All Forum Posts by: Lance Knapp

@Account Closed We at my company are brokers. We are incentivized to believe that real estate prices and activity will only go up from here no matter what, so we manipulate data and our narratives to reflect that. Therefore, I came here for some differing opinions and dialogue.

I don't understand why you have no worries of chasing a red hot market with no cash flow, even if you believe you can fix the place up and create equity. What if real estate prices have 20+% downside in SF, West LA, NYC where you buy with no cash flow? What if interest rates rise and property values decrease? What if the end of government/central bank stimulus stops propping up values?

@Account Closed the first time I read your post I was honestly too angry to interpret the content. It actually is very useful. Thank you

@Account Closed I have only been out of undergrad (NYU) for 1.7 years. Asking questions here is a valuable resource for me. My firm only works on deals that are $50MM or higher, so I am unversed with smaller deals that I personally would buy. I am young and trying to learn. BP is a good resource without negativity... Appreciate your other thoughts though. Here's food for thought: you began investing at the absolute bottom of the real estate market in 2009, so any deal you have touched has made money. I am a first time investor in 2016 when the market is near all time highs and central banks have pumped trillions of dollars to patch up ailing economies. It's not as simple as when you started, and if you think it is, you need to think harder.

@Account Closed I hear you man. I worry about people thinking that the market can only go up. The thing that gives me peace of mind is going through the loan approval process. You need to have legitimate income and the underwriting process is sound. Makes me think the market could be safer than we think.

@Lee L. very interesting Lee. Hadn't thought of that!

@Corey Woodruff that is some of the best advice I have gotten. I will look within a couple hours of where I live (likely excluding LA entirely). The higher cap rate areas of LA are dangerous and high in crime. I think you are spot on that there will be a cash flowing market within a couple hours of me. Thank you!!

@Account Closed I do not need the cash flow to pay my bills, but I am looking to grow my income through real estate. Increasing my income will help with applying for future loans.

@Account Closed that makes sense to me. Out of state could turn out to be a huge nightmare. Any suggestions on where to invest in CA?

@Bill Devola that is all immensely helpful. I totally see what you are saying that the cap rate is guaranteed but that appreciation is not and depends on many factors. Further, the idea of knowing someone in the potential city is a key point.

It makes me hopefully that you say there are many markets that fit my criteria - haha and I bet that more CA investors invest out of state than anywhere else!

Do you have a way that you search for these population/employment trends? Or further advice on finding the perfect market? Thank you very much Bill!

All, thank you very much for the insight. This is all very useful for me. @Matt R. and @Andrew Fielder you guys are correct in that flipping or getting creative with fixing up over time could be a profitable route. Also, I had no idea that since 2000 LA is #1 in total profits... That is very attractive, and I would have never known! Also, I am going to dig into why UCLA thinks we are only half way into the bull market.

@Ian Walsh in all honesty I have learned primarily which areas are actually nice vs. which areas I could have tenant disasters. Further, the main criteria I look for is where the property cash flows or not. In West LA, if it cash flows, it might be a deal depending on the area and upside. Tough to find one that I get really excited about!

The more I think the more I realize that I want decent cash flow. As a result, I may need to look out of my area or out of state. Any thoughts here? @Account Closed the markets you are talking about sound very attractive - any insight would be much appreciated. Also, @Larry Fried and @Jack Slattery where do you think?