All Forum Posts by: Michael A.

@Seth Matherne My opinion won't be worth much here, but I'd take this deal if I were comfortable with everything this report doesn't tell me (area, market rate for rents, demographics, etc.). A 17% ROI is great in my current market. I lean on this more than cap rate if I am not able to compare multiple purchase options. Your cash put into a mutual fund will on average net you 8% ROI per year when averaged out over time. This is obviously a seemingly better deal.

A few questions for you to maybe consider: How do you feel about owning a building like this? What condition is it in now? Are your maintenance and CapEx figures reasonable given the building condition? Too high or too low? Have you gotten a real insurance quote from an agent? Your closing costs look to be about a third of what they are at any bank in my market so I would make sure you've been quoted that from a lender if you have not already.

Thanks a lot for sharing - good to see what other people are finding out there.

@John P. Can you elaborate on the pro forma comment?

@Danielle Wolter this describes my first blunder perfectly. Hang in there. Only way to go from here is up.

@Yonah Weiss I have a degree in architecture and am licensed as an architect in NY and VA. Direct impact on my real estate aspirations? Not really. But I am fond of buildings, especially as an asset class.

Great question!

@Jonathan Newlin I contribute 12%/paycheck with a 3% employer match. I save another 12%/paycheck in cash for REI. My wife works and does the same. My family of three (soon to be four!) lives just fine on this. My wife and I love saving and treat it as a lifestyle rather than a burden. We are in great shape regarding our 401(k) now (we started at 22 with our first jobs). So my advice would be to be smart about saving for retirement now so that you can afford to take bigger investment opportunities comfortably later. Fast forward ten years from now to where you are holding rental properties but have nothing saved for retirement: that may be an anxiety-inducing scenario depending on your mindset. It would be for me. My attitude was to get responsibly stable in my 401(k), then my cash. Now we are eagerly looking for a rental property to add to our portfolio.

I use this phrase a lot: if you lost what you invested outside of your 401(k) how devastating would that be to your future? In my world, I need to be able to rely on the long term benefits of having a retirement plan while I try to enhance it through real estate, not the other way around.

That was long winded but I hope it is helpful!

@Jayden Grissom I have a strong opinion about this.

You could be referring to 2 different things:

I lived in NYC for 12 years until recently while building my career as a licensed architect. The term “real estate” there meant “real estate development”. If you wanted to work for companies buying building and leasing property, you typically needed a degree in construction, architecture or engineering, along with some experience in these industries before you could switch over and start working for developers. This happened to a lot of my colleagues - they got hired by developers like Silverstein, WeWork, etc. to manage the development of real estate. There are Master’s degree programs that specifically prepare you for this too if you don’t have the other backgrounds I mentioned above.

If you want to buy and hold property for yourself like the vast majority of people on this site then you need a level head and a good financial situation, not a degree necessarily. This is an investment strategy for people passionate about this type of asset class after all. There are no grand mysteries. I am naturally inclined to this, given that my career has been all about buildings.

@Jonathan Newlin I really second @Scott Trench when he mentions having a reasonable financial situation before investing. You'll need a down payment, cash to close, and some sort of reserve to even get through the lending process when you buy your first property. It has taken me years to save enough, but I am finally aggressively searching for my first local rental in my market now. And the longer I wait to find the right deal, the more I save towards REI. I contribute heftily to my 401(k), and am militant about cash savings every month. I have an automatic withdrawal from my checking into a savings account every month on paydays. As long as I stick to my personal budget, then my REI budget grows on auto pilot until I am ready to buy. As Robert Kiyosaki from the Rich Dad, Poor Dad books would say, "pay yourself first."

@Pope Lake I think about this all the time as a new investor. Australia just ended a 25 year growth streak! It is an example people point to a lot recently. If you were over there and decided to sit out until the next downturn you may have missed many opportunities.

My strategy right now is to make an offer if the property meets my criteria on paper.

My wife and I did black bottom, concrete-looking counter, and white uppers. Looks awesome!

@Taylor L. organizes a meetup that I will be folding myself into in the near future - perhaps he can send you the info!