All Forum Posts by: Petie Ehm

@Bill S. Good point to consider. One of the podcasts I listened to recently made that very point but also said that sometimes you go with market changes, i.e. if there is a sudden upswing and you can realize some real profits, then sell and reinvest. We could hold properties for 20+ years as long as the passive cash flow from all the properties justifies doing so (and as long as we are still living!). It also depends on how long the retirement funds hold out. I would say at this point that cash flow would be the overall goal once we get established and get things going, considering that as we age we might be less interested in active involvement in the REI processes. This would also help us to drain the retirement funds less quickly, I think. (Assuming we don't go into lifestyle overdrive).

Thanks @Bill S. I appreciate the tip about the Southwest quadrant of Denver. In fact, I have seen some things come up in my initial research in that area but I didn't know that it was a zoning friendly area. Truth be told, I have only been at this for a few weeks. If you had told me a month ago that I would be investing in real estate I would have told you that you were nuts. I have a whole lot to learn.

Hello @Joseph Graeve  Just so you know, I have a daughter in CO who has just received her RE license. She will be working with a group in Denver, but she is brand new! Sounds like you are really on a roll - just like the podcast folks in the BP podcasts! It is all very amazing. We are still working out which strategies will best fit our personalities (as several of the guests on those shows have emphasized one do) so we avoid taking on projects that don't best suit our own strengths. It is great to hear real live advice on this.

I am floored by all the helpful advice here! What an amazing group of people. What I'm learning is that finding the properties is going to be the tricky part. Initially, we thought Denver was a hot market. We now realize that we are a few years after that b/c now it is saturated with investors, perhaps! But with a daughter in the area (with a new license) we are game to jump into the fray. 

@Adam Kroll since we are bringing cash to the table (it will be from the sale of our current home + a small inheritance) it makes sense to keep that strategy going - use cash, then leverage, then use more cash. The primary piece makes total sense because we are willing to live in temporary homes and then rent them out, possibly. That way, we have time to find out exactly where in CO would be the ideal "permanent" home (relative term) and possibly have a little cash flow once that first property is turned over as a rental. I would want to have at least one additional property going simultaneously, maybe 2, with some cash flow although those would have to be financed pretty heavily as there isn't a ton of cash to invest in all 3 (unless we intend to live in some rough areas).

@Jean Bolger My timeline is... visit CO at the end of this month to get a feel for the various areas (I've been here before so it isn't all new) and buy a property as soon as the right one comes along. Meanwhile, our current residence in the east goes on the market mid-May. As soon as it sells, I move to the new property just purchased - hopefully one that needs a bit of fixing before turning it over for rental as soon as it is ready. At least, that is today's plan. 

BTW... I am "Petie" not Pete. Apparently there was an autocorrect happening when I was registering for the account and my name became Pete. I have tried to contact someone to fix it but have not gotten a response. Anyway, as for our plans, I am handling the REI investigating, the husband is bringing home the bacon with his current job!

Thank you @Michael Orf. It has occurred to us that this might be the way to go since we have some cash to invest upfront. We will run some numbers on a few scenarios to make comparisons. I have also read that if you can find new construction for buy and hold, you can expect a lower CapEx expenditure for an extended time period. Not a ton of that (new construction) going on in the Denver area (that I see) where rental might be assured (or in our price range). The risk here, I imagine, is that if you do have a vacancy it could be a big ouch once a HELOC is used to extract cash for the next investment.

Your strategy will be something we strongly consider.

Thank you to @Frank Houpt and @Frank Trigoso.  

Thanks @Travis Sperr. That was a lot of great information and it gives me the sense that, in fact, larger down payments with shorter term loans are worth investigating. We have some excel spreadsheets to play with (as well as the BP calculators) and can pull some properties from the MLS as test cases. Maybe SFH rentals (which cost more but which might have more long-term, consistent renters) are the way to go. I have seen some possibilities in Thornton, Westminster, and north Denver areas that could work. Would even consider the south and east of Boulder market (very south/east as it is crazy expensive, in my opinion).

As far as expectations for income - that is an interesting question because until a short time ago it never occurred to us that REI was something we could or would want to do. Still, having a target can help guide the process. Otherwise it is like spinning around with your eyes closed.

Also, regarding flipping... since we have to live somewhere, renovating a residence while living in it and then holding it as a rental is what I was thinking. I think I referred to it with the wrong language, as a flip is not something that is held once flipped, correct?

Thanks, again.

Thanks @Norberto Villanueva. I know it makes good sense to seek the best markets when flexibility is there. But I have some reservations about beginning with long distance investing. I might need to begin closer to home and then see from there. If so, I am also interested in the Phoenix, Tempe, Scottsdale markets.

Thanks, @Paul Timmins. Great ideas - will do!

Thank you @Travis Sperr and @Adam Kroll. I'd like to pick your brains further if you don't mind. Regarding risk tolerance... would you say there is greater risk purchasing fewer properties with more money down (less to finance) rather than with minimal down payments? Let's say this would apply to either rental property or flipping. Of course with more money down, fewer properties can be bought. This doesn't seem to make sense with buy and hold as it ties up a lot of money for a long period of time with fewer properties to be obtained, even if the cash flow would be enhanced. After having mortgages on 6 houses for nearly 40 years (we moved a lot) and always dreaming of the day that one would be paid off, it is mind boggling to imagine holding 5 or 10 mortgages (or more) that won't be paid off for another 30 years as we are nearing retirement! I imagine that younger folks don't suffer as much from this anxiety. But I'm willing to do this if the numbers show that this DOES make sense. That being said, a little cash flow would be nice especially in about 5 years when we would consider retirement from 9-5 employment. Another means to that end might be light flips and then hold if the right property becomes available?

Another question - are people having success with short term rentals? VRBO? (I'm guessing most VRBOs are in the mountains). Traveling nurses, etc.

It's good to know that cash flow is workable in the Denver area. I do see, however, that good deals on properties aren't plentiful across the region according to the MLS. The art of finding the deal will need to be developed to improve outcomes.

As far as willingness to work - I am by nature a workaholic. Currently I devote many hours a day to researching, analyzing, and listening to BP podcasts. I find it kind of fun and interesting. I intend for this to be my "full-time job" (at least by REI standards), with my secondary job being an artist which pays next to nothing. Meanwhile, my spouse is hanging onto a full-time job so we can afford to take some chances with this endeavor.

Regarding the ability to obtain financing - time will tell, of course, so I can't speculate on our ability there. This will be a massive research project in itself.

Finally, goals are dual - a bit of cash flow but with the aim of holding on for appreciation until a time when either the market says "Sell now" or retirement accounts begin to dwindle. Alternatively, we pass the properties on to our 2 grown children. 

Thanks again for your time and input.