All Forum Posts by: Mark Shaffar

@Account Closedgood point on cycles not being simultaneous and thus allowing opportunities at different times. What crap being pushed by banks on loans are you referring to?

@joe B. sounds like a kind of medium term buy and hold. Interesting

@Joe VilleneuveThat was one of the best posts yet on BP!

@Scott Trench

and @Amanda HoeningI think that is the beauty of investing in rentals. You've either got more equity in an upturn or more buying opportunities in a downturn. I think the key is cash flow. As long as you can wait out the downturn thanks to positive cash flow you are good to go. What scares me is the idea of banks calling a portfolio loan in a downturn. I'm not up to ten conforming loans yet though so no big issue for me personally.

@Jean BolgerI like you Dad's quote, and good point about illiquid equity. 

@Keith Johngreat stuff!

@Charles Worthgood point that risks start high if you only have one door and diminish with more doors. Of course predicting what the better ROI is on a rental vs private lending is tough. With private lending the rate is fixed and should be good if the borrower doesn't default, on a rental there is potential to beat that if you lower your risks through buying in good neighborhoods with good rehabs and great tenants especially when adding in depreciation on taxes, mortgage interest deductions, appreciation of values, leverage, principal payments, etc, but there are a lot of variables there

@Chris ClothierI think even using your numbers of 5k plus 12 months of expenses 12k might be enough (especially if leaning more to a 60k house) but you said it well with, "If at any point you feel that you will be looking for the rent check and sweating its arrival in order to pay bills, then you are definitely not ready to invest." 

I also invest about 40% of my capital in private lending and I certainly appreciate the simplicity of a check each month that is always the same. I'd be curious to see if the majority of the buy and hold investors on BP are earning more than 12% ROI when it's all said and done. I know I am but that was mostly from buying in 2010-2012 when houses were really cheap.

@Jeffrey BanaszakI'm a Milwaukee investor myself and one of these days I'll make to to @Nicole Pettis's meetup. Welcome to BP! I had to click on your profile to figure out your pic. I was thinking marching band, but after I saw a bigger version I'm guessing hoodie and worklight?

@Jay Hinrichs  and @Chris Clothier I'm all for saving up a nice cash reserve in case of a tenant trashing the place, but as I understand it, Traver is comfortable investing 16k which would be 20% of an 80k house. Say the rehab quality, neighborhood, and property management all check out to lower (but not eliminate) some of the risks for vacancy and maintenance. He's still got an additional 12k reserve. What kind of reserves would you recommend on these kinds of properties? Maybe I read that wrong and the reserve would also need to come out of the 16k which is then understandably too tight.

@Chris Seveney

I've seen investors like yourself set up tours of a few turnkey providers and/or realtors in a few cities they are interested in. Sometimes a picture is worth a thousand words. Advertised ROIs and actual ROIs are two different things. You might buy a cheap house in a cheap neighborhood that looks like it has a great ROI until your two biggest variables of vacancies and maintenance kick in and kill your cash flow. Checking out a property to make sure the rehab and location will lower your subsequent maintenance costs and attract a quality tenant are very important.

A while back @Jay Hinrichs

 posted about the the real estate market levelling off 

http://www.biggerpockets.com/forums/311/topics/199...

and I got to thinking today about what happens after that. What are my plans to handle the inevitable part of the real estate cycle when values start to drop? I'd like to hear from the BP community about what they are doing now to prepare for that and how their strategy will change when it does hit. 

@Larry Friedshould be good for a review:)

 Gautam makes a good point. Norada and and Home Union are middle men who will introduce you to providers they think are suitable for your needs and they deserve to be paid for that service.

@Jay Hinrichs's turnkey-reviews.com has the providers themselves. Middle men can help vet the providers but you still need to vet the middle men.  

 I agree, you might get lucky buying out of state, sight unseen from a dependable turnkey provider, but a huge part of real estate investing is mitigating your risk through due diligence.