All Forum Posts by: Patrick Thomas Dickinson

Ok bigger pockets folks. Give me your opinions. 

The time has come. I officially have my Pre Approval letter for a loan amount of 450,000$

I also have 200000$ to put as a down payment on something. I also have reserves of about 50,000 to 100,000 that I want to keep on hand for my current properties and future properties for a rainy day. I have already made a post similar to this about a month ago and I got some great feedback. After seeing everyone's opinion I went back to educating myself more and spoke with numerous people that know more about real estate than me. 

My goals an concerns with them: 

Cash flow vs appreciation: I own a property in Brentwood California ( high demand appreciation market) I never have issues with replacing tenants I had 50 applications last time I listed the house for rent. Ive been able to increase rents every year because I know I can and people will pay because its a fairly desirable area. I also have a house in Conroe, Texas it generates decent cash flow every month but appreciation is fair at best because of where it is, I had 3 applicants last time I placed it for rent and I have my reserves of raising rents in fear of tenants not being able to pay a higher amount. My point is it almost seems like the better play is to bight the bullet, buy the house or multifamily in the better, more expensive desirable areas  ( appreciation markets )if you can afford it. In the end it seems like you will win in most cases if you account for appreciation, less headaches, easier to increase rents every years and less vacancy. I know cash flow is king and it kind of messes with your head when your barely breaking even or even in the negative on a property but If your a buy and hold who has 20 to 30 years in the game like I do, who really wins in the end the cashflow team or the appreciation team. 

,Future financing: buying in areas that generally appreciate quickly would seem to open up more future financing options for me with future homes. IE doing cash out refis on these properties that have increased in values. I just did this on my California Property and I would like to repeat the process in the future. Lets say I bought in a strictly cash flow market and brought in and extra 500$ per month on the property meanwhile I am getting very little appreciation on this property. There goes my cash out refi option. In my mind it would take years to save enough cash flow from other properties to have a down payment on further properties unless you had a lot of properties generating a lot of cash flow for you.I do want Scaling Fairly quickly so I know blowing all my money on one  appreciation property could hinder that process?? any thoughtsCreate enough cash flow to replace my w2 income within the next 15 years which would be about 8000$ per month net in todays dollars , ( I know someone would tell you typically buy as many units as possible in the midwest or some big cash flow market to do this . After doing some research this seems misleading to me, are the cash flow folks really winning in the end of the game.? Or do you buy in markets that maybe you don't see cash flow for a couple years but your end game looks better long term. 

With this thought in mind any recommendations on areas where I might be able to achieve this goal. I know everyone everyone wants cash flow and appreciation and I know you have to pick one usually but where can you get a little bit of both. 

I am currently working on analyzing deals daily in Texas, trying to increase my potential leads and  speaking with/vetting potential property managers right now. 

I JUST WANT TO EXPRESS TO EVERYONE THAT IM NOT LOOKING TO GET THIS ROCKSTAR AMAZING DEAL UNICORN PROPERTY THAT TAKES ME 6 MONTHS TO FIND BECAUSE I HAVE UNREALISTICS GOALS AND EXPECTATIONS. I AM JUST LOOKING FOR SOUND LONGTERM ADVICE  BASED ON THE CURRENT MARKETPLACE WE LIVE IN. 

(If you had my finances what would be your next move with my goals in mind. )

Conversation starters:

Multifamily if so where/ what markets and why

Appreciation vs cashflow in todays world, is It better to look long term ?

If I want to repeat my buying over the next 10 to 15 years how to set myself up to avoid future financing hurdles. 

@Michael Plaks hi i sent you a colleague request im looking for a cpa that specializes in real estate and small businesses please pm or I can pm you. I own property in both California and Texas ( near Houston) 

@Eric Fernwood You always have such great information and very thorough ,would you be opposed to talking over the phone one day I feel like maybe I can get more across that way and maybe some more insight. I understand most of what you said in the previous message but you seem to know a lot about real estate investing so Id love to pick your brain. I’ll keep it short and sweet I’m sure your time is precious

@Theresa Harris I like your advice to be more clear I have $200,000 for a down payment as well as the ability to obtain financing from my lender. A four Plex sounds like a good start ,get it stabilized work out all the kinks and then go from there once I feel comfortable

 @Nick Giulioni Indianapolis was on my list I would love to chat more about that maybe through phone call if you wouldn’t mind just let me know and I’ll private message you

@Art Webb I don’t live locally but I know when I stayed in Conroe a while back there are plenty of air B&Bs off the lake I don’t know about management

How did you come up with your multifamily criteria please explain your thought process behind choosing that criteria: 

I know this is going vary between individual. 

For starters what's your 

Location A,B,C,C+ D areas etc, school districts, economies, diversity of jobs, specific population amounts etc

Condition/ Repairs needed 

year of home

Profitability Criteria 

Anything else you care to add. 

@Frank Rodrigues

I hear you on the midwest. Seems like appreciation is possible in those markets as well lots of cash flow. I have boots on the ground in texas, what are your thoughts on texas. Yes i know it has property taxes that eat into profit margins, lets forget about that aspect though. 

@Lydia Bar

new construction in conroe texas. I found a local investor agent. It was not a turn key provider. I prefer to shy away from turnkey. I really like to get rid of the middle man ( aka turn key provider), yes sometimes you need to help to do things, but understand that turn key providers are in it to make a profit and guess who that cost rolls back to ????? you 

Okay Bigger Pockets Folks

The time has come for me to make some decisions:

My situation: I live in Sf Bay Area in California. I own two Single Family Home Rentals currently. One in California and one in Texas Both are currently rented. I am currently cashflowing about 800$ a month with both properties.

I just completed a Cash Out Refi on the California property and now have 200,000$ Liquid cash, as well as additional 50000K liquid cash for reserves/emergency funds etc. The lender who did my cash out said based on my dti ratio they will lend me an additional $400,000 ( currently preapproved for this) . So max I have is $600,000, although I don't know if I want to spend all of this.

My Goals:

I want to scale fairly quickly, I am 35 years old now and I want to have sufficient amount of units/ properties by the age of 45. I just started reading the multi family millionaire and learned about the stack method etc. So I am thinking my next move will be a out of State 4plex. One thing I found interesting in the book is when he talks about not scaling fast enough because your in your comfort zone. I don't want to do this. So I'm thinking large scale( 4 plex and bigger )at least within the next 10 to 15 years.

- Have enough (take home after tax pure cash flow) from my properties to match my current w2 net income ( which roughly 7500$ to $11000 monthly)

- Not create a lifestyle where I am so immersed in my real estate investments that I cannot enjoy life. I self manage two newer properties right now that don't give me to many problems currently. So basically the less problems, the better. I would be willing to pay people to have less work and problems. Ie property management etc.

IM REALLY MAKING THIS POST BECAUSE ITS NOT EVERY DAY THAT I HAVE 200,000 CASH IN MY HANDS. I REALLY FEEL LIKE THIS NEXT DEAL OR DEALS THAT I DO WILL BE PARAMOUNT TO HOW MUCH I SCALE IN THE FORSEEABLE FUTURE.

MY QUESTION TO EVERYONE.

-WITH MY FINANCES THAT YOU HAVE SEEN ABOVE WHAT WOULD YOU DO. ?

Below is my thoughts.

Buy more SFH? I want to get bigger and create enough cashflow to replace my w2. Seems difficult in the sfh area

Buy one multifamily property or maybe even two.? Any ideas on areas where you can buy 4plexs or duplexes built post 1960 for under 300k each, I know the midwest 8), a lot of multifamily properties are old though, any areas with newer multifamily that you recommend.

Would you pay cash for one property outright or buy multiple properties and just put down the minimum 25% and buy the rest with leverage from the bank. ?

Anything else you care to add.