs from the St Louis Fed datasets. The first shows that the Raleigh market has gotten ahead of itself. I started full-time REI in 2001-2002 during the 'tech-wreck' recession. That recession hit Raleigh-Durham-Triangle harder than most of the rest of the US. I lost my tech job like tens of thousands of others and transitioned into REI. Interesting that that tech recession is hardly a blip in the big 25+ year picture. By 2007-2008, I was done with buying because the market changed, and bargains were few and far between. I bought a little in 2011-2013, but when the hedge funds came in, I was done once again. Looking at the first chart, I'll wait for a new cycle because we are over-extended.

For the second chart, I'll try to convey that it's not inflation that is to blame for the RE prices. In addition, I'll add the "hot" markets that were mentioned in this post as compared to Raleigh. Note that long term, Raleigh has performed well, but relative to those other market Raleigh has underperformed. If you look at core CPI, all the housing markets analyzed have greatly outperformed inflation and CPI. As an investor who holds over decades, I see these markets as overextended. Even if housing is in great demand today, the relative risk of high capital and (relatively) lower return makes the market less attractive. I'm ok with waiting, even if it means I will never buy a property again. I've done enough in my career. I don't ever want to be a motivated buyer, because motivated buyers make big mistakes. 

I have a wholesale deal in Columbus, Ohio 43223 that none of the buyers I know are interested. Not sure if I should let it go or keep marketing. It's a full rehab project ARV around 180k. Marketing it at 70k OBO Rehab around 65k. What do you guys think on why it's not moving?

What is your unfair advantage? We all have one. Whether it is knowledge of a local market, family in a particular area, specific knowledge on a travel topic, or some sort of skill like designing or construction, we all have something that gives an advantage over other investors. That should be your starting point. 

Random example - I know someone who takes ice fishing trips every and has advanced knowledge on the ins and outs of that world that you and I would never know. Figure that out first and then pick a market. Randomly picking the Smoky Mountains because it's popular is a terrible idea. If you're an out of state investor wanting to buy and self manage from a distance, you should be able to do some of your own research and find a better market. 

 There are a lot of smaller towns outside of Columbus, Ohio you should check out. Newark, Delaware, Marysville, Lancaster, and Chillicothe just to name a few

Hello @Greg R.

The purpose of investing is to get off and stay off the daily worker treadmill. To do this, you must have what I call a dependable passive income. What is a dependable passive income?

• Reliable - Your income continues even in difficult economic times.
• Inflation-Compensating - Rental income increases faster than inflation, compensating for rising prices.
• Persistent - Your income will last; you and your spouse won't outlive it.

The key driver of these three income requirements is the location. Instead of listing off places, I show you a process for selecting a dependable passive income location.

A caution - It is important not to place any weight on the COVID years. COVID distorted markets, and today, these markets are returning to their pre-COVID conditions. So, base your evaluation on pre-2020 performance.

Below are the six criteria a dependable passive income location must meet. The process is to go step by step, eliminating all cities that do not meet the criteria. After each step, you will have a shorter list of potential cities. At the bottom, there will be a short list.

• Metro area population size greater than 1M. Small towns may rely too much on a single business or market segment. Wikipedia
• Both state and metro populations are increasing. Do not buy anywhere if the state or metro populations are static or decreasing. Wikipedia
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scout’s100 most dangerous US cities.
• Inflation compensating - Every time you go to the store, buying the same basket of goods costs more and more dollars. To have the additional dollars you need to pay for inflated prices, rents must rise faster than inflation. Therefore, a critical location selection metric is that rents and prices are rising faster than inflation. Rents lag prices, so you can use the appreciation rate if you do not have historical rental data. Zillow Research
• Low operating cost - High operating costs can turn what appears to be a profitable property into a money pit. The three most apparent are income taxes, property taxes, and insurance. Insurance - ValuePenguin, Metro Property Taxes - LendingTree
• Rent control - Some states and metro areas have implemented various kinds of rent control. Rent control may prevent you from increasing the rent fast enough to keep pace with inflation. It may limit your property manager's ability to select the best tenant. It may make evictions of non-performing tenants difficult or impossible. Never invest in any location with rent control.

If you choose a location that meets all the above criteria, your properties should do well for the foreseeable future.

@Kurt Phillips, thank you so much for hosting your monthly meet-up!  It was such a pleasure to meet you, and the speaker, Josh, is incredibly helpful!

I met so many wonderful individuals at the meeting, and I cannot thank you enough!  They were all welcoming and Elizabeth was so kind to everyone who were new to real estate investing.

I am now looking at the calendar and flight tickets to visit Ohio and join the meet up in Feb! 

 Really cool to hear!  Have you stayed w/that or have you added additional strategies?