All Forum Posts by: Matt Perez

Quote from @Nicholas L.:

@Matt Perez

if you can, go there in person, maybe even more than once.  walk the streets, meet the agents and property managers, jam a whole bunch of showings into a weekend.  so many CA investors buy properties sight unseen and expect everything to just magically be done for them.  while i know that is what is promised, it just doesn't work that way in many cases.

 Well noted thank you. I am going out there And Plan to do some showings but I plan to spend a week out there to start annd even more familiarize myself with what I have been researching. I don’t expect anything to be magical. I expect it to be as expected. I’m sure there will be maintenance things that come up and other issues. Same as if it was a local house. I believe good tenant screening is big no matter where it’s located and go from there. Some work and ironing out kinks to me is to be expected.

This all helps . I have enough money to get going in a lower price  market and keep some in reserve for whatever. Shopping B & C neighborhoods  in the KCMO area. My wife and I both work good W2 jobs in the San Francisco Bay Area. We are both union workers so we have about 10 years to go and close our pensions, which we will do.  I am looking for long term buy and hold at this point. Something to help build long term wealth for my kids and eventually when I get more time and $$ keep building up the portfolio.  I have 2 kids 12 & 15 so we’re busy parents plus I enjoy coaching which I do so spare time is minimal.  I’m just trying to get a sustainable investment going now so in 5 years when I have more time and some equity built up I can start to make the moves to scale up more. 

Quote from @Travis Biziorek:

Hey Matt,

"Too low" is relative. We all have our own unique goals, risk tolerance, and time commitment. If 4-5% CoC works for you then that's great.

For me, it doesn't make much sense. If I'm investing for cash flow I like to see 8-10% unlevered CoC returns and much higher than that if I'm using leverage.

You can easily put your money to work today at 4-5% returns in far more passive stuff than real estate. For example, there are plenty of great dividend stocks that pay annual dividend rates that match or exceed that. 

If you're simply trying to put money to work you have a ton of options. If you have a passion for real estate you can do far better but it will take a bit of work.

Thank you. I can easily move on from this house and set higher targets. Your answer is great for me.  Was kind of just  wondering what the bottom bar should be and 8% sounds about right. Not for everyone I’m sure but as a newbie trying to get in I don’t hear much of a target range. Of course higher is better but figured there had to be some kind of basic area of target .

Quote from @Glen Wiley:

Quote from @Joe Villeneuve:

Quote from @Glen Wiley:

It might help to make sure we are all using the same vocabulary. When you say COC what do you mean exactly?

I calculate my return on RE as a combination of:

1. Appreciation

2. Cash flow after debt service from rents

3. Principal pay down

4. Depreciation and other tax related benefits.

Including all of these factors means that I usually see better than 30% returns on my investment annually.

As @Bill B. said - cash returns is mostly useless for judging an investment (after meeting a minimum bar for cash flow). The other aspect of return on investment are very real and spendable, just not as liquid as cash.

 That's not correct. Read the words, or should I say, look up the definition of "cash". Also, it's only calculated for the first year

 I know what it means, I didn’t say the above were cash, I said they were returns. What I was asking was whether the original poster could clarify what he meant by cash on cash. People often neglect to consider many facets of real estate returns.

That is why I am on here. I said it first thing in my original post. I am a newbie. I’m on here reaching out to the BP community to help learn and discuss.  I’m just trying to get involved and grow. So I may be using terms wrong. 

So with that said I'm probably doing more just ROI. Return on my cash invested after debt services . So down final cashflow divided by down payment

The house is only about $126k  but been on market for 5 months. Other homes in area the same are about $150k.  I did look at refi in 6months (the minimum time) I would leave about $9k-$10k in the house after that short time. 

Quote from @Joe Villeneuve:

Never use percentages to judge returns in RE. They tell you nothing of true value, and will lie to you

 Joe 

What do you use as “true value” factors then?

Kevin 

thank you for your input.

Hey everyone ,

I am a newbie investor. I am looking out of state because where I live in California is just to expensive. As a newbie I am looking at homes that are "turn key" and could get 4-5% annual CoC. I know people get 8-15% or more but have to do all the rehab and dealing with contractors. Being I'm not all that seasoned yet would 4-5% ready to go be a bad idea?

Curious on peoples thoughts on this one.  Not home runs but it does get my money working.