All Forum Posts by: Ryan Daigle

Hey @Elena Nelson. I don't like HOAs because that's less control you have over how you operate the property. However, that's just a risk you have to factor in. If the numbers look great and you're willing to accept good returns for lack of control, then it might work for you.

One good aspect of HOAs is that if they cover exterior items like you say, then that's less repairs and capex that you have to account for. I wouldn't necessarily reduce your assumptions, but it's a potential good thing to come of it.

Hope that helps and good luck!

I always look at somebody's incentives when reading an article like that with little substantiating data. In this case, it's in OpenDoor's best interest for things to resume back to normal, so of course they're saying it's time to buy again!

Now, they may be right, but I'm not going to use their word for it. But I also haven't stopped transacting because of COVID either. I've just priced in great risk and more conservative assumptions, but I'm still open to opportunities.

Overall, I'm pretty optimistic that within a few months we'll be in a good place.

@Steve Chan there's no such thing as recession proof. Resistant? Perhaps.

There are many factors that contribute to recession resistance including economic diversity, affordability, etc... I've done a bunch of slicing and dicing on government data that tries to measure this for each MSA and come up with rankings for economic strength for each. Here's how Oklahoma City ranks (that 48 on the far right is the overall rank and is pretty good - this is out of 1000 areas):

So Oklahoma City may have a strong energy sector, but it also has good job diversity.

When you combine general area rental affordability, Oklahoma stacks up even better (my "investability" rank of 8 out of 380 MSAs):

So... OKC looks pretty good overall.

Disclaimer: These rankings are my own proprietary algorithm and may be flawed. Additionally, a lot of this data is based on 2015 government data which is the last time it was updated (various programs have been defunded since 😭). So it's both proprietary and potentially outdated - you've been warned!

@John Johnson I've seen well-run properties in the 20-unit range like you mention operating in the high 30s (38%). However, I wouldn't underwrite to that. The lowest I go in projections would be low 40s, but that's when I have good reason to go that low (recent major renovations, newer construction etc...). Your 30% feels way too low and offers no margin of error.

@Steve Davis no conventional lender would do that, no. Any I would be skeptical of anybody that's willing to put up money on the hope of appreciation only.

@Davere Currie not sure what your investment goals are, but keep in mind Cleveland is a dying metro with consistent net population decrease. From worldpopulationreview.com:

If you're seeing Cleveland as a strong cash flow market you should always ask yourself why that is.

The long term demographic trends that are supporting multifamily as a property class are still very much in place. I'm with you @Dan Handford that we may see a small dip in the short term, but that asset prices and returns for the 2+ year time frame will remain strong.

@Evan Polaski great question. I think anything less than 70% LTV is low-leverage in my mind. 65% and less, ideally.

I'm assuming this is for a collateralized debt like real estate. If we're talking about other leverage like buying stocks on margin, well then my answer would be a lot different!

I find myself taking both sides of the "Rent Payment Rate at 95% of Prior Month" headline from an article like this. On one hand 95% seems like a high percentage - that's an A after all! But on the other hand, if all your other costs stay the same, a 5% reduction in expected rent is gonna hit the bottom line hard.

My properties are low leverage and have plenty of buffer so a 5% reduction doesn't factor in, especially in the short term, but wondering how you all interpret a 95% collection rate from pre-COVID levels. "Pretty good considering" or "this is not good"?

Hey @Kreig Jarnagin - I like your area. I have a SFH in Independence I did BRRRR style last year.

Regarding local meetups, @Logan Freeman is your local tour guide on that front and runs several of his own.

Good luck!