All Forum Posts by: Matthew Terry

I work for a contractor that focuses on roof and window/ door replacement. I just wanted to get some input from experienced investors that hold properties for long term investments. 

On both our product we offer a 50 year, 1 exclusion (an act of God) warranty held by the manufacturer. Meaning, if anything goes wrong, we will replace it for free including all parts and labor for the full 50 years. With that, if you go and purposely damage the integrity of the roof or window frame, it will not be covered. On roofs this includes losing just one shingle or get a leak within the 50 years, and you will get a full roof replacement. With the windows if the argon gas leaks out, accidental glass breakage (the two biggest exclusions on warranties) are both covered for the full 50 years. Both warranties are transferable to the next owner if sold within the 50 years.

I have looked into getting into real estate investing before, but never pulled the trigger. When I got to thinking about the value of these products and the warranty, I thought it would be a very smart investment. Never having to worry about a roof or windows/doors again.

The roof and windows are built to last well over 50 years, and that is why we put that kind of warranty on our products, so it is a premium product, but it comes at a pretty average investment when you compare it to costvsvalue.com

So the main question, would it be of value for an investor to buy a guaranteed 50 year roof and/or windows? Or would you rather just buy the cheap windows that you can find at Home Depot or any other big box store??

@Matthew Terry What market are you seeing updated systems for $90K, good neighborhood and 1.1% R/V? You can get that with value add in those markets easily but in turnkey or MLS, you are probably missing something.

I actually invest in the Bay Area (supposedly impossible) as well as out of state in Huntsville and OH (also supposedly impossible). There are successful strategies in every market and geography. Pick what you want to do, talk to people doing it well, develop your plan and execute and you will do well.

@Jeff Cagle

I think Michael is providing value by answering all of these questions but of course, hes always looking to "raise capital." This is what all of the top investors in the world do. They all raise capital. Even Brandon Turner and a lot of people who do the Bigger Pockets podcast try to raise capital from this community.

People don't just provide free value if there was nothing in it for them. Everyone is selfish deep down. Everyone comes on here to take take take and some will mask their true intentions to try to manipulate people for their own needs.

If anyone is stupid enough to just hand over hundreds of thousands of dollar to some random guy on bigger pockets, then they deserve to lose their money. Look at all the so called sophisticated investors who lost their money to Bernie Madoff.

You and I are similar in that we can tell when people are masking their true intentions but there is no one on earth that does something without seeking something in return. The owners of this platform even seek to raise capital.

I personally would never hand over money or start a partnership with someone unless I knew you for a long time. I would rather lose all of my money on my own terms, then lose my money to a Bernie Madoff.

My comments come out of the 10+ years investing in "distant" markets.  My experiences with alleged "turnkey" properties has not been good: either the work is shoddy or the allegedly B neighborhood is in fact a war zone.

Research very carefully.    

Matthew: the assumption that you will have no cap ex "for years" is a deeply dubious one in places, like K.C. but unlike southern Arizona, where the weather becomes a major factor.  To be realistic, you should build the cost of at least one replacement roof, 1 replacement furnace and 2-3 water heaters over the period of five years.   How do your numbers look now?

You also mention "highly-rated property managers."  Highly-rated by whom?  How do you know this?  No one is going to look after your properties like you would, especially for a couple hundred of bucks a month.   

Mathew,

curious ..what did you pay for it...and how much do you owe? 3600 profit (I assume over a year) seems low..what is the rent? how much is the home worth?

Andrew from Scottsdale has good input into investing way out of your area. I have 7 rentals in Phoenix all within a few miles from me..very easy to manage because of that and i am 76 years old and i am hands on. i feel the farther you

are from home..the more money you lose as opposed to the closer you are ,the more money you make. Don't be misled by lower prices in grey area cities

I'm trying to follow the math. It looks like this is nearly 10 months away. I agree that values are going up in Mesa and in Arizona in general, but I'm reluctant to place an exact number on what will happen over the next 10 months. If you will have $120,000 in equity, I have to assume if you sell you will have realtor fees and other closing costs, plus you will need to give notice to your tenants and generally allow for 90 days to close. That of course eats into your actual dollars to invest.

 But, using your numbers, "$120,000 gets you 4 or 5 houses". That would mean you are taking out loans to buy them or buying four $30,000 homes. That doesn't sound too appealing in those cities. It's would be like owning rentals in So. Phoenix or worse and you'd be a flight away to deal with problems. You could take out a needle and stab your big toe and get the same satisfaction. Not at all to my liking.

I think you'd be better off refinancing the property (borrowed money is not taxed), keep the cash flow and possible appreciation and use the proceeds to invest. I personally like Mesa and Glendale and Phoenix and Austin and Dallas and San Antonio. Solid markets with good growth and people who can actually afford to pay rent. Here is a spreadsheet to that idea:

Average Turnkey Cash Flow Per Door In Phoenix Metro Area No Bank Financing Needed

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Whatever you decide to do, you have some time to think it through first.