All Forum Posts by: Nick Hedberg

I'm seeing the same trend in Venice with multiple house under development in just a few blocks.  Below is one example. It was sold for $800,000 in 2013, and is now listed as a McMansion for 4.5 million. If anyone comes up with some concrete numbers or developers, please share.

http://www.realtor.com/realestateandhomes-detail/555-San-Juan-Ave_Venice_CA_90291_M28672-11551?turbo=1#photo3 

Bubble? No, @Bill Devola, @Sharad M., @Jay Hinrichs demonstrated the market is significantly different then the last cycle. Lending & interest rates are very different then in 2006. It's tough for investors to get a return on via the traditional markets so many are getting into real estate seeking returns.  @Heather Skowronsky mentioned, some countries have negative interest rates. US real estate has become a haven for outside investors.

Cycle? Yes, as @Chad Benedict stated the real estate market cyclical and many markets have been going up for 5-7 years. I believe many of above mentioned external factors have exacerbated this cycle, but it's far different then 2006. I think the next cycle will be painful, but not nearly as bad as 2008 and 2009.

My guess is the European & Chinese markets will soften and potentially enter a recession in the next couple years. This will impact the US and as money dries up, the real estate market will soften and move onto the next cycle. Many properties are selling in weeks or days. This is a sign of a hot market and what goes up. . .

@Heather Skowronsky - Thanks for the shout out and I think your comment "Bexit has the potential to crumble the entire EU" is right on.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” - Benjamin Graham

We are seeing volatility in the markets because people dislike fear and uncertainty.  They are voting against the change in status quo. The long term impact of Brexit on world GDP will be relatively small, but the real impact is the consequences of contagion as @Heather Skowronsky and @Sharad M. have discussed. 

We have had a 7 year market bull run (graph below).  Markets are cyclical and US stocks have been getting expensive, despite the soft economy.  Real Estate has been rising for 7+ years and many markets are hot. @Heather Skowronsky just sold a property of mine in Northern Virginia in 5 days at list price for 40% more then I bought it in 2009.  If Brexit causes a European recession it will impact the world. China has been experiencing tremendous pain and many of China's rust belt sectors are already in recession. Many emerging markets have been struggling and the middle east and oil countries have been punished by low oil prices.  The world economy just needs the right trigger to cause another recession and Brexit could be that trigger.  Only time will tell.

Tara,

It's fantastic that you want to get into the REI game, and I think owner occupying is an excellent way to get started. Buying your first property can be a stressful experience and not having any funds can turn a normal repair into a serious issue. On the flip side, a 4 family can be a wealth accelerator that changes your life.

As @Lee Carrell mentioned, a 4 family can magnify any issues you have. Larger mortgage, repairs and capex.  What will you do if the $10,000 roof needs to be replaced? What about a water heater, air conditioner or an eviction?

I applaud your efforts for finding the 203K loan and think it's the right fit for you.  My advice is to cut expenses, save aggressively and accumulate cash. Once you have some cash on hand then re-evaluate purchasing a property.  In the mean time, continue to learn about real estate. As I progress in my real estate career, I'm constantly amazing at how a little more knowledge can make a big difference. 

In the long run it's cheaper to avoid mistakes, especially if you don't have much cash on hand.  

@Ryan Antista - If you do the @ symbol and start typing someones name, they will get notified you mentioned them. Highly recommended!

If you quality for FHA financing, you can probably provide a 3.5% down payment and a rate around 4% plus PMI insurance. I would call a mortgage lender then provides FHA loans and have them run the numbers. With a 5 year loan you will probably have a balloon payment at the end depending on the terms outlined. Interest rates are historically low so I would try to lock up a low rate if possible. I would bet interest rates would be higher in 5 years, not lower.

You can use Redfin/Zillow/Trulia for comps or reach out to a realtor. I would also recommend running the numbers through the BP Rental Property Calculator (Under the tools tab). The mortgage is only part of your expenses.

Yep, meetings is at 11 am.  See you there!

Hi @Ryan Antista,

You are starting out and you already have seller financing lined up! That is a great opportunity many people are interested in. The downside is the 5 year terms could be tough, depending on your situation. I would compare the terms against a traditional mortgage and an FHA loan.

Your skills of online marketing and graphic design could be VERY well used on Bigger Pockets. For Wholesalers their business is marketing and many are unfamiliar with how to setup online marketing campaigns. I'm sure many people would appreciate the advice from an expert.

Last thing is come to our local meetup!  I have met @Eric Dowling there and he is a great guy. It's at the Unurban Cafe in Santa Monica on 5/14 this month. Come out and network!  

Hi @Sameer Kh,

My long term goals are very similar to yours. My goal is to have enough FI in 5 years where I no need to have a day job. Once I no longer have a day job, I can begin the real wealth creation by going full time into REI and starting new businesses.

I'm currently pursuing #3 on your list. I'm purchasing high cash flow properties with mortgages to maximize my COC ROI. I live in California and am buying out of state for these properties. Once I have enough cashflow, then I'll focus more on in state properties for long term wealth building and appreciation. Since my goal is to maximize my COC ROI, I have 30 year mortgages and won't consider paying them off until I have 10 mortgages and am capped for new Fannie/Freddie loans.

The 2 most obvious ways to do this are to increase your ROI and reduce your expenses. Maximizing your ROI is an easy answer but is tough to do. More return frequently means more risk. Knowledge & experience are key.

Reducing your expenses is generally one of the easiest ways to get to your freedom number (or reduce your freedom number) but it is not a sexy answer. Reducing your expenses means you can save more to increase your FI. It also means a lower target which will be easier to achieve. You can read about Extreme Retirement or Mr. Money Mustache, both are interesting sources to pick up some tips on cutting expenses.

I would start off building your buy & hold portfolio and continue to educate yourself.  More education = more potential.

Hi @Mike Krigbaum,

I'm an investor in South City looking for quads, especially ones with 2 bedrooms. If you find any please let me know!

Nick

Hi @Armand P.

I just closed on my first multi in STL and used @Peter MacKercher as my agent. He is an investor with lots of experience and has his own contracting/rehabbing company which helps with accurate estimates on rehabs and required work. He has a great team in place and did a great job helping me find a place.

Give him a call, you own't regret it.

@Daniel Cuevas - Listen to @Kevin Crosson, he is spot on. @Jeff Greenberg hosts our monthly meetup in Santa Monica.

One of my friends paid $6000 to be 'mentored' by Rich Dad Coaching. She definitely received some benefits but it wasn't worth $6000. My advice is to start listening to the BP Podcasts, these are pure gold!  You can gain knowledge from the 160+ successful investors they have had on their podcasts.