All Forum Posts by: Matt Vogt

There's something to be said about turnover costs, vacancy etc. If you're comfortable with your properties performance as-is, why shake it up? In most businesses, it's said that new customers are 5x more costly than keeping old customers. I don't see this being untrue for real estate, although my experience is limited so take it as you will. If/when you decide to charge more, you'll quite possibly be faced with the reality that you'll have to invest more capital to upgrade and refresh the unit(s). How many months of an extra $50-75/mo does it take to recover a few thousand in necessary updates? 

Probably having the tenant change the heater for you isn't a good start, so try to avoid that if at all possible. About a year ago I lowered the 1st month's rent for the tenant to move into it as-is, uncleaned, unpainted after just closing on the property. That worked out, but not all situations like that will. 

Good luck

You just made me want to move to Texas! That's a wonderful house! Maybe try what @J Turner said and pull it off the market for a bit?

I'd go to your local bank and see what they have. I have several that give me offers frequently. I have a Chase Southwest card that will give me $20K at a 2% origination fee at 0% interest for 18 months.

@Ike Igiebor Buy, Rehab, Refi, Rent, Repeat...

I totally agree with @Account Closedh that you guys are over-leveraged. What happens when you have a vacancy and need to cover $1604/mo. What happens when the market corrects and you lose your equity (or part of it) position? I would be nervous about being overexposed and bearing too much risk. Maybe consider streamlining your cash-outflow a little... get rid of the car loan (sell car, get less expensive car), get rid of the cc debt, build a cash buffer. Your retirement savings are barely existent, the 401K could probably have a loan of 4K or so - not really enough to pay for emergency repairs (furnace etc). 

How much is the mortgage on your primary residence? How about house-hacking your primary to get another $500-800 in income? Is it just you and your wife (using 1 of 3 bedrooms)? 

Could you sell both properties and buy a multi-family to house-hack with? 

Lenzy had it right... you must run the numbers and have enough room for error in your numbers. I would suggest that you start modeling potential deals for a while before pulling the trigger on one. It's easy to get emotionally invested and make a bad decision. Use time to hone your skills, build confidence, and to use reason over emotion for these decisions. Could you be walking into a diamond of a property with this guy, maybe. Could you be walking into your biggest nightmare, finding yourself way over your head, maybe. I'd play it safe and investigate more options before being sold on one specific property/market without carefully weighing the alternatives. 

One thing to consider here is that wholesalers are sales people to some degree. They are selling you on a "Deal" - be it a true deal, or a pig with lipstick. I would suggest taking everything with some salt, and doing all the due-diligence to ensure that it truly is a deal. 

Have you looked at properties near you, are they out of your reach? 2 hours might work if you have all your systems setup, but you're still going to need to go there from time to time (more likely than not). 

Good luck, just keep reading and soaking up all the knowledge that you can.

Hey Jasper, 

I realize that you want experience, but why not put a dollar value on your time? Even though you are young and lack experience, you should be able to land something that would pay you for your time. Additionally, real estate is booming right now, you should be able to find a great deal of opportunities. 

You might want to narrow down on the segment of the industry that you would like to learn more about, then pursue options from there. Is flipping what you're after, long-term buy/hold deals, wholesaling, etc? 

I'd get on Craigslist, search for jobs in the RE industry. If you're into flipping, maybe get a part-time construction job to learn some trade skills. While experience is essential for success, I wouldn't short-change yourself on a few hundred a week. Even $10/hour would get you $200/week to start saving towards your future investments, and/or offset your expenses. 

Good luck

Condos can be a good investment, but it depends on what you're trying to do. Appreciation is typically less than a SFR, and your cost structure is different. You're going to have lower CAPEX due to the HOA covering exterior features. You'll want to have extra insurance to protect against special assessments, and you'll want to verify that the HOA is in a good financial position and relatively well managed. HOA's typically charge quite a bit relative to a SFR, however they make some aspects of management easier for you.

For a buy-hold type deal, a condo could be a great investment, just factor in HOA costs and annual increases (inflation give or take) into your model.

I guess it would be good to inventory your skills... what is within your capabilities, what is outside of them, what can you manage (but have others do), and what can you do yourself. Is anything outside of the realm of your abilities/skills (ie. structural design changes, etc)? 

Do you have a visual of your vision for the final product, how does it look, what major changes are happening etc?

Draw out your plans or have someone do so for you. 

Are you doing all of the remodeling at once or over the course of time (between tenants)? 

I'm sure there are more questions you should be asking/answering yourself... but maybe start here. 

What about cash for keys? Have you tried to buy your horrible tenant out? It seems that even a steep cost (say $1K) would save you a lot of headache and legal expenses. 

Good luck, doesn't sound like fun.

I don't think it's a bad thing to be a bit afraid. Listen and learn from your fears. 

Let's be honest here... you're 55 years old and all your wealth to date has taken a LONG time and a tremendous amount of effort to create. It's not something you want to lose, and it's not something that can be recreated overnight. When getting into something new, it's always sound advice to take on a mentor... or several. This will help you learn in a positive environment and would theoretically reduce your risks. The Bay area isn't inexpensive either... you're going to have a lot on the line, with varying degrees of exposure.

I suggest you play it smart. Partner with someone who has a proven track record of doing flips. Spread the risk and share the rewards/potential downside. Do this under an LLC so that if ALL HELL breaks lose, what's left of your personal nest-egg is protected.

Most people aren't in the same financial situations... some can stomach losing 5K, some 500K, some 5 million, etc. Choose what you are comfortable loosing. No investment is a 'sure thing', so be prepared to take a few hits before you figure it all out. Figure out what you're comfortable with, and figure out how to do a deal with that amount of exposure. 

Take calculated risks, choose good and experienced people, and work through the learning curve.

Best of luck!