All Forum Posts by: J. Martin

I've seen many questions on forums of where to find good demographic information, population trends, statistics about the makeup of properties, or average number of bedrooms per unit. All that, in addition to the distribution of commute times, distribution of bedrooms per unit, units per buildings, density, makeup of people and households, and almost anything else you can thing of, I have found on city-data (free):

http://www.city-data.com/

If anyone else knows of a better one, please post on this forum and I'll give you a few big "VOTE"s! Hope that helps some others out there looking for statistics!

Oops @Joe Kato !

I didn't see your post saying you sold it! Well, congrats! I guess my advice still applies.. lol

I'm still a BIG fan of 30yr fixed-rate money at this point in the cycle, largely as an inflation and interest rate/cash flow hedge. Everyone that loves commercial talks about their cash flow today at their ultra-low variable rate. But look at historical interest rates (not even talking about going back to 20+% prime in 70's/80's). When fed funds eventually gets to 4-6% over the next decade, prime will be at 7-9% (+300bp). Of course, the economy should be better (and hopefully rents up and vacancy down).

Meanwhile, I will be sitting with my 3.25% 30yr fixed rate on my 4plex (that did cost more per sq ft and higher GRM than a 5+ unit.) and 4.6% 30yr fixed on 2 other SFRs. But as rates go up over time, I will be paying the same on my mortgage, and rents will be going up just like for the commercial. But I get to keep all my increase, instead of sharing it with the bank.. Just from my perspective at this point in the cycle.. I'm in for the very long haul, so this makes sense for me.. Having said that, I look at commercial deals all day long in my 9-5 job, and will be investing commercial once I tap out on 30yr financing and 30yr rates aren't so damn low.. Thanks Bernanke for the $4T in dollars!! Congrats, and good luck on the next one Joe!

I agree with @Mark Ferguson about picking whatever has the highest return - with the caveat of after-tax, risk-adjusted return. Remember mortgage interest is deductible, and RE has a lot of tax shields.. And buying and selling properties to cycle into the next highest marginal returns has transaction costs.. Since your CF is so low on your ex-primary residence, do you have a basis for higher appreciation? Or is just there because it's been there? Are you going to move back someday? In other words, would you buy it again today, at an 8-10% discount to its current market value (about what you'll get out of it after transaction costs if you do a 1031X w/ no taxes..) If not, the question may be whether or not you should sell the house and move up to something bigger.

Also, how much do have saved for retirement?
How old are you?
Do you sleep well at night with leveraged properties?
Do you maintain lots of extra reserves?

I'm young, good salary income & potential, am not risk-averse, and keep good reserves and additional credit, so I'm comfortable with more leverage at this point in the economic/interest rate cycle. But I have coworkers with families who are pre-paying their mortgages for the guaranteed 4.5% drop in interest expense, because that stomps on treasuries. (although you lose the tax benefit, so more like 3% guaranteed after-tax return at 33% marginal tax rate). Whereas I look at that and say "Someone is letting you borrow money at an after-tax rate of 3% to go invest for 30 years instead of voluntarily paying them back early. At my target Return on Equity of 10-15% before appreciation, does that make sense for me and my situation/risk tolerance?"

For me, that answer is a resounding yes!

Btw, I wrote a blog post that talks about keeping them cash versus leveraging them up.. Take a look..

http://www.biggerpockets.com/blogs/4579/blog_posts/32645-if-ca-h-is-king-then-leverage-is-god---loans-cash-roe-roi-and-risk

@Robert Carl , if you have that much in expenses, I would recommend getting higher deposits. I got 2 months for some of mine in a low income area. You'd be surprised what people can come up with. Or let them pay the extra month over the first 2 months of tenancy.. At least gives yo more cushion.

Also, if you're doing $500 worth of cleaning and repairs, I would have it done in one day or two, rather than 2 weeks. Pay more or get more people to work on it at the same time. That 2 weeks vs 2 days is costing you almost the entire $500 cleaning cost in lost rents..!

And you can take them to small claims, get a judgement, then you can try collection later if they don't pay the judgement, depending on your state..

That sounds like a cheap exit to me.

Listen to @Troy Fisher , and move on with your business. It's not going to be worth your time 19 times out of 20. The best revenge is living well ;)

I think it depends a lot on your business too, and what communications are being handled by the VA. I use a VA for some basic online stuff and 'internal research'. But not to communicate with any of my investors for real estate..

I use odesk.com and have had some success, but still early on.. good luck!

I agree with @Joel Owens - don't look at a 36% income tax estimate. Look at your own situation. For example, I don't think I saw depreciation in the estimates, which is an important non-cash expense you can take on your expenses to reduce your taxable income, in addition to your exact interest expense, and all other rental-related expenses. On top of that, be sure to make your own estimates. Don't use an agent's.

That's why everyone loves real estate!!

@Supreet Singh Sachdeva , you'll find more than all the demographic data and owner-occupied percentage you are looking for at www.city-data.com (plus income, distribution of commute times, household makeup and number, etc etc)

I think this is up @Bryan Hancock 's alley.. (in full disclosure, I believe he offers some himself if I'm not mistaken.. check..)

Unfortunately, I'm not an accredited investor yet! Or I would have tried to buy a slice of coinbase.com! (that's a whole different non-real-estate discussion!)

Interesting hours breakdown. Someone once told me to make a budget of the hours in your life, just like you would one for your income/expenses. Then you can see by % what you plan on "spending" your hours on. His idea was that you pre-allocate XX% to the things that are most important to you, just like a savings account (like time with family, personal growth,taking into account responsibilities.

It also allows you to set goals over the long term with your time. A big reason for investing in real estate for me was freeing up more of my "time budget" over the long term to "spend" on things I'd rather do than wake up early to go to an on-site w2 job (although I actually like mine well enough), and be able to live comfortably (although I live relatively frugally now).

I would recommend discussing those numbers with your wife too, when talking about 1-2 hours a day on ALL family activities and help.. Good that you built in misc time though..

I'm working 40hr/wk job, travel often for work, managing 6 units - bought, rehabbed and leased 5 units in last year. Took a long vacation. Enjoyed activities around my area.. Maintained lots of relationships, and lost an important one.. probably not really attributable to real estate. But between traveling for work and being busy with everything else, didn't spend as much time as I should have/could have to grow my relationship with my now-ex.. :-/

The landlording didn't take a ton of time, but I target vacant buildings, so prospecting, managing the rehab, and leasing everything up takes quite a bit of time.. This topic has made me think much more deeply about how I allocate my time.. Thanks!

Anything is possible!

You can check with a title company on who owns the lots. Probably a defunct or out of cash builder. May owe the city a bunch of taxes. The trick will be finding the buyer or hook up a new developer and private money. But this may take dual negotiations with the city and the owner if there is a big overhang of taxes.. The city might take a haircut though if they can get them developed and start collecting revenue on them instead of having vacant partially completed properties that often add to blight/squatting..

Good luck!