All Forum Posts by: Robert Rixer

Don't forget the other expenses of being a homeowner over renting: property taxes, insurance, water/sewer, repairs/maintenance. There's a saying: Your rental rate is the maximum you will pay each month; your mortgage + tax + insurance is the MINIMUM you will pay each month.

Second this. There isn't a one-size-fits-all solution, you're best off building your own for your situation and types of investments. Plus you're understanding of underwriting will be way better than looking for a copy+paste solution.

The flaw in house hacking is that a property is rarely ever both an ideal investment and the ideal place to live. You usually have to sacrifice one or the other, or a bit of both.

Glad to hear there's cashflow investors still out there. It feels like most deals done these days are by appreciation buyers.. Team cashflow needs to make a comeback! 

Run some preliminary numbers first. What is the average build cost of a 6-8 unit and what can you expect to sell each unit for? If build cost is $800k/unit and sales comps go for $650k then it's a non-starter.

Working for a condo developer in my early career, 3 pieces of advice I can share.

1. Trying to make money through efficient construction is a losing battle. Even if you do everything right construction-wise (a big if), the added upside will be marginal. Bigger needle-movers are getting a great deal on the land, up-zoning to fit more units or the area naturally appreciating during the development process.

2. You have to get some other satisfaction from developing, other than just money. This could be building something tangible, improving the community, etc. The risks are skewed in development with so much that could go wrong (rezoning/permits process, construction, slow sales, tanking market, etc.) and the upside rarely justifies it when compared to buying existing. Yes there are people out there who do it very well but it's a tough business with a lot of pitfalls. 

3. Best time to develop is when the price of existing is above or at least close to the cost to build new. Obvious statement but people still develop when there's similar existing product half the price of replacement

If you can afford 50% down on a 4-unit in LA then keep doing what you're doing!

With interest rates today, a lot of deals are negative leverage. Upside is key whether forced appreciation or speculation that the area is going up. The other reason is if you think rates will go back down historic lows. 5.5% cap looks like a no-brainer if you refinance to a 3.5% rate later down the road. 

Does anyone know why Oakland specifically is nearly double the rent decline of 2nd place? Pretty significant drop..