All Forum Posts by: Lorenzo L.

@Lorenzo L. good on you for getting into RE investing in college! I think a lot of us on here wish they got started that early, I sure do. Lot of great info on this thread so hopefully you can see how networking can supercharge your investing career (also something I wish I started earlier, ha). 

I've been investing in the immediate Boston area since 2013 and can verify that it is insanely hard to find deals that pencil. I find it hard to believe that investors are actually buying negative cash flow deals, but they are and then banking on appreciation. There are also a lot of foreign investors looking to park cash since US real estate is considered very safe on a global scale. Regardless, just because these properties are trading doesn't mean they're good investments for your aims, so just focus on the numbers you need and keep on keeping on.

One piece of advice is to maybe ease off direct to seller marketing and focus on networking with wholesalers and agents. That way when a deal is brought to you, you know the seller actually wants to sell. I've done a lot of DTS marketing and found that almost all my leads were either tire kickers or if they actually wanted to sell, the property had so many entanglements (multiple family members involved, tons of debt on it, municipal liens, etc.) it wouldn't even be worth it. Can waste a ton of time, money, and effort on this which could be used more effectively evaluating deals, strategies, and markets where you can find returns.

Good luck and feel free to connect if you'd like to chat more about it!

 Leverage is a beautiful thing, but also a dicey one. If I can grab a quality location, 5.3 cap all cash right now I do it. The re-leverage aspect is now at my opportunity. Right now, I concern myself with the quality asset. How I cash flow it, how I leverage it, I can worry about to what's the most opportunistic. 

The equity market is a fine comparison, but the reality is if you think every 5 years you're net return will be 90%(not sure if this is pre or post tax) then you can choose that route but you have to mark it to that return annually which is a reach. I'm well diversified in equities, I think the scarcity game of physical real estate then add in the premium which is location will give me a higher yield in the 10-20 year mark and that's my timeline. 

Ideally, you sit back on all assets levered at 20-40% and real estate possibly up to 60%, ideally not north of 40%. Keep your equities levered at 20%(half high vol, 1/4 low vol, 1/4 basic indices) and keep your phys/hard assets levered at 40%. The additional cash you have due to leverage put into more hard assets and the cash flow generated put into fixed income/equities after reserves. It's all going to be a long & quality game. The point of entering it is almost futile, the idea is to acquire it. 

 Have you thought about doing a house hack?

Hello Lorenzo,

I’am with you 100%… i live in florida and been looking for multifamily all year long and the same issue here. When you do the math you actually loose if you finance. The only option is to purchase cash and at that point it makes no sense due to the fact that a HYSA account or CD can pay you the same interest rate without having to deal with property management. I am curious to see what others say, but I am completely with you on this. I even considered the option of just purchasing 1-2 single family homes per year and growing that way as there is less risks of tying up all capital in 1 property

@Lorenzo L.

The investors buying these properties could pay cash and make that 5.3% return. They could also be losing money in the short term while value-adding the property (before they can increase rents and NOI).