All Forum Posts by: Patrick Fraire

My theory is cash on cash return is the true barometer for a successful investment and if there’s is an opportunity to buy low, someone with a paid off property should use that equity to capitalize on the down market. Thus increasing their cash on cash return.  

I don’t see why I need to pay off a car to say that. I leased a car. What am I to do. I only owe 150/month x 24 months. I think that’s okay. I don’t think that’s so bad Steve. Why have cash sitting in a depreciating asset? 

1. If you think paying off a car is the minimum pre requisite for understanding real estate investments we have bigger issues. Cars are so cheap to finance nowadays. 0% interest with very low down is pretty common. So paying off a car with cash makes no sense to me but maybe you have nicer cars than I do. I leased a 2018 Honda Civic base model last year for 150/month with 0 down. 

You are correct, I assumed we were talking residential rentals. Kudos to you for realizing the opportunity in 2012. Now everyone is looking back to that period wishing they took advantage. Sounds like you capitalized so I am issuing you a certified “Atta Boy” for that. 

@Steve Vaughan

Imagine if you locked in a 3.5% Interest over 30 years just a few years ago. You would be thanking yourself for liquidating some of that equity in your paid off properties for another investment. You may have to wait another 10 yrs to get those terms on conventional financing.

@Charlie MacPherson

Man the gas company seems like they are always 3 months behind.

@Ann Watkins

Oh man that is the absolute worst when you make the changes to make the inspector happy then a different one comes the next time and asks for something else.

@Alex Varner

Per Contractor State License Board , Contractor cannot request a deposit for more than 10% of the total cost of the job or $1,000 whichever is less.

If you pull this on them they will probably be pissed (which is okay you are the captain now). What’s going to happen though is they will buy their material and then you need to pay for material once it is onsite (unless otherwise noted). Say you give them $1,000 the day before he orders material. Later in the week he picks up it says hey I’m at the job with the material I need a check for it before I continue. Now you have to drive an hour to give him the damn check and you lose a day and with 10% total job cost + material he probably is at 50% total now. All before doing any work. I’m this example I just put them their 50% (If I trust them and if it’s a small job). On a bigger job it makes more sense to do the $1,000 deposit then make sure they mobilize properly and have material quantity on site then release a material payment. Then continue the job in progress payments. Small jobs it’s not worth the time.

@Michael Warinner

I like @Julie Marquez suggestion. Get your degree in something (like construction management) that can help you land a job with a big real estate developer. That could launch your RE career early and be ahead of the guys who watch Gary Vee and decide they want to be an entrepreneur right away.

The out of state markets certainly are better passive investments. Southern California has some of the most over priced markets in the nation. If you just throw a dart at a map of LA vs Kansas City for example, your more likely to land on a property that yields a higher cash on cash return in KC (assuming no value add just passive turnkey). The market is going down right now in CA (correct me if I’m wrong we have a lot of markets and I’m only looking at a couple) I’m hearing people haven’t even felt a pull back in the mid west yet. Basically if you were just looking for a passive investment, out of state has higher returns, the numbers don’t lie.

However the fact you have a family and need a home but you also have a taste for real estate investing.... if I were you which I definitely am not otherwise why would I be commenting on my own post. I’d swing for a “2 on one lot” in Riverside...that would give your family a home and you an investment property. Don’t know if fha would let you buy 2 Homes on one lot but there are several of those that exist in riverside. Each house can bring in between $1500-$1800 assuming they are 2/1. Purchase price your looking at like 380k-420k depending on the area. I’m sorry for all the sifting your gunna have to do with my long post but good luck man and congrats on your baby! 

@Val Jaz

If it is a true unforeseen condition then his increase of $200 may be fair. If it took his guys longer than he thought...that should be on him. If they did it faster would he give you a refund? Prolly not. What was the exact reason for the price increase?

update on this post. The owner ended up listing as is for $349k it sat for a week or two with no interest. Then they did the repairs (I estimate about 40k) then re listed at $600k. Sat for weeks decreased to 588k...no interest and finally sold for 575k.

As I told him the thing was worth 580k after repairs. So much for the 625k Zillow estimate eh?