All Forum Posts by: Josh Young

@Bryce Miller

Welcome, and congratulations on making the decision to leverage the owner occupied loan to get started in real estate investing. I have built a portfolio using owner occupied loans and I also help other investors do the same. The first step is talking to a lender and getting pre-qualified. Then generally the best advice is to buy in the best area that you can afford, even if the cash flow isn’t as good in year one you will get more market appreciation in equity and rent growth in the better area. From there once a deal makes sense, pull the trigger, a lot of folks get stuck in analysis paralysis and I’m not saying don’t do your due diligence or be smart about it, but acting quickly and with intention will benefit you greatly in the long run. I’d love to help, feel free to reach out if you want more advice/guidance.

@Shiloh Lundahl

Your posts are always entertaining, the banter cracks me up. A while back you ripped on my style of slow and steady long term investing in buy and hold real estate with low down payment conventional loans because it's not as fast as your style and the potential of cash on cash returns isn't as high. Your model of fix and flip with lease options does have big upside potential, but also has more risk for most people starting out, and you have done great at scaling your business, so no doubt having you in the deal does mitigate a lot of that risk. My question though is why do you want to bring on equity partners? I understand needing more capital to scale, but why not bring on debt partners and keep more upside for yourself? 

@Adam Sherwood

I think you started with the price a little high, there has been a lot of new supply of multifamily housing added in the Tempe area, so that has pushed prices down a little and made it more competitive, so you have to have a great listing to attract a quality tenant. Your pictures and write-up are okay, but could definitely be better; the pictures should be light and bright and have better angles to show off the home, especially the kitchen, and having clutter from a previous tenant in some of the pictures is not ideal, as well at the back yard should be picked up and neat for the picture. As far as the write-up you did good with describing local amenities and some lease terms, but I would give more lease terms and take out the part about who you think would be a good tenant, this could be a Fair Housing violation and it's just good practice to focus on the property's features not the ideal tenant unless you are talking about minimum income or credit qualifications. I'm a local rental property investor and a property manager, I live in Gilbert, so I'm pretty close to Tempe. Feel free to reach out to me with any questions or if you want help.

This is a casual meetup to talk about any and all things Real Estate and is open to anyone. I own 6 properties here in Gilbert and love helping others to learn about real estate investing.  

Quote from @Duke Butterfield:

Josh - thank you! I missed your response before I sent my follow up to the last user. But yes you've given me much of the insight on the sell vs rent numbers I  interested in. And you clearly have some relavent market knowledge. Much appreciated!

Do you have any additional insight on continued self manage from OOS vs PM? How have you made that decision for your prior primary residence to rental properties?

I self manage because I'm local and because I'm an agent & property manager, so I help other investors like yourself. With that being said, I wasn't an agent or property manager when I first started, but I did start out self managing because I'm local and because real estate investing became my passion and my career (I used to be a golf pro). If I moved out of state I would hire a property manager, but I would hire a smaller independent property manager who is also an investor like myself. Managing from out of state could be tricky, especially if you have a turn, making sure the property is ready to be marketed, doing showings, screening applicants, and then handling any maintenance/repairs. 

@Duke Butterfield

 You are in a great position with this property, I would hold it for a long time. At some point in the next few years you might consider a cash out refinance to pull some of the equity out, but obviously wait until rates are a little lower. Scottsdale has such good fundamentals you want to hold for as long as you can, we have job growth, population growth, investment in infrastructure and low property taxes; these are all the things you want. 
This is how I would look at your returns. $360k equity (based on your estimated loan balance and estimated transaction costs if you sold, this is not calculating capital gains taxes but that would reduce your equity down to about $310k if you sold without doing a 1031 exchange). $8k cash flow (this will increase over time because you are in an appreciation market). $6k principal pay down (based on your current loan). $20k appreciation (based on 3% which is conservative, 4-5% is the historical average). Total this is a $34k return which is around 10%, that's not bad, but your numbers will get a lot better after you do a cash out refi. When rates get to near 5% you should be able to pull out $250k (based on 75% LTV) and then your cash flow should be around break even (but you just pulled out 30 years worth of cash flow at $8k per year), the principal pay down will increase to about $8k and appreciation will stay the same at about $20k, so now your returns will be $28k on $140k of equity (based on the same sales cost assumptions above) and that is a 20% return and you have the $250k cash to go reinvest somewhere else.

Don’t let anyone tell you that you made a mistake by not selling; holding is how you make money in real estate. I use this exact strategy of keeping my previous homes as rentals and trust me it’s a winning strategy.

@Jeffrey Hayes

If you post a link to the listing (usually Zillow) and/or the address then we will be able to help you. As you know, marketing and price are both very important, and vacancy will significantly impact your income, so you are almost always better off charging a lower price and getting it filled with a good tenant.  

Calling all aspiring real estate investors! Join us at the Gilbert Real Estate Investors Meetup Group for an informative session on the fundamentals of real estate investing. Whether you are new to the game or looking to expand your knowledge, this event is perfect for those eager to dive into the world of real estate. Learn about different investment strategies, market trends, and tips for success from experienced professionals in the industry. Network with fellow investors, ask questions, and gain valuable insights to kickstart your journey towards financial freedom through real estate. Don't miss this opportunity to take the first step towards becoming a successful real estate investor!

Quote from @Vijendar Na:

@Josh Young - Are there opportunities to buy new builds for investors? Whats your opinion on Mesa? Do you generally buy new build or old homes for rental purposes

 Not all new build communities sell to investors, but some/most do. Things to consider when buying a new build are appliances, fans, blinds, and back yard landscaping; sometimes we can get appliances included, it just depends on the situation. Back yard landscaping is usually the biggest expense at $5-6k for artificial turf and rock, but doing this sets you apart from the others. The best thing about a new build is the capital expenses and maintenance and repairs will be minimal for many years.  

Mesa is a big area and can vary a lot depending on the neighborhood. I personally wouldn't buy an old home as a rental, I only buy 1980 or newer for myself, all of my properties are in the north part of Gilbert built between 1985-2003. I buy homes as a primary residence with 5% down and move into them keeping my previous as a rental and the area that I live doesn't have new builds that would work for us, otherwise I would buy a new build. 

If I had $100k to buy an investment property and wanted at least break even on cash flow I would buy a new build in Casa Grande. If I didn't mind being a little negative on cash flow then I would buy in Gilbert. The cash flow that you need to achieve should be based off the rest of your portfolio and your financial situation as a whole. I personally focus more on appreciation, but if I wanted more cash flow I would definitely go to a fringe area and buy a new build rather than going to an older area and buying a cheaper property.

@Nithin Kumar with a $100k to invest you can break even or be a little positive on a new build in Casa Grande. There are other fringe areas (San Tan Valley, Maricopa, Buckeye, and Surprise) where you can almost break even too, but prices will be a little higher and rent to price ratios will not be as good. If you are looking for more appreciation and can afford to cover a few hundred dollars a month of negative cash flow then I'd recommend looking at Gilbert. I live in Gilbert and own 5 rentals here, but I also help other investors find, analyze, buy and manage properties all over the valley, and Casa Grande is a top pick from some of my other investors.