All Forum Posts by: James Hamling

"I buy $150k to 200k houses all the time for 30k."

There is nothing, absolutely nothing realistic, consistent or scalable about that what-so-ever. 

99.9% of people are operating in a space I like to call "reality", where there not able to obtain, on demand, properties for pennies on the dollar. 

@John Underwood to take what @Joe Villeneuve is explaining a step further: 

Say you buy a property for $100k all in, and you pay all cash so it's "free & clear". 

Say that grosses $1k per month. 

No, $1k is NOT your cash-flow. Gross, yes, but not NET. 

Let's say your awesome on keeping all the assorted expenses down so end of day all operational expenses are at or under 20%. 

PM, cap-x, maintenance, tenant placements, system, prop tax's, all these things add up fast and 20% is low compared to many. Many are at or over 10% on just PM alone after factoring in tenant placement, not to mention vacancy. 

So that revenue is now $9,600. 

But what about Uncle Sam???? 

Now we are at say $6,720 net per year. 

BUT AGAIN that isn't your NET...... This is your investment recapture. 

You put $100k into it, and now got back $6,720 or 6.72%

At that rate it will be 15 years to have the $100k back and finally be into net profit. Until that point it's all just capitol pay-back. 

Now say gross rents go down 10, 15, 20%. And all of a sudden that 15 years turns into 20, 25. 

So the all-cash person IS being hit by it, it's just more hidden. Because as Joe said, you pre-paid it. 

Now, if a person wants to be really accurate they will factor in inflation because spending $10k today and getting $10k back in 10 years is NOT the same thing, it's less $ as the purchasing power has declined. So a person should use an inflation adjustment and with that will quickly see that 15 years turn into 23. 

All-cash never beats proper leverage use, NEVER. The math is clear on this. 

But all-cash is a lot easier to operate, a lot easier to feel as though one is doing good, a lot easier to keep going while making nothing because that's exactly what it is until you have your invested capitol back, 0 profit. 

If a person has a giant pile of cash to start with, sure it has a beautiful simplicity to it. But don't fool self into thinking it's more profitable because it isn't, it's just simpler. 

If each of us have $1m in cash and do same investing of same properties in same market just you all cash and me with leverage, I will do a multiple of your returns within 36 months. And from there the multiple just get's bigger and bigger. 

Again, PROPER use of leverage. Those who think over-leveraging is "proper" are wrong if not a lot more wrong because they risk loosing everything and then some. All-cash only risks lower returns over longer time. 

@Collin Hays I am guessing what your seeing is the dynamics of the full math playing out. 

I will try to explain in simplification. 

Say there is 10 offerings, and demand is matching at 100%. Let's say $100 is the rev stream on these. 

So each of the 10 is capturing it's full 100% potential, supply-demand in perfect balance so also getting that full $100. 

Now say demand drops to 8. 

This means each of the 10 now has 0.8 market share vs 1. 

So instead of $100, there now at $80. 

Now expand supply to 12, demand at 8, and we are now at 0.67. 

BUT, now that there is competing for market share it brings that $100 down to say $80, via price competing to gain more of market share vs other. 

This mean that 0.67 market share is equating to just $53.60

Your right, it's not nearly as simple as just a singular "rents down a touch". It's a triangle of factors working in a feedback loop. 

The factors compound. Meaning the revenue decline can be amplified. 

Given past events, how long would you guesstimate this cycle has to play out to get to the other side? 

You take someone my generation (gen-x) and older, and the vast majority of the time when we ask "how much is it" we are asking and will press for the whole $ amount. 

Even if were financing it we want to know how much in total it is. Than what payments are, for how long. Because we are all about free & clear. It's just etched into our minds that debt is this bad thing, probably because we and those before us have experienced a lot of bad things from debt. 

Keep in mind, those my age and older, we grew up with people who went through the Great Depression, that survived all that. Those people raised us. 

The younger generations, it seems most often when they ask "how much is it" if you give them a whole $ amount they say "no, no, how much is it, how much will it be each month". 

That's a huge paradigm shift. 

And they seem totally unphased about having ____ debt to there name. It's as if it means nothing. And I think it really kind of does mean nothing to them. 

As I said before, I'm of a different group so I don't get it, it's all weird to me, I can't wrap my head around it so I'm not best to describe them as all I have is outside perspective. To me, taking on debt has an emotional impact, you feel it. It nags at you. 

I know I "should" lease my vehicles but it feels too much like debt so I just buy the damn things. And if I have to buy anything on credit, I'm never Mr minimum payment heck-no. I'm Mr bi-weekly payor posting maximum I can to get that gone asap. 

Now investment's is viewed a bit different because if I am paying say 5% and I am getting 10%, awesome that's a net profit and totally different. It's viewed more like inventory at a widget store, I buy inventory for $1 so I can sell it for $1.25. More inventory means more sales I can make which means more $0.25 in my pocket. 

The younger folks, I just don't get it. 

It's as if they have no fear of not being able to make that monthly, so carrying that debt is just a-ok. It seems like nothing but risk if you ask me. 

I think my generation and older are natural savers and investors. The younger seem to be spenders. 

My mothers home, free & clear. Our land, free & clear. Autos, free & clear. All our "stuff" free & clear. The only debt I carry is performing appreciating debt. That's not by chance, it's by effort, discipline, denial of all the "things" I could because I don't want that monthly debt payment. If I wanted to, I could go and make some crazy purchases today and just, let it ride. It would eat at me too much. 

People can say it's incomes or time blah blah blah, no it isn't, it's mindset. We choose to live within and below means. You see that across the spectrum of means in my age group and older. 

The younger, there spending $ there not gonna make for decades and doing it with a smile. There crazy in my book, inviting trouble. 

Well, I can clarify things with Twin Cities data because that's the direct data feed I got and I hate the "so-n-so says" vs the direct actual facts of the data itself.

Well, I tried 5 times but BP has some issues with uploading pics still so I will have to explain the data charts. 

Unit volume is steady since 2023, a flat-line, of the same unit volume of 2015 and 2007. 2016-23 was a bit higher unit volume as was 2005-07. But it's actually not the big a difference really, were talking 45K vs 57k. Not as big a decline as some would think. 

But what's really interesting is the dollar volume, wowzers. 

2020-2023 is this really obvious bump up in things. Remove that bump, it's a straight line up and to the right..... In that sense, were at ATH. Technically not because the covid "bump" pushed it over $25B, and were just over $20B.    

But man, look at that (if BP would let you....) volume down and dollar volume unrelenting on a steady up and to the right. 

2007 was $13B, 2015 was $11B, 2019 pre covid $18B....... and as of May 2025 were over $20B. 

Closed price as % of original list price.... 100%. 

Price per sqft, hold onto your seats for this one because this data point is very telling..... $199

Holy bajolies batman! $199 per sqft median sale price. 

Ok so what's all this tell us? Per unit volume down but not massively. Yet dollar volume way up and unrelenting in it's climb AT SAME TIME per sqft is dang near going parabolic. With median being sellers getting 100% of asking. 

This says sellers are commanding the market STRONGLY. Demand is so strong it's taking smaller and smaller homes for more and more $. 

Yes, that screams affordability crunch BUT, where supply-demand is very healthily holding and the affordability is being addressed via smaller and smaller units. 

To the "old timers" like myself things immediately brings back thoughts of the 80's. 

It's exactly what happened then to. Ah the K-cars, anyone else remember those? Mine was blue. That's about the only brag anyone could have with those things, and I did have ac. I always felt like I could accidentally "Fred Flintstone" the thing and kick my foot through the floorboard. 

Everything got smaller, cheaper made, so it could be afforded at the 14, 18, 28% interest rates. 

And life went on.

We drove around in our K-cars chugging Tab, eating pop-tarts yelling "damn those commies" and we liked it by God, we were good little budget strapped commie hating patriots. Lol. 

I thought Scottsdale was long a up-market more affluent nice place to live? 

But nearly 6% of the population is millionaires..... That's really something else. 

What's the age old adage in Investment Real Estate? You make $ when you buy, amplify when reno, and reap when monetize. 

St. Pete is the definitive beach vacation spot, it really is. So in a downturn it's when $ is made per the adage. It only requires the patience, capitol and vision to get to the other side of cycle. 

Amazing beaches and strip along the water in St. Pete, I've had nothing but great times out there. I mean, from what I recall but the photos from what I don't looks like I had a great time too, lol. 

What are you exactly meaning when you ask the volume of leveraged sales, are you asking on volume of real estate transactions with mortgages vs those all-cash? 

Yes, in general terms we are seeing a marked increase in all-cash transactions but it's a drop in the bucket vs the more traditional transactions with mortgage financing. 

Those with mortgage financing is a gigantic % more than all-cash, which is nothing new really. A 2X or even 3X, 5X to all-cash transactions would still remain a fraction to that of those with mortgage financing. 

If your alluding to a thought that "big investors" ie all-cash, are making up some big % of transaction volume, they are not. In general they make up as much as 2% of all transactions. I know media has liked to paint a different picture in past because apparently that's the go-to blame-game of the day, blame "the rich", and it get's clicks and likes, which sells advertising. 

Reality is, it just ain't so. 

You know what we are seeing as a significant group in the all-cash buyer arena? 

Aged persons. 

Those who are retired or retiring, cashing in various equity from family home, business sale, even investment/retirement funds and purchasing that "last home" in a manner that it has no debt. 

It's more about differences in generational mindsets than anything else. 

Gen-X and the older generations view debt like lead boots, a risk, something to be eliminated at soonest possible opportunity and value the feeling of not having such. 

The younger generations, well being one of the older generations myself I think the younger ones and how they view things is just weird and bizarre. They seem to only think in monthly terms, as if their income is eternal, and ignore the whole dollar amount. It's weird to me.  

@Stephen Jones there is a lot more to it than just the money, and I fear all too many responders are going to miss that. 

Yes, in theory you could start on the journey of people leverage, hiring staff, focusing energy to hiring, training, managing, and the unfortunate reality of firing and doing it all over again. 

But that isn't for everyone, people miss that. Anyone can cook, being a Chef isn't for anyone. Just because one can doesn't mean they will be happy at it. 

You said a few things that has me thinking you'd maybe be much happier exiting the life and time consumption of Landlording, and being free to focus on deal making. 

Well how about this.... 

You have achieved a level most never get close to. What if you go back and diary how you did it all, and knowing what you know now, how you'd do it if you had it to do all over again with this decade wiser. 

And then, go ahead, sell, stack up the capitol, and formulate your knowledge into a program, and launch a community, program, cult, whatever. 

In this you can do 2 things simultaneously. 

(A) Helping so many people via real, actual "this is how I DID it" knowledge. Of course compensating for your knowledge, yes that holds a value, but it really would help people. 

(B) Now you can focus your time and energies on the thing you really like, the deal making. Because with the "group" you can present a potential JV into deals, but also just being the knowledgeable eyes looking at the deals that group brings and advising for the various how-to.

I say life is too short to do what everyone thinks you should do vs perusing your passions. 

Miss the reoccurring revenue, well there ya go, charge $10mnth. 

The #1 reason so many of us detest the "Guru's" is not for being a Guru, it's because so many are over selling, over charging, and under delivering. They are selling hope and false promises.      For the legit few, I applaud them. 

No one can afford homes at these rates.... ???????

Thousands upon thousands of people every week are proving you wrong on that statement. 

And what do you mean "at these rates"? 

At normal rates..... That's what 6.5 - 7 % is, that's definitively normal, look it up. 

To all who say home prices are too high so it's "gotta" collapse, fall, whatever, I have a simple counter; California. Seattle. New York. Boston. Miami. The list is long of places that have long had prices "too high" for years and decades on end. 

Look, the long-n-short of it is exactly what Claus declared to the world, you will own nothing and be happy. That was a declaration to the masses, the "worker bee's". Because that's how they see the world, it's how there shaping it. As long as Plutocracy reigns.... 

It is not a problem for the Plutocrats, it's heaven.