All Forum Posts by: Patrick Ruff

Invest now, if you wait you might see a 10% decline in a year, but if you invest now you can earn that 10% by the time the market bottoms. Also it's hard to time that market bottom and in the meantime you're losing real money since inflation is eating up your cash (assuming you don't have it in something else that you can sell easily like stocks...which also might crash).

https://www.zillow.com/homedetails/610-Almon-Ave-Woodbridge-NJ-07095/39206911_zpid/? has a ~$300k duplex that isn't amazing but not terrible. @Colleen F. you won the challenge!

Thanks so much @Colleen F. I'll check Woodbridge out. Honestly after posting I was thinking to myself this might be a mission impossible type of challenge. Thanks for giving me hope, I'll keep looking!

The setup: wife and I live in NYC, her parents recently rented an apartment close to us in order to be with our firstborn son (who is just starting to crawl...), THE RENT IS TOO DAMN HIGH (some good YouTube clips on that if you're interested) and we can both work remote so why not move somewhere with a lower cost of living?

The challenge: wife is okay with the concept of house hacking but will only do it if it's within 1 hour of the city for fear that her work forces her to come into the office

Main question (please post on this if you know): are there places within an hour's commute to New York city that we could move, get a nice multi-family, and not pay the $3k+ rent we currently pay (the in-laws I'm guessing could find something better/cheaper than the short-term rental they have now)

My thoughts: I'm not looking for something like $600k or whatever, more along the lines of something like a $300k 3 br / 3 br duplex that we could live in one half and rent out the other

@Andrey Y. yup paid full asking. One thing I didn't mention was CapEx which if you consider that I think the property might cashflow still, but just barely.

loan term: 25years, product: 5.33, adjustable rate, loan type: conventional. Rate lock: NO And a 4.75 interest rate..

4.75% seems high but it's a triplex so I'm guessing it's treated differently. I bought a few duplexes and they were between 4.5% and 5% so that seems right. I would definitely try to reach out to other lenders since you take a hard credit hit anyway so you might as well know better. Single-family properties seemed to have a lower rate (I have been able to get a rate of 3.625% on one of them whereas a multifamily in the same area was 4.1% or something like that). Also my credit is slightly above 800 so if you're doing something wrong than I'm definitely doing something wrong!

@Rob Gillespie thanks, I definitely try to steer clear of D neighborhoods (thanks @Marcus Auerbach for explaining the concept of "fool's gold") and have heard that one of the biggest expenses is turnover. As to kids it's been a wild ride so far with my son (at least he sleeps through the first half of the night now :P) but when he laughs or smiles (with no teeth) it's really something! I eventually heard back about a place in 44121 that seems good (the person who had made an offer backed out). Good luck in your investments as well and I'll definitely try to treasure these moments!

Thanks @Mike D'Arrigo for your response. I agree that the 1% rule isn't foolproof (it may even be fool-friendly) and to Marcus' point looking at Capex and YoY rent increase and other factors is probably more important (not to mention the type of neighborhood, like, there could be a great "on paper" deal but if you look at the area and people are stealing AC units it might not be so good on your $paper$). I've looked at Indianapolis and it seemed like there is a fairly established market there (not bad, lots of interest, but at the same time I get the sense that a lot of good deals have already been made and that the market is still good but much harder to find something great these days).

Out of curiosity is your podcast on real estate? I'm always looking for more sources of good information (I mentioned Marcus who does GREAT videos on YouTube).

@Marcus Auerbach I agree with you that I think rent increase is an important part of things and I guess I'm being a little impatient. Currently with coronavirus the PM and I have decided it's fine to not increase rent (I'm curious is anyone else doing this? I think it makes sense not to hit the tenants with a rent increase in the middle of the worst economic hit since the GFC but maybe I'm crazy?) and I'm hopeful we can in 2022 (after 1.5 yr. lease is up).

To the millennial demand I agree on that point too, I think a lot of people are worried about there being some sort of housing crash but right now I see 1) millennials are buying their first homes driving up demand and this will continue for years, 2) people are moving out of urban areas (I see this as temporary for the majority of people but there will definitely be a large portion that never move back), 3) interest rates are at historic lows, and 4) inflation is around the corner (maybe not this year, but 2022-2023 I could see it as the government needs to inflate away its debt).

@Brian Garlington thanks for the advice as well, I did a similar thing working with Marcus (who is great by the way) in Milwaukee and I think it's working out, it just seems like there were a lot (as in, I don't think anything in the first year is cashflowing) of random expenses that added up (lawn/yard maintenance, leaks, water bill being $200 a month basically 2X more than expected, etc.). 

Thanks @James Wise too I've seen a lot of your posts and that's what got me looking at Cleveland (the map you made describing the different neighborhoods was really helpful too).

I think I was sort of going crazy due to spending a lot of time trying to research things and getting nowhere along with the fact that my 5 month old son while freaking adorable is not sleeping more than 2 hours at night now. Anyway thanks everyone for your responses, I love Bigger Pockets for exactly that, and I'll keep positive. The fact that I even complain about anything including inventory is such a "first world problem" type of situation when there are a lot of people really struggling right now. Thanks again!

I was off Bigger Pockets for a while, but we went forward with investing in Milwaukee. We found several different zipcodes/areas and kept up a diligent hunt on the MLS (I think the neighborhoods are solid C+/B neighborhoods). We bought a duplex that met the 1% rule (200k and rents for 2k) and so far there have been a lot of repairs (basically if it cash flows it cash flows very little), but it's only been a year. Hopefully this information helps other new investors but I'd definitely say be careful to allot a certain amount of money to repairs because for me with mortgage/insurance/tax (~1300) + property management (180) + water utility (100) + repairs (250) so with those numbers the property actually cashflows around $200 a month, which for the cost of buying (roughly 50k) the cash on cash return is only 4%.