All Forum Posts by: Rich S.

I'm not even a fish here, let alone a big one so feel free to ignore this.  I don't think for almost anyone it is a number... it is a goal/reason/lifestyle/whatever.  Sure, I'd love to win the Mega Millions and have millions of resources to make certain decisions, but the reality is I want peace- in knowing obligations aren't something to worry about.  I want impact- where I can make a difference for people, community, etc.  I want satisfaction- that all the work was worth it and achieved its goal.  In America in 2024 and beyond, you will need money to fulfill simple needs, but I don't strive for the money, I strive for what it allows me to do.  It allows for a lifestyle of peace, impact and satisfaction.  When will I have enough??  I have no idea.  

So many more people on here more qualified to answer this than myself, but my thoughts....

Have to focus on areas with existing infrastructure.  It is the only way to eliminate some costs without flat out giving away money to make things affordable.  Many government entities are trying to do this already, but the impact is too small and costs are too high for it to really make a difference as far as scale.

Provide incentives for developers to build and for people to move to areas with existing land and infrastructure to @Jay Hinrichs point.  In my opinion we need to direct assistance and subsidy more strategically.  More of an "If... then" vs.... here you go.

Instead of solving the end game, improve process.  The shortage exists for lots of reasons, but a lot has to do with lack of trades folks to do the work, which drives costs up, which creates "unaffordable" housing.  Provide a bunch of free trades programs, mentorships, networks.  Get more people working in sectors where we need them and provide incentive to do so.  Also combo that with programs to create more entrepreneurs so they can take their skills and exponentially use them. 

Lastly, understand that America is a FREE MARKET.  It is very inefficient(as far as impact of the $$$) when the government uses the "my great idea" approach.  People still want what they want and everyday that goes by more and more folks feel entitled to that WANT.

**One example is there are thousands of old school buildings and old government buildings that are sitting empty all over America.  They sit empty because the costs to update them to code make a project unfeasible for private money.  They tie up lots of well located, on infrastructure land.  The government is trying to find pathways to help folks, but by the time they figure it out, we will be on to the next problem because of all the tape.

I will leave the politics be as there is no point in debating these issues online as it just alienates sides vs. each other.

As far as the tax credit, sure it will help a certain sector, but there is still too much down pressure in most housing markets right now.  There are people staying in houses instead of moving up because of affordability and limited inventory.  These are affected in my simple mind by interest rates and the cost of entry into new home market and there are less specs than normal in some markets for the same reason.  Unfortunately, we get way too fixated on policy only helping one faction of the market, in this guys opinion.  In my simple mind, we can't seem to find a way to make things fluid, hence we always have a chokepoint.  In the days where we let things fix themselves, it was what it was, but now because we try to fix it all, we end up with a different version of the same problem. 
 

There is definitely some "old school" vs. "new school" vibe in this thread.  I think the original point of the thread is that Jim K was trying to get at is that it isn't always glamourous and it sure as heck won't be easy.  The way TV and social media portrays everything these days sure makes it look simple and without bumps.  There are a million ways to play this game, but the reality is, you need lots of "input" to produce lots of "output" and depending on how you play it, determines what the trying times will look like.  Jim K. might be fighting racoons, while the person who outsources everything is calling their 10th plumber because they can't get one to come out while their tenant is without a working bathroom.  No matter how you decide to play the game, one thing is for certain, if you don't like struggles, it will be tough to win. 

I know nothing about Seattle, so I'll just take the scenario in a hypothetical area and what I would do.  I think it is highly unlikely to achieve your goal, but getting half way there would make getting all the way there much easier than it was to get half way

#1- Make sure your W2 is in the field where you are getting a 2 for 1... somebody is paying you and you are learning things that help you in real estate..... work a trade job for a contractor, or become a realtor, maybe get involved in Property management or lending.... whatever your JOB is, it has to educate you for your larger goal or you won't make it.  And leverage that job into opportunity... if you are working in the trades, network for side jobs, handyman jobs... earn income, make connections, stumble into leads.  If as a realtor, make all the connections you can, listen to people, never eat lunch alone, take folks to lunch you can learn from.  If in lending, make connections with movers and shakers.... ABC companies keeps taking out loans for real estate transactions.... how do they find them, can you get a finders fee for bringing them... things like that

#2-Hustle..... if you want to get anywhere near your goal, you have no choice but to live it.  You can't work 9-5 and make it..... you need to work your W2 AND LIVE your real estate goal.  Find ways to make every part of your life more efficient.... like has been mentioned, your time is finite... have to maximize it.

#3- Never pass up a conversation that you feel might help you... who cares if the landlord with 150 properties is intimidating, chat him/her up.  You need to turn over every rock and hope it lands you a connection that moves you forward.  Example... a friend of mine found his private lender volunteering at a church function.  Never would have guessed in a million years the guy had money.... but while explaining he dabbled in flips and rentals on a DIY type of basis, the guy said, "If you are every looking for a money partner let me know"..... 10 or so years later, friend went from about a million dollar portfolio to about a 10 million dollar one... since that day, he's never had to hunt for $$$ to swing deals, all because of a conversation at church.

#4- When you get hit in the face that first time-- and you will-- you have to get up and keep moving.  Have to fight the battles, ignore the naysayers and keep your eye on the prize.

In reality, there are a lot of different ways to accomplish your goal as far as strategies, but all of them will require the same mindset and drive.... good luck. 

In my world, someone paying and staying, assuming they are a decent tenant is exactly what we are all looking for.  If you are worried, put them on a month to month, add late fees and be religious about notifications to protect yourself.  

I would guess 95% of investors on this site would take the tenant you are talking about. 

You just have to find out what peace of mind is worth to you.  I think the suggestions of giving the tenant options is a good one.  It allows them to feel like they have control.  She's a good tenant, which are the golden gooses.  As long as you are in the ballpark, I'd take a bit less all day long, but peace of mind is more important to me than some.  Good luck. 

Sometimes the best deals you make are the ones you walk away from.  I would just move on as the pressure just doesn't "smell right"

I think a great idea for new tenants is a 6 month prove it period... month to month after.  This tenant has already proven their merit.... but to protect yourself, you could incorporate a 60 day, one way lease termination and an escalation clause.  I think the other key is figuring out say you are $50 under market per month on average for the 4 years, but you just keep it because of a great tenant.  Even if you were under market for 4 years, you are out $2400.... It think it is fair to say, one turnover might cost that much with a month or two of lost rent, maintenance, cleaning, etc.  In my opinion.... land lording is a long game.... steady and consistent are the biggest keys.   

I think the key is finding out what factors are most important to you.... security, growth, stability, flexibility, etc.  

If you have a valuable asset with no debt, you are secure, stable and have flexibility to use that, BUT your eggs are in one basket.

If you cash out that asset, you aren't as secure or stable, but can grow and can be flexible in a sense you can deploy your capital, but once you do that, you lose your flexibility.  

I think you can look at it this way-- you have the ability to play with "house money" both literally and figuratively.  You can cash out your entire original investment and basically collect cash flow- and in the worst of worse cases, you are back where you started with X dollars and no property. 

Most people just look at the math and the numbers, but then can't sleep at night because of the risk.  Other people can't sleep at night because they can't convince themselves to take a risk.  Find out what things are most important to you and use those to lead your decision making.  Good luck

Plus-- you have a very good "problem" compared to many folks in REI.