All Forum Posts by: Thomas Staub

@Jay Hinrichs @frank 

Jay nailed it on the head. 

Material costs are skyrocketing for all sorts of reasons. Timber is yielding double digits returns up from an average of 8.4%. 

Additionally back in 2010 there were approx. 12 million construction workers and that is now down to about 10.5 to 10.8 million which is driving up wages or making it impossible to find quality contractors. 

New development, which desperately needs to happen in the affordable and middle class arena, just doesn't offer enough margins to build. So you're left with luxury builds which is already cooling dramatically. 

You're seeing many people sit in their homes and upgrade also driving down supply. 

All in, and from research of many economists, due to lack of inventory, prices will remain stable and but market action will cool and with it prices, ESPECIALLY in the primary markets. I do believe in some secondary markets and tertiary markets you can find deals but mainly for buy and hold. Flips are becoming riskier as people are becoming extremely picky on their purchase and they will buy but you need to produce quality products, which again, squeezes margins. All in, there are always deals, just fewer of them at the moment. 

@Frank Boet 

@Bob Prisco - You can't bank on those information outlets which were once legit articles backed by research. They are merely a marketing and attention economy forum. Amazon is spreading across many cities and it's hard to confirm that in itself is enough of a driver to invest. I do like Cleveland and our company has been investing there as of late. From my research there are better markets that are offering higher yields and larger day 1 equity. Pittsburgh, PA is one of them. I do like the Ohio Valley and see promise in Cincinnati, Columbus and Cleveland. That corridor is solid and physically positioned well in the USA. It also is one of the 15 states absorbing 71% of the US population in the next 20 years. 

@Shital Thakkar - I agree with you 100% but want to add just one piece. It's more about where the Millennials are moving. They are the new home buyers, trend setters and corporations are moving to where they are. It's vital we all track their migration. Pittsburgh PA for example has seen declining growth for 20+ years! However, if you look at a micro level at what is happening you see Millennials in droves moving there. Ohio is experiencing something similar but to a lesser degree. Many of these cities are going from a blue collar economy to a research, medical and white collar economy. 

@Chris Elam - congrats on the first step. Wholesaling can be a tiring business. Listsource will be important, and I'm curious if you're targeting wholesales for major fix and flips or smaller flips?You'll have a higher hit rate on the smaller, cheaper homes but less profit per deal. Also, consider targeting multi-families as your wholesale strategy. Many people only target single family homes but there are those that might want to sell off their MF and that could offer substantial upside. Cheers

@Amber Rhea - Hey there Amber. I would somewhat disagree with the other posts. Absolutely it should come down to your comfort level but... and a big but.... having mortgages out are a good thing. It lowers your tax burden, you can allocate assets across other investments and diversify and as @Matt K. is right, historically 8.0% is about what you can expect on a mortgage so getting 5.5-6.0% is historically cheap money. Now the more leveraged you are the lower your monthly cash flow will be but the higher your ROI will be. That is the relationship. I would recommend that if you do invest in single family homes in the future, try to purchase them at or above $80K-$90K and make sure they will rent for $900+. You want to be in B class or above neighborhoods unless you have an absolutely steller prop mgmt company that can handle the tenants of C class. Cheers

@Daniel Guerra - Interesting re: Chicago. Are you seeing a migration to Milwaukee? That is a market we are considering expanding in to but I'm having a hard time confirming the variables we typically solidify, are there. I know investors are pouring money into that area but wonder if there is any movement from Chicago to neighboring cities. 

@Bobby Sharma

@Joe Villeneuve  - I respectfully disagree. Socioeconomic, Macro and Microeconomics are crucial variables to monitor and watch. Simply looking at financials is frivolous and dangerous and such recommendations threaten the longevity of his wealth. 

Yes, absolutely yes, review items such as crime trends, median income, unemployment figures, non-farm payroll figures and growth respective of that, school system health, general GDP growth of the prospective market. What is happening with the local economic development chapter and can you piggyback off of those upcoming projects by buying ahead of those? 

For Example. Oklahoma has a school system that is on the brink of complete failure and with it's current political realm and laws protecting change unless 75% of house members pass a bill, they are in deep deep trouble. Yet, the financials look ok... for now. That is a state I wouldn't go anywhere near as I believe a mass exodus is coming and likely an influx of migration to its neighbor Texas, which has highly ranked schools. Teachers in Oklahoma make less than those working at Wal-mart. So, without doing your research you could buy in a terrible time without understanding major downsides. 

Point is, 100%, review crime trends, GDP, population growth trends with Millennials, (after all, by the year 2030, they will be our largest population segment), school system health and respective proposed budgeting from the state govt and general macroeconomic conditions. Financials come right after and make sure the numbers yield decent to attractive returns. 

@David Mohrmann

@Greg Davis - you have about $25K to $30K in equity to pull. that will afford you one SFH rental at $100K purchase price which will cash flow you $250 per month, give or take, your fees alone from a HELOC will be around $3K and then you have a monthly payment of $150 to $200, netting you $50 per month and so breakeven point would be 5 years.... maybe three at best. 3,000/50 = 60/12 = 5 years.

I think you wait or HELOC it, take out and payoff any credit card debt. Have you tapped into your 401K, IRA? Switching now from a peak bull market into a self-directed IRA and investing in SFH rentals from there would benefit you more than the HELOC pain. Happy to help.

@Allyson Edwards Ryan nailed it. Is the property in a good area with upside potential? If you’re around the NC - Raleigh/Durham Area, and you have a property that is solid but just not making the numbers, you should likely keep it. By 2020 70% of the population will live in just 15 states and that property is in one of them. If it’s in a B class property or above and has long-term potential, consider the following: 1) upgrade countertops (vinyl is fine, $1,000) 2) add modern backsplash ($500) 3) update fixtures ($500) Drop price by $100, see if the market bites, two weeks no bite, drop $50 more.

Hey all! 

@Daniel Guerra & @mindy 

Just curious, have you considered other markets? There are several markets that still offering fantastic deals. Check out the chart I attached to get an idea of which markets are coming out of a bottom despite the elevated asset prices we are seeing.