All Forum Posts by: Nicholas L.

@Jay Hinrichs

yep great point. to refine, it would be: any plain old LTR (especially if listed on the MLS) and bought with a typical down payment (or even greater leverage) at today's interest rates will not cash flow. so when I say "will not cash flow" i am assuming lots of leverage.

and as you have probably seen, we even see quite a few posts from new investors looking to use a HELOC on their primary for the down payment and another loan for the rest. they then exclude the HELOC interest from any calculation, make aggressive assumptions on other items, and voila - cash flow. then one rough turnover or an HVAC repair wrecks the model (and possibly the investing career.)

the period after the GFC was a unique time to your second point. i can't believe now looking back on some deals that I turned down when i was getting started in ~2018 because they weren't absolute home runs.  oh well

@Brenden Sperl

you can post the listing here and people will give you specific feedback.

you probably need to lower the price.  if you do the math, vacancy will eat into your total rent collected much more than a price drop.

@Jonathan Warner

i haven't looked at the Dealfinder, so I am not familiar with it and can't comment on it.

but, it sounds like you're not missing anything.  most deals right now will not cash flow, and new investors tend not to be conservative enough.  

in general, only the higher risk / more creative niches are going to cash flow right now.  vanilla LTRs don't.  now, to be clear, that doesn't mean they're not a good long term investment.  they are- there are other benefits to RE than just cash flow.

i'm under contract right now on a property i plan to BRRRR, and... it's not going to cash flow when i'm done, it's going to break even. but that's just fine with me.

@William Breymann

some miscellaneous reactions for you

"we were talking about partnering on with a family member"

I wouldn't partner on your first few deals. New investors partnering together = higher risk.  do a few yourself first.  then you have a track record.

"don't want to put the majority of our HELOC into one property"

do you have cash? using a HELOC to purchase a property is expensive - interest rates on HELOCs tend to be high.  and, you may know this, but HELOC payments are generally interest only initially so if you only make the minimum payment you're not paying down the principal.  this is the bank making money, not you.

"whether I'm thinking too much about the locations and whether I like them vs if they make financial sense"

well, it should be both, right?

are you ONLY looking at STRs?  do you have a passion for hospitality, and are you willing to do what it takes to be at least a higher performing one, including spending a lot of money up front?  the market is saturated right now and it's not as simple as buying a place and listing it anymore.

i've looked into MTR quite a bit and have a unit i plan to convert to MTR soon.  i don't personally invest in STRs but have read enough to know that everyone tends to think they'll be a top performer...

@Marcus Auerbach

like you, i can mow a mean lawn and do a trash out. and i leave everything else to the professionals.

@Jared Cross

No.

@Chris Luckscheiter

hello - are you networking in person with local investors?  that is what i would do.

good luck

@Allison Hertzberg

hello!  are you in Stamford?  I have one rental there.

I don't personally invest in STRs, but I always get nervous when people seem to approach it from a tax perspective, rather than a having a passion-for-hospitality perspective. The market seems pretty saturated so it doesn't seem to me like buying a random STR specifically for depreciation makes a lot of sense...

Hope this helps - just trying to give you some things to think about.  if there's more background here that's relevant let us know!

@Jonathon Cornell

just to challenge you a little... how can there not be any opportunities in a major market like that?

how many properties have you looked at?  how many offers have you made?  how many meetups are going to?  what are you doing to network?  are you looking on and off market?  if you're not looking off market, what are you doing to start looking off market?  can you house hack again if you look for something that breaks even?  what if you looked at 5 properties every weekend for the next 25 weekends?

@Jeff G.@Jeff G.

hello.  it sounds like you're being thoughtful and cautious about this, which is great, and like you said, very warranted given the status of the market right now.  with that said, I'm just going to give you my honest reactions to your post.

-can you say more about why you feel like you've stagnated?  "feeling stagnated" is not a great motivation to do something.  owning rentals IS growing your net worth actively.  building equity through mortgage paydown is nothing to be trifled with.

-the upside of properties being less expensive is that they're easier to acquire, the downside is the thinner margin. so to me, it's not obvious that if you're in CT, you should flip in MI. i'm in Pittsburgh, and i look at "cheap" properties all the time where: the purchase price + the rehab = the ARV. and as you know, that doesn't make a good flip.

-if you're the money guy, then your partner should be handling everything else.  so if she doesn't know the answers to all these questions and have a plan... i wouldn't move forward.  and, i know almost nothing about you, and nothing whatsoever about the partner... but again, being honest, "connections to contractors" isn't bringing much to the table if you are both an experienced landlord and have funds.

hope this helps