All Forum Posts by: Joseph M.

Anytime Joe.  Glad to help.

@Joe Splitrock - Got that right.  Pigs eat, hogs get slaughtered!

@Joe Colemen - What is meant with "Grind them Out" is you have to keep looking and a lot of times you have to look in areas that are not as evident that there is hidden value there. I am not talking location, I mean in the deal. Example would be you look at a SFR and see that the floor plan can support either another bedroom or could make a 1/2 bath into a full bath. That type of added value sometimes is not evident to the average buyer. A real world example: I looked at a 2-unit property with a detached 2-car garage and workshop in the rear of the property. To everyone that looked at the property, they saw a workshop and messy garage full of the owners crap. Tenants had outside parking areas. I saw almost 800 sq.ft of prime living space! After verifying with the county (always check zoning & permits by the way), I bought the place. I immediately "rehab'ed" the 2-car garage and workshop into a brand new 760sq.ft. 1B/1bath open floor plan apartment. Now I turned my 2-unit into a 3-unit with-in a few months. The cost was 1/10th the cost of buying another property of the same size. I also get the same rents as I would have if I had bought a separate property. I also have, collectively, a MUCH more valuable property. That is looking for value where other do not see value, hence the grind.

I hope that helps.

@Peter H. - To your question "When would be a good time for a "rookie investor" to enter the market?", the first thing I would ask you is what is/are your goal(s)?  Are you looking to buy and hold, flip, buy, rent on a lease-to-purchase, land banking, development, commercial...invest for cash flow, appreciation or both?  My second question would be have you started to assemble your team (mentor, banking, Property Manager, attorney, CPA, handyman, appraiser..)?  With out a team, even Babe Ruth would have failed.  Third, have you identified your target area and target market?  By target market, I mean the type of renter are you marketing towards (students, retirees, couples, Sec-8, luxury...).  Lastly, what is your tolerance for risk as well as what type of cash reserves do you have?

Like in many things in life, there is no one answer.  What works well for one person will be a disaster for another person.  Just one word of caution, if you are new (less than 2 deals in your life, not counting the purchase of your home), then I would tread lightly in this market.  The markets that I am in are anywhere between hot and crazzzy!  Seen this before and it will happen again and again.  Deal are out there, you just need to really grind them out and be really specific on your DD, rely on your trusted team and have accurate financials.  Just remember, it is better to not do a deal than do a deal that you wish you did not do.

Best of luck to everyone.

@Dan Goeckel - "There is something to be said for getting in the game but there is more to be said for being patient."  You hit the point on the head, especially for a new investor.  Every market that I am in hot to VERY hot.  Complete seller's market and prices are increasing/appreciating.  While there are good deals to be found, you really need to be on your game and be able to act fast.  The ability to that, IMHO, comes with lots of actual RE experience.  Anyone can buy a property, not anyone can make a property a successful long-term investment.  I believe in the idea that you make money when you buy.  There are many ways to do that of course (buy/rehab, find new use, add value, current rents under market...). 

With that said, if I were a new investor, I would continue to 1) conserve cash, 2) secure funding with as many banks as possible, 3) focus on building your "team" and educating yourself and lastly 4) continue to look and walk properties.  In this market, it will not be super easy due to the limited inventory and given how fast properties go pending.  It will be a grind, but there ARE deals out there, just just need to grind it out.  Just be cautious.

@Matthew Forrest - With all due respect, your comment "The government injected trillions on dollars into the economy and those dollars are not just going to disappear. I believe that it will go into the hand of people that value assets who will use their newly found money to buy more assets at whatever the market price is. Money is basically free, asset prices go higher." is dangerous and reminds me of the "Good 'Ole Days" in the early 2000's (circa 2004-2007 mainly). I cannot tell you how many times I was told by bankers, RE "Investors", flippers and brokers that "hey, money is free and the house is an asset and will it will always go up in value. Back then, someone...anyone...could get 90-110% LTV loans. Those were STATED income loans, where little to no proof was needed. Even a "full qual" loan was a cake walk compared to now. I ask ALL those people that took the advise that "money is free and assets will go higher", how did it turn out? Most would say that it wiped them out, some are just recently getting back to square one. The few, that actually had the income/cash reserve to feed the alligator for a long time, at BEST broke even when tax advantages were figured into the calculations.

Here is my take from doing this for 20 years.  Money, while cheap now, is never free!  There is always a cost, most of the time it is hidden from view.  Assets do NOT always go higher.  Also, how do define an asset?  My definition, for the most part, is something that puts $$$ in my pocket.  I say most part because there are exceptions like gold / silver, land banking and development.  As I was writing, an investment in RE should put money in your pocket either immediately or in the VERY short term (think buy, rehab and flip/rent).  If it does not, you just bough an expensive hobby.  Also, always calculate your deal using Before Tax Cash Flow as tax laws change. 

As for getting involved now, I think there are deals out there regardless of the economy, interest rates, COVID or even war.  It comes down to understanding your market, having a quality team, having a sound financial backing/reserve and not trying to hit a home run every time.  Is this current RE environment more difficult? Yes.  Should a newbie stay away? No.  Should you continue to look at deals, make offers that work for YOU and close if possible?  Hell Yes!!  Just do so with eyes wide open and, please, move forward at a decent pace. I am writing this from 20 years of experience. While I loved the last RE crash (2007-2010'ish), I personally know of many people and some former friends that got buried.  Two of them, including a family member, lost their personal home.  ALL of them were of the mind set that "money is cheap/free" and the house is an asset that will "keep going up in value".  Learn from their mistakes so you won't repeat them. 

Just my 2-centavos!

@Edwin F Zhingri - It is good to hear that you are a goal orientated person.  So am I.  However, do not "do a deal" just to achieve some yearly goal.  The deal will come but you need to make sure it is actually a good deal for YOU.  Save, learn, assemble your team and know your area well.

@Sarah Kartsher - Good for you.  RE investing is a marathon and not a sprint (or even a 10K).  Take your time, learn and gain actual experience.  Sounds like you are on your way!

@Terry Harris: Depending on the region / market, wrapping up a flip or filling a vacancy is harder from November to January.  The main reason, at least what I have found, has to do with moving close to the holiday season (Thanksgiving, Christmas, New Years...).  Also, if you are in a cold weather climate, moving in the snow cannot be too much fun.

Good article for a NEW investor or for a wannabe "investor".  This is not the time to be in the market if you do not have solid experience.  It is true that each market is different, but what I am seeing (in multiple markets) is that ANYTHING of quality or even something that would be a very minor DIY rehab is going for list price or over.  The DOM is measured in days, not in weeks.  A few were in contract within hours of listing.  Good news if you are selling, not so good if you are buying and horrible if you are new and do not have an understanding of what needs to be done post-sale.  You MAKE money when you BUY!  Don't forget that.  
With that said, for the experienced investors this could prove to be a decent time, of course, depending on the deal.  I like others, invested during the Great Recession.  People thought I was crazy buying during a time of panic, bank closings and hysteria.  Crazy like a fox because I had the experience to separate the wheat from the chaff.  Now, my friends and business associates wish they had invested vs. "saving" there money.  With that said, I see the market this way.  First, this is NOT 2008!  WAY different mechanics.  Gone are the days where you could buy a house for the price of the land. [Fun times they were]  Second, there is a deal every day and you just need to find it.  This is where a team and experience kicks in.  I always have multiple exit strategies, never get over leveraged nor emotional.  I place an offer and if it does not work out, I move on.  I also believe that if you are not embarrassed by your initial offer, you offered too much.  What I am personally doing is looking for properties that have gone stale or for properties that will not qualify for a FHA mortgage.  DOM greater than 35 days is a good starting point.  Most retail customers want turn key or near turn key (paint a wall, change a faucet type of buyer).  I also know exactly what will rent quickly and for what rental rate in the areas that I am in.  In addition, many times I actually have a "wait list" of interested tenants, so I can often pre-rent a unit before it is even rent-ready.  I have already closed on two very solid investment properties that are now being rented.  Point being is that there are deals out there, it will just take time, expertise and a trusted team to find them.  If I were a rookie or newbie that is not well capitalized, I would be sitting on the sidelines waiting, watching and saving money so you won't get over extended if/when you buy.  A newbie can get burned harder in the current environment vs. a more standard RE environment.