All Forum Posts by: Account Closed

Welcome to the forum Garret. I'm in Miami (Coral Gables specifically). I mostly buy and hold, but have done a few flips as well. If you want to connect or have any questions about the local market feel free to send me a message.

Originally posted by @Brandon Cravens:

Originally posted by @Account Closed:

Originally posted by @Brandon Cravens:

Originally posted by @Account Closed:

Originally posted by @Brandon Cravens:

@Bradley Marion

Check out the rental property calculation tools here and learn what the inputs are and why they are used.  Most folks don't think to factor in vacancy, repair, and capex. Some don't even think about property taxes!

@Robert G.

I don't think one should equate leverage to risk. Back to my example, if you pay $100,000 for a property, I pay $60,000 for using leverage and the market corrects 50% you have lost $50,000 and I have only lost $10,000!!

The REAL risk in real estate is overpaying.

 With all do respect this example makes no sense. You are saying if you put $60,000 down, finance $40,000 (for a total purchase price of $100,000) and the property loses 50% of its value (now worth $50,000) you have only lost $10,000??  I assume you are suggesting $10,000 of your cash down payment, but what about the $40,000 loan?? Your loses are identical whether you pay cash or finance.

No. Person A buys a property that's value is $100k and he pays cash. Person B buys an exact duplicate of that property but he pays $60k and uses a 100% loan.  The market corrects 50%. Person A will have to take a $50k loss to dispose of his property.  Person B can dispose of the property for a $10k loss.

Person A has much more risk than Person B.

 Again, makes zero sense. How is person B paying $60K for a $100K property with financing while person A pays $100K with cash. Your example is one sided to prove your point.

I don't know what you don't understand. We were talking about debt being risk. Person A bought without debt and has a lot more risk than Person B.

Perhaps you don't think you can buy a $100k value property for $60k?

What I don't understand is why you are assigning different purchase prices to Buyer A and Buyer B? For a comparison to make sense all things should be similar other than the variable, which in this case is cash or financing. 

Originally posted by @Brandon Cravens:

Originally posted by @Account Closed:

Originally posted by @Brandon Cravens:

@Bradley Marion

Check out the rental property calculation tools here and learn what the inputs are and why they are used.  Most folks don't think to factor in vacancy, repair, and capex. Some don't even think about property taxes!

@Robert G.

I don't think one should equate leverage to risk. Back to my example, if you pay $100,000 for a property, I pay $60,000 for using leverage and the market corrects 50% you have lost $50,000 and I have only lost $10,000!!

The REAL risk in real estate is overpaying.

 With all do respect this example makes no sense. You are saying if you put $60,000 down, finance $40,000 (for a total purchase price of $100,000) and the property loses 50% of its value (now worth $50,000) you have only lost $10,000??  I assume you are suggesting $10,000 of your cash down payment, but what about the $40,000 loan?? Your loses are identical whether you pay cash or finance.

No. Person A buys a property that's value is $100k and he pays cash. Person B buys an exact duplicate of that property but he pays $60k and uses a 100% loan.  The market corrects 50%. Person A will have to take a $50k loss to dispose of his property.  Person B can dispose of the property for a $10k loss.

Person A has much more risk than Person B.

 Again, makes zero sense. How is person B paying $60K for a $100K property with financing while person A pays $100K with cash. Your example is one sided to prove your point.

Originally posted by @Brandon Cravens:

@Bradley Marion

Check out the rental property calculation tools here and learn what the inputs are and why they are used.  Most folks don't think to factor in vacancy, repair, and capex. Some don't even think about property taxes!

@Robert G.

I don't think one should equate leverage to risk. Back to my example, if you pay $100,000 for a property, I pay $60,000 for using leverage and the market corrects 50% you have lost $50,000 and I have only lost $10,000!!

The REAL risk in real estate is overpaying.

 With all do respect this example makes no sense. You are saying if you put $60,000 down, finance $40,000 (for a total purchase price of $100,000) and the property loses 50% of its value (now worth $50,000) you have only lost $10,000??  I assume you are suggesting $10,000 of your cash down payment, but what about the $40,000 loan?? Your loses are identical whether you pay cash or finance.

@Dax Desaiwhile you make a solid argument for leverage you must also realize some markets swing more than others. Many properties in Miami still have not recovered from 2006 highs. I own two units in a building that was a condo conversion in 2005. They sold for $165,000 at the time. I purchased them in 2012 and 2014 for $56,500 and $90,000. They are worth around $140,000 now. While all I really care about is cash flow its nice to know I can sell one if I need cash. 10 years with no recovery of the original sales price is scary.

I understand the last crash will probably not be a normal occurrence, but 1,000's of people in Miami were way over leveraged and lost everything. With around 50,000 units slated for completion over the next 5 years and condo inventory already over 20 months of supply, it seems like its happening all over again. Some risk is OK, but too much is gambling.

@Bradley Marion I am also debt averse. While it has slowed my pace in buying rentals it substantially reduces risk. The way I see it instead of buying 5-10 units a year I buy 1-2. This allows me to dollar cost average into the market over 10 years or so. Reduces the risk of buying too many at the wrong time.

Originally posted by @Carlos Toussaint:

Nick Cachaldora I may have some properties that may interest you as well. I tried sending you a PM but, it seems like I'm not allowed to message you.

 @Carlos I believe we need to be connected to send messages to each other. Sent you a request.

xxx

Hi Kevin,

I'm always looking for buy and holds in Miami. What types of properties are you working with?

Originally posted by @Carlos Toussaint:

Nick Cachaldora Hey Nick, are you a Rehabber?

@Carlos, all of my rentals have needed rehabbing to some degree. Some more than others.