All Forum Posts by: Lance Robinson

@David Katz

Hey David! More important in that is where and how you are buying. I like to buy properties in markets that are on a population and job growth and buy in an area that is around the median of the metro home value. This ensures you have solid renters that are usually young families just about ready for a starter home and will stay a while and take good care of your place. Usually means good school district, low crime. And has a nice blend of new homeowners and buyers as well.

The blend means you have a pool of investors and homeowners that have pride of ownership which is a nice balance between cash flow and appreciation.

If you go too low, you will be in an investor only area and will have no appreciation and a TOUGH exit as everyone wants a deal!

If you go too high, you are in homeowner's only and it's tough to get a buy, it will be an easier sell with more appreciation, but a harder rental market as you will have good tenants that would likely leave after a year to go buy something, meaning high turnover and tough rentability.

The middle is a sweet spot between the both. When you aren't buying with a deal, it's extra important to buy in the right spot! "location, location, location" Hope the "why" helped, let me know if you have any other questions!

@Yiftach Ilyov I own 7 properties in Indy now and love it!

Solid cash flow market, I think flips would be a bit tough right now to end up in the right neighborhood that you'd want to buy in so I would look at it as a cash flow market from out of state.

Also, as stated, I would consider looking into Tampa since it's in your backyard!

Let me know if you have any Qs or need any help, good luck!

@Codi Clausen as @Jason D. stated, it should be ready to go without needing a contractor. Do you mean a turnkey property or that the property is turn key? Two different things. If a turnkey property, I assume out of area, I would make sure to heavily vet the PM as well as their contractors as you will need them at some point. That's my favorite way to work with my PMs and contractors. I've found this to be nearly perfect in a specific market and then doubled down and continue to buy there because the "feet on the street" are that important. Hope that helps, let me know if you have any other specific Qs!
Lance

@Roman Rytov

Specifically to this:

My question was more about how to keep rentability high. Are the SFH more likely to stay occupied than condos or duplexes? Single Family Homes should have higher rentability and longer term tenants if you buy within an A area. I always look at the median house price of the area and try to buy in that range. This is a nice balance between renters and home owners. If you buy a solid 3/2, then the result, in my experience, is high demand with family renters that tend to stay a while.

Areas with higher appreciation rather than lower? Appreciation is VERY market specific. I think the above metric is the best way to find the right balance between good rents and rentability and appreciation. You will have the first time home buyers driving the prices up while still having a good higher end rental pool.

When you expand your portfolio do you keep the same type of properties or trying to diversify? I used to diversify, I have owned everything from SFH up to a 22 unit Apartment building in many different markets (7+ markets) and I love my SFH the best. They have been the best returns with the lowest hassle. I used to diversify markets, but not anymore. As of today, I only own SFH's in 3 markets, but will consolidate to 1 within the next 2 years I imagine. I like the main market I'm in due to my feet on the street. I have an amazing PM. Your PM is VERY undervalued in the equation!

What parameters to take into account? See above.

It's interesting, until recently I saw everyone on BP saying to "leverage to the tilt" then the recession comes and those that didn't own RE in the last downturn start to realize and change their tune a bit. You are absolutely on the right track here.

I've actually been working on my strategy with @Jay Hinrichs for a while now. Preparing for a recession just means lowering risk which just means less debt and more cash flow. It's funny how properties with 80% LTV just don't cash flow much regardless how the numbers read.

At this point, I would have a big cash reserve and use excess money to pay down your real estate. This is good general advice, market scares tend to test our heart more than our brain where we actually measure that risk.

@Roman Rytov I think you are realizing the reality that everyone on BP seems to ignore.

Your position both with risk and cash flow would be much better if you didn't have the debt. Everybody preaches debt forever, but most of those people never fared a recession.

My advice would be to stock up a big emergency fund, use excess money to pay off properties, and sell underperforming assets if concerned.

Properties that are highly leveraged have a hard time making much cash flow. They are literally one big expense or eviction away from being negative for the year, sometimes big time.

Hope this helps to offer a different way to look at these problems.

Originally posted by @Account Closed:

Originally posted by @Lance Robinson:

Originally posted by @Account Closed:

Originally posted by @Jesse Houser:

Hi all!

So I've been talking with my wife about the benefits to real estate investing vs. other forms of investing (stocks, bonds, annuities, etc.). She leans very much towards those forms of investing because it is what her parents have done and so it's what she knows. I've been trying to explain to her why I feel real estate has more benefits than the stock market and I was wondering if any of you could help me out.

Why do you pick real estate over other forms of investing? How can I better explain why real estate is a better vehicle for building wealth over stocks, bonds, annuities, etc.

Thanks for the help!

 We all know that the Stock Market never goes down . . .

OOPS! WRONG SLIDE, Sorry here it is . . . 

OOOPS, THAT"S NOT IT EITHER  . . . 

What, me Worry?

Sorry folks, having a bit of trouble here. Nothing to see, move along.

 In all fairness, houses look similar to this in general I bet if we compared side by side. Sure if you sell during the town times (RE or stocks) than you are in a bind. With stocks, you don't have to sell, with houses you may get foreclosed on though if you have debt on them. Alternatively, the market is the highest it's ever been today. So I see you trying to prove a point about the market going down, but looking at the trajectory it is currently way up. It will continue to swing as rental homes do.

Just want to make sure everybody sees both sides of this equation.

 Your Comment: "Alternatively, the market is the highest it's ever been today." Great argument. Lol (Here we go again. "It can't happen here". "It will be different this time". "FOMO - Fear of Missing Out". ) Have a happy weekend. ;-)

"Don't Miss The Signs Of Another Slow-Motion Meltdown"

by Tyler Durden

Fri, 09/21/2018 - 14:56

That slowing down effect is important to bear in mind as we encounter the 20th anniversary of the Russia-LTCM financial crisis of September 1998 and the 10th anniversary of the Lehman-AIG financial crisis of September 2008

Of course, investors recall where they were and what they did during the absolute height of the panics — Sept. 28, 1998 and Sept. 15, 2008.

Most investors may not be aware that these peak panic moments had actually been playing out for over 15 months in both cases. Investors who closely observed the early signs of trouble had ample time to get out of the way of the panic itself.

In fact, most investors were oblivious to the early warnings. That 15-month build-up was a real slow-motion event, not an illusion.

But the panic returned in the spring with the failure of Bear Stearns in March 2008, followed by the collapse of Fannie Mae and Freddie Mac in June. The panic turned into a global liquidity crisis and reached an apex with the bankruptcy of Lehman Bros. on Sept. 15, 2008, and the subsequent insolvency of insurance giant AIG.

Wall Street was facing a sequential collapse of other banks, beginning with Morgan Stanley when the Fed and Congress stepped in with trillions of dollars of guarantees, swaps and bailout money.

Both of these panics — 1998 and 2008 — began over a year before they reached the level of an acute global liquidity crisis.

Turkey, Argentina and Indonesia, all major emerging-market economies, are in complete meltdown. India, Malaysia, Brazil and Mexico are in the midst of currency collapses. South Africa is in recession. China’s growth is slowing and its debt is unsustainable.

Are we in another slow-motion meltdown? Are markets telling us that another global liquidity crisis is on the way in 2019?

It’s impossible to know, yet the signs are not encouraging.

 Every time it has dropped it ends up going higher, much higher, per the charts you showed. So unless someone needs the money in the next 5 years, you probably want it to drop so you can buy more even cheaper. It's only a loss if you sell and realize it, like real estate.

By the way I have exactly $0 invested in the Stock Market. So I'm not arguing stock market over Real Estate, I'm just arguing this exact fear driven example.

Nothing more to add, I know you like to debate a lot on the forums : )

PS I'm in Scottsdale, right down the road from you!

 In all fairness, houses look similar to this in general I bet if we compared side by side. Sure if you sell during the town times (RE or stocks) than you are in a bind. With stocks, you don't have to sell, with houses you may get foreclosed on though if you have debt on them. Alternatively, the market is the highest it's ever been today. So I see you trying to prove a point about the market going down, but looking at the trajectory it is currently way up. It will continue to swing as rental homes do.

Just want to make sure everybody sees both sides of this equation.

 Jay has been mentoring me for years. After coming up with a quantifiable system for this, I've used this to scale past Turnkey and into other non-turnkey properties as a system of profitability. Up front numbers are just so difficult to get the full story. Time shows better numbers of course...