All Forum Posts by: Robbie Taylor

1. @Joe Villeneuve How is owning a property free and clear like hiding money under a mattress?  You making 100% of the value back every 7-8 years (depending on how good your deals were and the mkt you live in).  Money under a mattress never makes anything.  I totally get how leverage expands your real estate portfolio faster ect. and the 4 ways of making money and all that jazz, I just didn't understand that statement.    

I have an interest in investing outside real estate as I'm sure many of you do.  I just picked up a book called The White Coat Investor: A Doctor's Guide to Personal Finance by James M. Dahle MD.  It's geared towards physicians, dentists, and other moderate to high income professionals. Has anyone out there read it?  Thoughts?  

David Faulkner Long term in Lexington will be interesting. There is a lot of regulation because Lexington is surrounded by thoroughbred horse farms that make a ton of money. That land-locks the city of 350,000. There are towns growing within commuting distance, but in most cases there is a clear distinction between those towns and Lex b/c of the farms. It's beautiful country but the set up has forced Lexington to become increasingly more crowded. For example the city has needed a southern interstate loop from I75 to I64 for 2 decades and it'll never happen because the land is protected. Real estate value is pretty insulated. It never really crashed in 2008. It flatlined. The really expensive homes lost some value (which has fully recovered) but the median home value has been stable.

I'm a dentist, but a nontraditional one.  I'm a clinical team leader at a dental school.  I have a clinical team of 39 students that work under my license and general supervision (along with other clinical faculty).  I'm responsible for their patient pool, final say in treatment planning, cover procedures, and insure they get their graduation requirements.  I also take an active role in clinic management and quality assurance and will be finishing a masters in health policy and management.  I don't love teeth.  I do love my job, which is mentoring and building relationships with some very intelligent and driven young adults.

My wife is a real estate agent and I LOVE her job.  I throw myself into it as much as I can.  That eventually lead to our interest in investing.

I've had some former students do live in flips to pay down massive school debt (the average dental student has about $300,000 coming out).  They've been successful in making payments of over $50,000 at a time.  One thing they always did was wait the 2 years to avoid capital gains.  You may want to consider spending some time in the home and working on stabilizing your own monthly debt and avoiding those taxes before moving forward. 

An article came out in my local newspaper saying the community where I live will need to double it's new home building rate between now and 2025 or face a major housing shortage.

http://www.kentucky.com/news/business/article15242...

Obviously prices will continue to rise.  What is the best way to capitalize on this kind of market?  Is it just to rack up as much single and multi-family units as you can now, or is there a less obvious way to take advantage of the market moving forward?

Thanks!

@Brandon Stevens Thanks for the info.  Due to my position at UK I'd rent to dental or other professional students.  That's who I have access to.  My wife is a realtor and has developed a great niche with them.  They go to school year-round and will usually commit to 2 to 4 years.  Moving is expensive and they're already running up $300,000 in school debt.  Occasionally one will move if they get married or just HATE where they live, but that isn't usually the case.

I do worry about assessments though! That can wipe out all the cash flow profit, even with the $1200 and 12 month rent. The ARV may be a little rosey too, but I could still handle $105,000-$110,000 worst case scenario.

Again, I appreciate a local look at it.  If I thought it was a slam dunk I wouldn't have posted on here! I'd be cutting a check. ;)  

This is a potential deal in Lexington KY within a short bike ride of the University of Kentucky Campus. I can run numbers, but I have major HOA questions though.

The Basics

A 2 bed 1 bath condo in a quiet community.   

Sale Price $91,000 (I'd try for $88,000 all cash but most things are going for asking price)

$5000 rehab (flooring, some paint, cosmetics, etc)

ARV $112,000

Rent $1200 (about $600 per bedroom)

Appreciation 2ish% (I go conservative with condos as they don't appreciate like SFHs)

Occupancy rate should be close to 100%.  Nothing sits empty in that area.

My wife is an agent so that'd cut down the real estate fees.

My dad is the source of the $88,000

My goal would be to let it season for a year to collect the cash (there is a lender in Lex who will refi after 6 months at 80% of appraisal.  Go to real estate meetings and you can meet these people).

I'd like to give my dad his $88,000 back after a year without spending too much out of my own pocket. Thankfully there won't be a lot of holding costs since he won't charge me interest and he's not looking for profit. Which brings me to the HOA.

Here is the kicker. HOA fees are $373 a month. It covers Heat, AC, water, sewer, garbage, insurance, snow removal, outside maintenance (that includes painting since they're wood siding) and access to the pool at the clubhouse. I've spoke with other owners there. The HOA has a history of being good to work with and are financially sound.

Should the concept of dealing with an HOA be scaring me off? I know a lot of people on here won't buy with one involved. It seems like a major cash flow drain but it covers a lot of my expenses!

My 15 year plan is to develop $15,000 or so a month in passive income. My wife wants to continue to build her real estate practice. I may hang it up or find a dental practice to work as needed, if it all. Housing is more fun than teeth! The real motivator is to provide my 2 daughters (8 and 6) a potential career or business opportunity if they want it, and not just hand them money. Opportunity is worth more than cash.

@Cary F. I like the idea of pulling the equity out to reinvest the more I learn about it.  Thanks for the example.  I understand the math.  One difficulty I have in my market, especially close to the campus of a large university,  is that it's difficult to add equity.  The market has to remain affordable for the undergrad student/professional student.  They can only afford so much rent.  Condos/apartments that were selling for $95,000 in 2000 are selling for $105,000 to $110,000 now.  That's not a big jump over 17 years.  The great thing is that during the 2008 crash, it just flat lined for a few years.  Students still came to school and paid rent so no one really went underwater.  Campus real estate is just different.

As I expand further in to Lexington and the surrounding counties, your advice becomes much more doable. BRRRR becomes more of a possibility as well, even though those deals are scooped up really really quick.

Thanks for the input!