All Forum Posts by: Kal Wol

When I bought my first house, I was an international graduate student, delivering pizza on the side and painting my rental after the work that hustle that helped me to quit my job 12 years ago.

My first house does not cash flow well but it helped me to buy many more. Probably I knew less than half of what you know now.

But I bought in 2004 2008 20013 2018 2022 all different markets. You cannot predict it, you just get smarter,make connections, grow your network and buy more.

Your first house or first couple houses does not have to be home run, buy something you are comfortable with. I would even say being little uncomfortable is okay.

Buy now, stop over analyzing, get your finances straight, and buy something that makes some sense in your situation.

If It makes sense now, it will make sense in 4-5 years when you refinance, but dont expect it to be without problems of course.

I would not buy a house that makes $100 a door now for sure, but I did many years ago, had very little vacancy, and almost paid off now, I am glad I did, I learned a lot since then.

Thanks @Ozzy Sirimsi you might be right on the over thinking part. But, I would rather over think before my move than over think after my move.

Some have provided a practical what-to-do-when strategies/tools and that was what I was looking for than the jump anyway one. I hear you and you are right on that sense also. I am sure it has worked for you and it does encourage me to be like that one, it just helps to jump with knowledge of where the paramedics are - just incase. That is what I am thinking.

Thanks Sir.

1 Vote

Germantown, Maryland

Quote from @Timothy Howdeshell:

Quote from @Kal Wol:

Hello awesome BPs

I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.

I am in the DC/MD/VA market to proceed with the conventional and to the house hacking. I can't, for now, consider the out of state market as I can't move and also I am a bit skeptical to move on the investor side to put large amount and give it a try. And the area I am looking at happens to be expensive for any of cashflow.

In the meantime, there are predictions based on the credit card loan, the job market and related stuff that 2024/2025 will be showing greater impact on real estate on the negative side. Probably you might have heard about it. And as a newbie, I keep getting to every news and start to hear that. Actually, it is funny that it was like that for 2023 also - it is just getting a bit more for the upcoming years I think.

That is not what I am afraid most. I will still continue to offer based on the number that works for me though it might be lower price. I don't want to lean on equity, I want to at least breakeven on the house with all the expenses covered: mortgage, vacancy, cap expense..

What I wanted to know is, what are the tools and strategies you awesome investors use if housing issues happen? Incase if you had been investor in the great recession, how did you deal with it? Is that possible to negotiate with the bank on lowering/renegotiation or forbearance? When housing issues happen, does it also happen to renters and do they in general lower/stop rent, vacate? How to deal with this if you have any experience?

Also do you see, if you have any experience in the past, any indicators that shows what is coming at all - like good or bad housing and preparing on those accordingly. I am sure in both scenarios investors can benefit but we have to which direction we are heading to benefit or at least not to loose much.

All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.

Thanks a lot for all your input in advance.

It is good to think defensively in real estate. Hope for the best, plan for the worst so to speak. Ideally, every investment will be stress tested to ensure that you're in a good spot if conditions move against you.

On one hand, this market is pretty challenging for investors. High prices, high rates, economic uncertainty, low unemployment (and therefore higher labor rates) are all headwinds. But there is never a perfect environment to invest. If there were, dumb money would flood in to fill the gap and you'd have a challenging/highly competitive market to work in. This doesn't mean that things aren't in your control though. Here are some of the tools that you asked about:

1. #1 is a strong personal financial situation. Do you have a strong savings rate, plenty of financial cushion, good insurances, steady income, high income? The better off you are, the easier it is to brush off expenses. For instance I got hit with a 7k bill unexpectedly this year on one of my properties. And while that stings quite a bit, it didn't materially impact me much. Relative to my portfolio, my reserves and savings rate can absorb this. As you scale, keep more reserves.

2. Lines of credit & working capital: This can be HELOCs, business lines of credit, credit cards (business or personal), etc. This is a slippery slope for the irresponsible, but if you have #1 above nailed down you can float short term expenses on debt for a time. Just pay them off aggressively.

3. Offer a superior price/value for your customers (tenants). Neighborhood is $1k rentals? Offer a $1.1k rental (slightly nicer home) for $900. This is not ideal for short term cash-flows, but for single family (up to 4 units) this may be a way to get loyalty and open up tenant pools to get better quality tenant.

4. Yes, banks will work with you if you're missing payments, but not really before unless you can prove hardship. A non-paying loan is a liability on their books. They are incentivized to work with you to get the loan back on track as it is more profitable. If you're in this spot though you may be in big trouble already. Not a great strategy.

5. Buy higher class property. Economic downturns generally hurt the middle and lower class families, but there's always someone making money. If you serve the wealthy, you'll have more stability. The tradeoff is generally lower short term rewards (cash-flows) and higher cost of entry.

6. Consider alternate assets such as self-storage, industrial, or NNN commercial.

At the end of the day, you'll just have to jump in at some point. Don't get into a situation where a negative experience will wipe you out of the game completely and trust in your ability to overcome new, unknown challenges as you have in the past. Courage is not the absence of fear, but acting in spite of the fear. Real estate takes a little courage.

Best of luck!

@Timothy Howdeshell nailed to the point as to what I was looking for. you have gone above and beyond the generic answers and pointed out the tools/strategies that one like myself needed. Thanks a lot sir.

0 Votes

Germantown, Maryland

Quote from @Crystal Smith:

Quote from @Kal Wol:

Quote from @Crystal Smith:

Quote from @Kal Wol:

Hello awesome BPs

I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.

All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.

Thanks a lot for all your input in advance.

Your question on lowering the risk is to first decide what your strategy is. Part of that strategy is to evaluate whether you will be a short-term or long-term investor. If long term then how many years? For the markets, you are considering what does the data shows regarding appreciation & other data over the past 5 to 10 years. For example for one of the markets that we have investments in (Chicago Illinois), the median sale price of a single-family home in 2013 was $152K. Today the median sale price is $295K. That is for all of Chicagoland at a macro level.

For small multifamilies (2-4 units) the median sale price in 2013 was $106K. Today the median price is $330K. Those who purchased in 2013, at a macro level, should be doing all right. But let's say you are a short-term investor, in April 2022 the median price for this asset was $339K. The median price has gone down by $9K. Those who are betting on the short term probably can't sleep at night. While those who know it's a long play rest comfortably.

Thanks a lot @Crystal Smith. I am planning long term. I have taken a lesson on selling the house for short profit last year. So when I am buying I am planning to have it for the long term.
The house I am looking at has a potential to increase in value in the future - DC metro area. So the future is not a problem. For me, I am not planning to relay and live on rent income anytime soon. I am planning to have one house per year to live in and then rent.

You have answered most of the question by not looking at the short term ones. More I am on what would happen to the other house that I am renting if things go south. Having enough money as you mentioned is a good one, having multiple renters per room rather than the entire house is another one I have seen though it has its own pros and cons.

Thank you.

Given your location, I recommend purchasing homes near any of the local universities. You'll then be able to execute multiple strategies to cashflow or sell the home after you move out to your next home. The multiple strategies are- Rent the entire home; rent by the room to college students, Rent to own, and AirBnB. I make this recommendation after putting 5 kids through college, all of whom lived off campus during their junior and senior years. One of which graduated from a school in DC. When visiting, we always stayed in an Airbnb near the school. When graduating, we rented an Airbnb for one week, near the school. And for the kids, We paid rent for a room that was higher than staying on campus.

You're in a great location to execute this kind of student housing strategy.

Thanks a lot again. These are good angles to take a look on options as far renting is concerned. I am glad that you are familiar with the area also :)

0 Votes

Germantown, Maryland

@Carlos Ptriawan Man, you have a ton of knowledge and you have such a good way of explaining and putting it in perspective. Thanks a lot.

Thats is why I am here, to learn more and to see the "Other" part of the facade, to know more parameters that goes into the equation.

I have come to terms with initial houses that I was looking, though I can afford them, they would be a good worry-machines if something goes not good. And there are some houses that I can manage for some months if things go all wrong.

Also, I was looking at other options than the full rental also. There are some websites which allows you to find tenants per room than the whole house even if it is not around college/schools. And always there is AirBNB thing even if it is getting a bit saturated now.

Thanks a lot.

0 Votes

Germantown, Maryland

Quote from @V.G Jason:

If you're worried about short-term fluctuations, you'll need to not invest in real estate. If you want to still invest, just make sure you're never needing to sell and appropriately equipped cash wise.

Makes sense, thanks @V.G Jason

0 Votes

Germantown, Maryland

Quote from @Theresa Harris:

The media likes doom and gloom. Not sure what you mean by the credit card loan (credit card debt is bad and should be paid off quickly due to high interest rates).

Make sure you have enough money in case of vacancies and unexpected problems. Don't get over your head (ie if you are barely scrapping by when a place is rented and have no cushion, don't buy it), don't over extend yourself and be realistic.

Thanks @Theresa Harris sorry for the confusion, I was referring to the general CC debit that they were mentioning that could lead to some issues. Not individual Credit card.

And you right about the being realistic. That is part of the question I am having. I am not going to rely on the rental income this time. I am planning to hold it for long as long as it can be rented out. I have saved up enough that can hold me for some months average mortgage and expenses, so if things are not well, I should be ok for a bit. But they extend is what I am trying to find if there are any tactics.

During the covid, I know some landlords were using some tools provided by bank and government to stay afloat.

Thanks again.

0 Votes

Germantown, Maryland

Quote from @John Clark:

Quote from @Kal Wol:

Hello awesome BPs

I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.

All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.

Thanks a lot for all your input in advance.

The DC market is federal government. It may stagnate, but relatively few people would think that it would ever meaningfully go down. As for Maryland and Virginia, how dependent are the areas you are looking at on federal government employment?

Thanks @John Clark Not very gov dependent but also not that far away. One of the property I was looking at is in silver spring area which is a good location in general as it is near to DC and it is also bigger city itself.

I have seen some in VA, but they are way expensive that I haven't even tried them out. Mostly I am looking in MD area.

0 Votes

Germantown, Maryland

Quote from @Bjorn Ahlblad:

Impossible to know where the market is going and when. If you can never be forced to sell, you will probably do OK. That means have enough money and don't be too leveraged, so you can survive the market downs. All the best!

Thanks @Bjorn Ahlblad

0 Votes

Germantown, Maryland

Quote from @Crystal Smith:

Quote from @Kal Wol:

Hello awesome BPs

I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.

All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.

Thanks a lot for all your input in advance.

Thank you.

0 Votes

Germantown, Maryland

Hello awesome BPs

I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.

All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.

Thanks a lot for all your input in advance.

1 Vote

Germantown, Maryland

All Forum Posts by: Kal Wol

Kal Wol has started 15 posts and replied 67 times.

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?

Post: How to be on safe side from forecasts of 24/25 housing issues?