All Forum Posts by: Johnny Lau

@Huimin Zhang

I would sell and put that money into OOS if I was in your situation. There is so much opportunity for good cash flow that you cannot find in California anymore. I got lucky buying houses near the Bay Area that cash flow good and appreciated quite a bit. It was all because the timing was right, 2007-2013. The numbers didn’t make sense anymore so I stopped buying in California.

Just recently I got back into the game and started buying again. There are a lot of good markets OOS that pay the 1% rule or better. For example if you buy a house at 100k, you should be getting 1,000/mo rent at least. I will be closing on my 4th house this week since I started buying OOS about 8 months ago. This is mostly for cash flow, I’m not looking for appreciation even though some areas do appreciate, but the cash flow isn’t as good.

My most recent house was acquired for about 56,000 and will rent for 1050/mo. This is in Michigan. I also buy in Alabama. I’m looking at Illinois next, or Florida. Lots of good markets out there....

@Marisa R.

Bought 2 SFRs in Detroit and looking for more, good numbers, good cash flow...

Also bought 2 SFRs in Birmingham, Alabama.

Looking to buy more in Detroit or a new market, Chicago for multis anyone? Florida for appreciating assets and desirable cities such as Cape Coral look very cool!

But then again, Detroit kicks everyone’s a— for cash flow. Hard to pass on houses that cost the price of a nice car. :)

@Cameron Riley

About 2,000 miles for both markets: 2 houses in Birmingham, Alabama and 2 houses in Detroit, Michigan and counting...

from Bay Area, California

Distance doesn’t matter, only numbers

@Codi Clausen

I've purchased one SFR in Detroit suburb and about to close 2 in Birmingham. Numbers are good and so far so good. Looking to buy more from their affiliates.

@Bala Apparao

My Detroit property does have better cash flow overall but I am buying in Birmingham to diversify my areas of investing. The houses in the south are newer and have more land, which I like. cash on cash better in Midwest,

Numbers for Detroit:

3/1 SFR 1000 sq ft

76,000 purchase

975/mo rent

650 cash flow approximately

Numbers for Birmingham

4/2.5 SFR 1550 sq ft

114,000 purchase

1,100/mo rent

750-800 cash flow approximately

4/2 SFR 1600 sq ft

128,000 purchase

1250/mo rent

700-850 cash flow approximately

@Cory Eldredge

Closing on 2 Birmingham SFRs this month. Numbers are good and houses are more modern and look better than ones in Midwest. But Midwest may have better cash flow, think Detroit, Chicago, Cleveland, etc. Huntsville is also a very interesting area, maybe even more upside than Birmingham.

@Jonas Helbert

Lol, kickbacks are illegal? It was structured in the contract but was probably called something else, I don’t really remember but things like that were common back in the day, maybe more so now, who knows.

In the Wild West days of real estate, I saw and experienced many shady things. One seller agent had over a dozen offers and told us (me and wifey) that if we wanted the house we have to offer 1000.00 over the best offer. She showed us the contracts. Then she tells us to ask our buyer agent to give her 1/4 percent of his commission back to her. He was shocked at that and told us that isn’t the normal way things work. We were newbies.

Another seller agent took us to houses she was listing for the banks and gave us the numbers that the bank would accept for their REO. These were not on market yet so we had first dibs. - because we didn't have a buyer agent!

These are just examples of agents behaviors we saw, the lenders and appraisers did things that would make your head spin! Lol

One lender who worked for a major bank would give me and my business partner official documents for whatever amount we asked, and she never even met me. 1 million approval? 2 million? Sure, no problem.

Cash buyers from overseas? Another story for another time...,

Wild West for sure

Funny thing is that those seller agents then start calling you about deals off market.

Seller agent: "I have an REO coming up soon, the bank will accept this much, do you want it?"

Me: “sure! Let’s look at the numbers “

Rinse repeat

@Stephen Witkowski

It’s very simple, you come in with an offer without a buyer agent and the sellers agent sees an extra 1.5-3 % into their pocket; no need to share the commission. Suddenly you are treated like royalty! You’re looking like Brad Pitt. They don’t care if a better offer comes in, they will hint to you that if you want the house offer this much, which is the best deal on the table; Is that shady? Maybe, but the only losers are the ones with buyer agents. You can practically pick and choose whatever house you want and usually your offer will get accepted. You have to be creative to get the best advantage. My poor friend used a buyer agent and got outbid many times, took him over2 years until he finally found a house! So he probably only got his 6th choice in a house! That’s too bad.

There’s this thing that Al Gore invented, it’s called the internet. It’s made many things obsolete, buyer agent being one of them.

@Brandon Carriere

If you read carefully you would see that the selling agent becomes my agent as buyer, double agent. It’s very common in my area and I never got fleeced. lol

They must balance needs of both clients, received big discounts on commissions and nice kickbacks. Purchased over a dozen this way and counting....

Sorry, but agents are dinosaurs in my opinion. It’s not rocket science.