All Forum Posts by: Joe Villeneuve

The word "average" says it all.  The average is based on what is usually a wide range of numbers covering a wide geographical area.  This means you are talking about many, many micro-markets where each micro-market has NOTHING to do with any of the others.

Each micro-markets stands on their own.  Incorporating them together into a convenient number (average) is just a lazy, and yes "stupid" thing to do. 

One more example of how/why analysis based on percentages is stupid.

Wrong. Deals aren't found, they are made. Opportunities are found. Deals are made from Opportunities based on the strategy used. The more strategies you know, the Deals you make 

Quote from @Dexter Florendo Kalai Aspacio:

Have you ever combined seller financing with another strategy to close a deal? How did it work out?

Yes.  Repeated, with different sellers and the same sellers.  Works great.  Not for every seller though.

Each micro-market dictates the cost or rent per sq ft.  Each range of sq ftgs within that micro-market will have a different "per sq ft" number.

Quote from @Hector Surratt Sosa:

Quote from @Joe Villeneuve:

The general RE market only applies, or should only apply, to homeowners. Any REI worth anything, can invest in any "general RE Market", and make money. Deals, for REI, are not found...they are made. Deals comprise of two parts, cash out of pocket, and how someone/something else pays for the rest. This means REI look for markets that are specific, not general, and they apply the appropriate strategy to that property to make that deal.

 Great insight! I agree that successful REIs create their own opportunities by applying targeted strategies to specific markets. It's all about leveraging the right tools and knowing how to structure deals effectively. In your experience, what are some key strategies you’ve found most effective when identifying those specific markets?

Different forms of Seller Financing, using LLC's, using cash partners to buy/rehab, then having a different cash partner buy out the original one to hold the property, Lease Options, sandwich lease options, options,...the list is longer.

Quote from @Andrew K.:

This might be common knowledge but is there an average rent per square foot for single family that I could assume for quick estimates while looking for deals? Example 3-2 single family 1450 square feet. Is it $1/foot? $1.50/foot?  I'm in Ohio so I know LA and NYC would be way different. 

Yes.  Based on my experience, there is a magic number you can use to do guesses, I mean "estimates", on properties.  It applies to everywhere in the country, and yes, Ohio is included.  That numbers is somewhere between $1 and $5 per square foot.  I've seen higher and lower, but the majority of homes falls between those two numbers.

The general RE market only applies, or should only apply, to homeowners. Any REI worth anything, can invest in any "general RE Market", and make money. Deals, for REI, are not found...they are made. Deals comprise of two parts, cash out of pocket, and how someone/something else pays for the rest. This means REI look for markets that are specific, not general, and they apply the appropriate strategy to that property to make that deal.

Quote from @Dominic Joseph Jean:

Quote from @Joe Villeneuve:

Cash flow doesn't generate wealth. It allows the REI to hold a property while that property gains in equity from appreciation, which is how you ultimately gain wealth.

How does the equity build wealth over time?

Equity from appreciation is cash that's frozen.  For each dollar the property grows in value, the equity grows that same dollar.  Here's where the disconnect comes.  Many REI think that it ends there, that just because the equity grows, your profits also grow.  That's not true.  Equity is cash, but it's frozen cash.  It's useless when it remains frozen in the property.  In reality, the equity is what you are paying for that property.  As the equity grows, so does the cost of the property to you.

Quote from @Daniel Lang:

@Matthew Becker Not over asking, over the appraised value* (which I received after the offer was submitted and I was lining up financing). I'm trying to build a portfolio that will generate cashflow for me. Financially, I'm not taking out a hard money loan.  My point in asking is how do I avoid this mistake in the first place going forward. 

Learn how to analyze the market the property is in.  Properties are pieces of a market.