All Forum Posts by: Scott R.

Good for you - you found a deal and made money flipping it and your rehab, not likely on appreciation.  And if you "flipped it" this presumes you didn't hold it until 2017 and sell it.  That would not be a "flip" by most people definitions.  The goal in flipping a property is to do it fast so you can avoid any market downturn, anyone flipping isn't boasting about making appreciation.

@Scott R.

The value of 5+ is only based on the increase in income.  

@Scott R.

This is a discussion of a buy and hold rental real estate transaction, not a purchase, improve, and resell transaction.  

Appreciation in a rental can only come from an improvement in market rents (5+) or an increase in the market value (1-4).  Your flip has nothing to do with the topic at hand of $100/door and does not apply. 

@Scott R.

Flipping=appreciation LMAO.  I started with flipping homes.   I bought them for 40% of their pre-recession value, fixed them up, and sold them at 75% of their pre recession value in much better shape at a profit.  Would you call that "appreciation" too?

@Mike Dymski

I was in school and did not invest prior to the last crash.  I got in right after it hit when prices looked good.  Maybe you made it through, but others did not.  Who do you think I was buying my deals from when I got in after the last crash?  It was the investors who bought high, did not get good cash flow and could not keep their properties.  

@Terre B.

If your numbers are so solid that you can guarantee $100/mo (with management) and you are comfortable taking on the risk of RE and getting a very small return (without assuming appreciation), by all means, go for it.  Look at your return on your investment though.  I'm guessing it will be very minimal.  You have to realize many of these metrics on here have not been tested to withstand any change in the economic cycle and that $100/door is completely different when talking about different places and different average rent levels.  Without appreciation, or additional rent increases, you are never going to make any real money on a property at $100/door.  Just think about how many doors you would need to own to quit your day job and how you would ever get to that if you only made $1,200/yr on each door.  It is not very scaleable unless you have deep pockets.  

Brandon was investing in Aberdeen, WA where rents are likely $600-$700.  $100/door is completely different there than it is in a bigger MSA and I don't believe he was investing pre-crash either.  

@Mike Dymski

For an investor purchasing at FMV in 2006-2007, how do you suppose that investor made money on their property? It surely was not in appreciation. Twelve years later, many markets have shown appreciation from those values, but it is nothing to write home about-especially if appreciation was majority of the return over the last 10-12 years.

@Scott R. if you look at home prices over the last 80 years, you are correct. They have appreciated at 4% annually, which is about the rate of inflation. However, most of middle America, home prices are just now recovering from the 2008 crash. In GA, outside of the ATL metro, which is hot, and high end parts of Savannah, home prices are slightly higher than the last peak in 2006. Appreciation is speculative. Cash flow is much more certain.

@Kraig Kujawa

How do your numbers look if gets to 40% and rents decline 30% as well?  From what I gathered talking with others, rents went way down and vacancy increased quite a bit in the last crisis.  It has happened before and it is possible it can happen again-especially with all of the new investors flocking to RE as a way to invest, purchasing properties that barely cash flow and assuming they will make a ton as they continue to appreciate...

@Scott R.

How well did properties appreciate from 2007-2010?  In some areas, we are finally hitting the 2007 prices and it has been 12 years.  There are people still underwater in parts of the country as well.  If we hit the next crash sooner than later, I have a feeling just about everyone on here will see some real stress on their investments.  Those with strong cash flow (better ability to whether changes in rents and vacancy) will do much better than others.  Even if someone has equity in a crash, they will not be able to access it if the property does not cashflow.

@Courtney M. $100 per door is ridiculous and I do not recommend that anyone invest with this as a goal. It means you are over paying for the property. Appreciation is great, but there is no guarantee that it will increase. Even if it does, you can't access that equity without refinancing or selling, which is expensive. How much would you have to borrow in order to get 40 doors in your market just to make $4,000 per month? $10M? You can make $100 driving Uber a few hours per day. That is a better plan. In order to make money in real estate, you have to buy it right and manage it right. Then your cash flow will be much higher.