All Forum Posts by: Mary L.

I work 40 hours full time, spend another 50 to 70 hours on real estate, working about 10 to 15 hours everyday, 7 days a week, no rest, no social life, no vacation, just work work and work, it turns out to be good after many years of 100 hours weekly hard working. It’s not a joke, it’s my real life example

@Hamad Khan

Expand a little bit more, but not more than 75 doors because democrats propose a new Housing Hedge Fund Bill - want to kick out the hedge fund and has penalties for landlords to own 75 or more rental properties - $10k tax fee each property each year.

Landlord who one 75 doors or more could have $750k tax fee each year due to the Democrat new propose Hedge Fund housing bill.

Please google the new Hedge Fund housing bill, then you will see the news.

@Chris Seveney

Thanks everyone for your input!

I feel the same, it's not a good time to buy rental now because it's negative cash flow with 25% down almost everywhere.

I googled what strategy did the investors use in the 1980's (18% interest rate) and found that more than 50% of the transactions back in 1980's were using assumable loans. One of the selling points in the newspaper was "get 8% interest rate while the market rate is 18%". However, the Fed banned this assumable loan strategy in 1982, and we can't really use it today unless it is seller financing at a low rate. But which seller would be willing to do seller finance at a lower rate like 5% today? Very difficult.

Although today inflation and high interest rates look like 40 years - 1980's, the strategies that we can use are limited.

If the rent is much less than the 25% down mortgage cost, I feel that the rentals do not have much investment value. Unless either the interest rate goes back down or the rent is increased significantly so that the cash flow won't be negative, then the rental investment would be worth it again.

With an 8% mortgage rate, there is no way to have positive / break even cash flow buying a market price property on MLS today.

I picked a house in the MLS today.

$460k asking price (non-expensive market price) on a SFR.

Say we got it for $450k after negotiation.

$2000 monthly rent,

with 25 % down, 8% rate, mortgage include property tax, HOA, insurance is $2900 monthly before I even count the vacancy, repairs, management fees etc.

This is a -$900 monthly negative cash flow.

Unless paying cash, after all the cash investor dried up, using 25% down payment, how do a typical mom and pop landlord buy a new property?

What strategy can we use to survive in this new market?

How do landlords stay profitable or break even cash flow in this high rate market?

Thanks!

@Anthony Harris if this is the case (eviction case), I would sell it immediately regardless the market condition or interest rate condition, this is a bad investment.

@Yoe Lopez

I know two other condo investors in Las Vegas.

One investor owns about 130 condo, the other one own about 80 condos, and I own about 50 condos in Vegas.

Why own double and triple digit condos?

Because the numbers does work.

@Edwin Lopez

I own dozens of SFR, townhouses, and condos in the past 12 years. After the past experience and the cap rate profit number comparison, I sold all my SFRs and townhouses, exchanged all the SFRs and townhouses into all the condos only because condos can provide me maximal profit in terms of the cap rate compared to SFRs and townhouses.

I have been very successful on owning dozens of condos in Las Vegas. Like one of the other posted mentioned, sometimes, condos has less headaches because the HOA would take care of the landscaping, roof, condo exterior structure, swimming pool etc.

If you own a SFR, you would be the one who deal with all these headaches (roof, landscaping) instead of the HOA take care of it for you.

Both SFR and condo have their own pros and cons.

Both SFR and condo can make good money if they are in the good location.

Don't buy the cheap SFR or condo in a bad neighborhood.

Location is much more important than the type of the property.

Condo is my favorite property type because of the higher cap rate return.

Last peak was 2006, and took 6 years to bottom in 2012.

The previous previous peak was 1990, and also took 6 years to bottom in 1996.

This cycle was just peak in March 2022, from the history, it possibly could take 6 years to bottom in 2028.

I highly doubt the bottom would hit in only 8 months in November 2022 now?

@Eric Fernwood

Thank you for the information.

However, I see both housing and rental market in Las Vegas has softened a lot.

Many rental prices have dropped 20% from the peak. Many “good deals” house price have dropped 15% to 30% from the peak already.

In today’s declining market, it is very difficult for me to see an 8% appreciation in the next few years.

This year is just the beginning, looks like still have a long way to bottom out.

I don’t want to catch a falling knife.

@Jin Zhang, I found 2 "good deals in good B+ location" (20% off from market price and 30% off from the peak in March 2022) last month, under contract, but I cancelled both 2 good deals last minute, because 3 more even better deals were listed on the MLS before my close of escrow. I have been buying real estate properties every single year in Las Vegas since 2010, I have been doing great, but I got freaked out last month. I'm going to pause purchasing additional real estate properties after 12 years. I will not buy and hold in 2023, to me, buying a good deal today maybe a bad deal next month, it is like trying to catch a falling knife. I will wait for the falling knife hit the ground floor, then buy again.