All Forum Posts by: Peter Hans

thanks for your post Silver!

nice to get some feedback i am still interested in this =)

anybody has a clue how much expenses an avg garage has? is the 50% rule usefull?

Danny
how much of the houses you flip would cashflow? How do you decide if you want to hold it or flip it?

thanks

i can't give you a qualified answer however...

the more shady/ghetto the area you are investing in the higher the cashflow

i think a good way to start would be to advertise via newspaper otherwise driving around your city looking for parking space/garages in good areas and ask the owner if he would be interested in selling for insta cash...

after you know what parking space and garages are renting for in your area you will know how much you can afford to pay to get cashflow

but i am really not sure how motivated sellers will be to sell in this niche

btw i also see garages from time to time at foreclosures i guess this could also offer good cashflowing options from time to time

*BUMP*

nobody with experience?
i would think that the 50% rule won't work here the avg. cost should be lower than 50% of the rent... or is this a optimistic assumption?

anybody here got useful links he can give me?

thanks

I get your point J Scott. :)

Just to clarify my standpoint... i didn't mean to invest in breakeven cashflow as a alternativ but as a addition!

When you are searching for deals you put time and work into it. Now and then you will find a property that might be cashflow but after further investigation you come to the conclusion that the property has only breakeven cashflow.
You now have two options:
1. Don't take the deal
2. Take the deal

You have already put time and work into you investigation so if you choose to not take the deal you worked on the deal for nothing...
Why not just take the deal instead?
You don't have to make a downpayment so you ain't losing capital...

so let's say investor A doesn't buy breakeven properties and investor B does

after 10 years of investing:

investor A:
50 cashflowing units for 5000$/month

investor B:
50 cashflowing units for 5000$/month
30 breakeven units for an equity gain and cashflow in 20-30 years

they both invested the same time in researching REI deals and invested the same amount of capital

why would investor B be in a disadvantage?

thanks for taking the time to discuss with me guys i hope i don't seem to balky in your eyes ;)

Originally posted by J Scott:

Originally posted by Peter Hans:

But let's say you got 15 propertys that cashflow for a good chunck of money why not add like 5 breakeven properties as well.

For the same reason that if I have several businesses that are making me money, I'm not going to be tempted to start a business that breaks even.

I'd rather just start more businesses that make me money... :D

is the equity you gain over the years worthless for you?

Danke für ihre Auskunft! :)

Ich hoffe es ist ok wenn ich nur in Deutsch antworte da ich mich so einfach besser ausdrücken kann!
Wie betätigen Sie sich im US Markt? Sind sie noch in Deutschland am wohnen und arbeiten und lassen Immobilien in den USA durch Hausverwaltungen für sich arbeiten oder sind Sie/planen Sie ihren Wohnsitz in die USA zu verlegen?

Es würde mich sehr interessieren wie ihr Werdensgang als Deutscher in der US Immobilienwirtschaft ist!

Vielen Dank!

Originally posted by Charles Perkins:

Peter are you seeing good RE appreciation in Germany? Investing in this kind of environment is certainly more risky and I would want to understand the market it very well if I was to play in it.

acutally there are some areas in which there is a good appreciation rate but cologne isn't one of them so it seems like investing in breakeven cashflowing properties is even a no go for people that can afford to risk it...

but till we are talking about 100% financing we could change the propterties really easy in cashflowing with still a pretty small downpayment!

if you are making a 20% downpayment and take a credit for 80% of the property i used in my first post as an example we would now have to pay 533$ per month for the credit which would gibe as a cashflow of 142$ in this example!

so by making a 20% downpayment the proptery would change from a very maginal investment to a great investment?

Originally posted by Charles Perkins:

Why would you choose a breakeven property? Are you hoping for appreciation, not necessarily a bad play, but it is much more speculative in this current market. Are you simply betting on the ability increase rents faster than expenses might increase?

I wouldn't say it is necessarily a bad strategy, but would ask that you explain why you think it might be a good strategy.

I can find properties in the greater Seattle area that can cash flow and it is hard to imagine that properties in your area can't be found that will cash flow.

It seems to me that it is more sound to invest in properties that can cash flow. Occasionally you can also find a property that will cash flow and is highly likely to appreciate.

I might pursue a marginal property if I see tremendous opportunity for added value, but I would want to negotiate a price based on the existing property. I would not offer a price based on the value I intend to create.

Look forward to hearing more about where you are coming from.

I am from germany nearby cologne so the real estate market is quite a bit different than in the usa it seems. A usual singel familiy house has an avg. price of $300k w/ an avg rent of $1500 which is obv very bad. Same goes for flats/apartments!
It's standard that the avg. montly rent is about 0.5% of the properties FMV.
So it's very hard to get positiv cash flow which makes breakeven properties also very attractive compared to the avg. property.

Well as long as you ain't wealthy enough breakeven properties are obv a risky thing.

But let's say you got 15 propertys that cashflow for a good chunck of money why not add like 5 breakeven properties as well. If you are a buy & hold investor the swings of the real estate market won't affect you to much unless you plan to sell the properties within the next few years.
Trough you ain't making any money cashflow wise you will still be gaining equity of the properties every year and in 20-30 years you will on them and have a positiv cashflow with no credit to pay off.
And if you are financing the property for 100% you ain't losing any purchasing power for better investments.

So if you have enough money breakeven cashflow doesn't seem like a bad idea to me because in theory you won't pay anything but your tenants are buying you a property which you will own in 20-30 years.
(well sure there are a lot of factors which you all already mentioned that could let you have to pay... but the same factors could also let the property become a cashflow property... the thing is you don't know what the market will be like in a few years it could change to your disadvantage as well as to you advantage but based on the investment in the todays market you are pretty much freerolling and as much as i learnt real estate investment you always be based on the todays market because nobody knows the future...)