All Forum Posts by: Paul Smythe

5-7% doesn't strike me as that bad of a discount. Might be worth negotiating further, but I could see it being a lot worse.

Obviously everyone is going to say #3 with descriptions like those

@Blake Ramsey Don't do it. It takes a lot of money to live and invest at the same time. Get the degree (assuming it's a good one that gets you a well paying job) and invest along with your salary.

@Daniel J West you're about to be flooded with contacts from 20-year old Ohio agents. They're all over these forums.

Seems too good to be true, and if it isn't I need to start investing in Maine. A 14% cap rate is ridiculous. That's a deal in my market with all the numbers the same but double the price.

I can't help but wonder what the catch is, whether it's bad location, terrible condition, or maybe the numbers you're looking at are pro-forma instead of actuals.

@Chris Seveney great point and that seems to be pretty much a nationwide trend from what I've seen. Suburban office is definitely looking better than downtown currently.

I'm pretty bearish on the office market. Occupancy hasn't come close to recovering and the longer-term leases are still coming due with tenants cutting or giving back space entirely. It's tempting to try to buy on the downswing, but I don't think we're done falling yet.

@Joshua Milam there's some truly awful advice here. We definitely seem to get this question occasionally. College can be extremely valuable and will put you on a better trajectory to make more money to invest. You will not be better off just reading BP and the internet.

Real estate takes a lot of money. It's not like your friend will be able to buy one rental and retire. Unless they've got $1 million lying around, it's going to be a major uphill battle. Even $1 million might only generate $80-100k/year, which is great but still maybe not enough to "retire."

I've heard a stat that something like 90% of real estate agents fail in the first two years. It's a really tough business and should not be your friend's only plan.

See if your school offers a real estate degree, it's what I took. I knew RE was where I wanted to be. You can learn a lot and also have the education to start you off with a great career that will allow you to invest and build your own portfolio.

@Chris John I remember on the BP podcast they talked about rent appreciation and buying even if it wasn't cashflowing because rent would eventually appreciate to make it cashflow. Sounded silly to me at the time.

The 1% rule is my go-to initial litmus test for any property I'm underwriting. Still as relevant as ever in my book. We have a real hard time generating cash flow in my area if the 1% rule isn't met. Property taxes kill most deals when you get under 1%.

Maybe if you're not aiming for cash flow it can make sense, but buying at worse than 1% is a really risky proposition to me. You've got to really like the area you're buying in at that point.