All Forum Posts by: Peter W.

 Single family and rent out the rooms to roommates.

The second is to talk to more bankers.  Depending on the bank, they will let you apply 75% of the expected rent against your mortgage payment without seasoning--that is for the initial calculation.  That will you qualify for more than you could with a single family home.

If we are talking about reducing the Gini coefficient, the only things which every seem to work are things which make everyone poor indiscriminately e.g. plague and war.  There are likely government interventions which could help, but ultimately, the rich are/will be masters of avoiding any political maneuvering meant to make them less well off.  While technology likely means the Gini coefficient 

As investors, the two big things going on, is the bifurcation of America and unrest which is being created as a result (with other causes). The second is stagflation driven primarily by government debt. 

In the case of stagflation, borrowing money to buy hard income producing assets is part of the solution. Between the two, you need to underwrite that rent growth won't grow as fast as expenses--that is rent to price ratio is likely to continue to decrease. The other part is developing yourself so you can continue to increase your cash flow and building assets. 

The bifurcation indicates a need to flight to quality--assets of interest to the top 10% of the population will perform better than for the bottom 90%.  You C neighborhoods have increased risk of turn into D neighborhoods, and your B neighborhoods are more likely to become C neighborhoods than A neighborhoods.  More importantly, one needs to figure out how one ends up on the side wealthy side of the equation rather than the poor. 

 Yes, zillow predicts my property taxes are about 2.8%, but they are closer to 4.5% when all is said and done.  It's quite difficult to figure out without asking someone, because there are 4 sets of property taxes and their advertised rate is different (higher) than what they actually charge.  On my primary, when I bought the house, the escrow was higher than my mortgage payment.  

I'm in Rochester, NY.  We have a severe housing shortage here, especially in the desirable suburbs.  It makes being a landlord relatively easy (due to high demand and desperate renters) but purchasing a pain in the butt--really you require a bit of luck to win competitive offer.   Here, and probably most of upstate new york, the cash flow looks better than other locations, because the property houses are very high going from about 3% on the low end to close to 5% on the high end and zillow tends to underestimate the tax burden (we have village, town, school and county property taxes).   New York State just passed a new tenants rights bill, "Good Cause Eviction" which limits your ability to remove bad tenants and raise rent.  Municipalities had the option on whether to accept the updated tenant rights or not.  I believe based on some of the comments I have read here, that Buffalo is a similar story--but I only know my market.

With that said, Ontario is probably the least desirable of the great lakes.  I vacationed on the Michigan side of lake Michigan, and that lake was awesome and made the "beaches" near Rochester look like dumps.  My wife and I thought the experience was comparable to going to the beaches in Florida where she grew up (Forgotten Coast/30A).   However, we do have a plethora of waterfalls and the finger lakes which are beautiful.

With all that said, I would figure out where you want to live and then invest in the same location, rather than figure out where you want to invest than choose to live there.  Other than the Tier 1 cities, there isn't much difference in risk adjusted returns for real estate.  Even then, your returns are driven more by how you are as an operator than the city you choose.

Best of luck, if you have questions on Rochester, I'll do my best to answer.

AP just pushed this to my notifications:

Small plug-in solar panel systems gain traction in US | AP News

35/mo in savings (assuming it's all year--which we know is not true because there is significantly less power in the winter for due to both the power of the sun and length of day) at $2000 self install--not on the roof--has a pay back period of 5 years.  For most folks they estimate the payback period is 10+ years and the cost averages out to $0.20 per kwH if the system lasts 25 years.

I'm of the mind that the tech monopolies, those with business monopolies and moats will continue to have ROEs near historic values which is 15-20% so I expect them to continue to perform at those levels.  Part of the key of stock investing is determining which have deep moats for their business and which do not, as well as what the ROE for a variety of businesses are.  Once you pick the handful of companies that you like, you have to keep in an eye on new technology which threatens the businesses.

For me it's:
Microsoft, Facebook, Google have the strongest moats in their businesses. Although potentially Google's search dominance will be threatened by the new LLMs  (to be determined). 
Amazon, Apple, Nvidia, and ASML have the next strongest moats.
Tesla, Netflix almost no moat (which is why FAANG is no longer a thing).  And why Tesla, which, despite my belief in Elon as a businessman, is probably a worse bet than the rest of the magnificent 7.

The other important thing here, is that software is the best business to be in, the margins are insane like 70%+ which is why they are cash cows in a way that hardware businesses aren't.

One more point, the tech monopolies drive almost all of the gain in the S&P500.

I haven't run numbers recently because I moved to upstate New York. About 10 years ago in Florida the payback period was something like 10-15 years and that's assuming nothing breaks. Which is to say, the ROI on solar panels is typically pretty small—especially in the Midwest where there isn't much sun. I am not sure whether you are closer to Colorado or Cleveland in terms of cloud cover. My buddy works in the industry (currently maintenance, but he did sales and install previously) and he would not consider solar where we are in upstate New York.

If you go lease options you can pay zero down, it typical makes it difficult to sell the house.  Those contracts have lots of fine print which are not in your favor. Doesn’t mean it can’t work out, but be careful to understand what you are signing. The salesman will not be your friend here, his goal is to do whatever it takes to get you to sign.

The department of energy has some excellent calculators which will calculate exactly how much energy your solar panels will create so you don’t have to guess.

The department of energy also has a list of the SEER ratio for almost all available AC units so you can calculate how much energy you will save there as well.

I assume by the proceeds you mean the cash flow coming from the property

In terms of risk and effort adjusted returns, in the current market, my opinion:
tech monopolies (15-20%) > leveraged rental properties (15ish%) > S&P 500 (10%) > unleveraged rental properties (~8%).  This changes if you are doing value add real estate investing, but that will depend on your skill level.  This also changes based on market condition (rent to price ratios as well as interest rates).

There isn't enough information available to give good specific advice.  So I'll give some banal, general advice.

1. Maximize Tax-Advantaged Accounts First
Real estate offers great tax advantages, but 401(k)s and IRAs often provide even better benefits with less risk and complexity. Max out contributions to these accounts, even if it means using part of your cash reserve.

2. Invest in Yourself and Your Skills
The best ROI often comes from building your own business or side hustle. Ask: Can I leverage my skills to create something scalable or sustainable?

3. Be Realistic About Real Estate Cash Flow
Current market conditions—high rates and inflated home prices—make it hard to find properties that cash flow. Covering expenses is often a win.  With that said, real estate is still a GREAT long term investment.
3b. High-yield properties on paper may come with real-life headaches: vacancies, bad tenants, and higher maintenance costs. Be conservative in your projections.

4. Diversify Across Asset Classes
Avoid putting all your eggs in one basket. My target allocation looks like:

• 1/3 in real estate

• 1/3 in index funds (e.g., S&P 500)

• 1/3 in tech monopolies

Other asset classes could include: crypto, small local business, internet based business (ecom/blog), treasuries, private mortgage notes.

5. Invest Where You Have Local Knowledge
Only buy property in markets you understand. Don’t be swayed by marketers hyping up "hot" areas—you live with the outcome, not them.

6. Don’t Obsess Over Optimizing Every Dollar
Trying to squeeze out every last bit of return can lead to stress and bad decisions. Optimize for simplicity, sustainability, and peace of mind.

7. Plan for Downside Risk
Every investment should be survivable if it goes to zero. Exceptions are broad-market index funds (like the S&P 500), where you should expect and plan for temporary 50% drawdowns.

(Edited by chatgpt)