All Forum Posts by: David Faulkner

A bit of a drive, but on Sat ... hmm ... I might stop by if I can. If possible, any reminders closer to the data would be much appreciated.

If your investment strategy depends on the market going up the day after you bought it, find a new strategy. If your investment strategy breaks if the market goes down the day after you bought it, find a new strategy. If your investment strategy works either way, pull the trigger. Else, keep looking.

Correction: I'm down for meetups in AV Mon or Tue evenings, not Wed.

No problemo. Learning how to run the numbers properly is the right place to start. Driving and mapping neighborhoods, thumbs up there. Finding specific properties in specific targeted neighborhoods, running their numbers, and putting in offers, even if just for practice, better. That way, you will know and be ready when you do see a deal. Last quick tips: 1)ignore the list price ... make any offers based on your numbers, not theirs ... if they say no, then onto the next one. 2)I run both the buy-n-hold and flip numbers on every home, that is my plan A and plan B (or visa versa) ... plan A numbers need to get me a good return, plan B numbers need to be good enough (with margin) that I don't lose my behind if the SHTF with plan A ... easier said than done in today's market, but I don't (and haven't recently) pull the trigger unless ...

I work some days in AV, so if it is mon-wed evening for meetups, count me in.

You bought low in 2002 and now you have the opportunity to sell high in 2015 (or spring 2016), tax free ... I'd do that. If you were in a better cash flowing market, I'd advise differently. If this were an ice cold market like 2009, I'd advise differently.

I'd also seriously reconsider buying such an expensive and large replacement property. It may be a financial, emotional, and time drain when those may already be drained by a newborn. I'd put 20% down on a more modestly priced home that still meets your needs (but maybe not all your wants) and invest the rest wherever you can find the best return (based on conservative estimates of the fundamentals, not speculation) ... this may or may not be rental properties in your backyard, or even RE at all. Don't invest remote. Best wishes whichever path you choose.

 I thought you were going to do that, Chris?!? Joking :) Seriously, though, we should put it on meetup. And by we, I mean anyone other than me :)

Nice meeting y'all the other night ... look forward to meeting again.

https://www.biggerpockets.com/forums/311/topics/22...

Any questions?

I am a buy & hold investor with several SFR rentals in the AV. Bought in 2009 with ~1.25% monthly rent/price yield. East side, but nicer East side (must be VERY careful picking block to block on the East side of AV). Prices have since doubled (rent yield cut in half), so I concur that now is not the best time for buy & hold ... That has nothing to do with inflation or monthly rents likely to fall, though, just current market valuation. Do NOT only use rent yield to do your analysis, BTW, just used above to illustrate my point.

One exception for me is if I could find a SMOKIN' deal (like 50% off market price) in a good neighborhood, but even if I could find that (I can't. If you can, you're the man) then I'd be more likely to flip it in this hot market as opposed to hold with risk of cooling. In fact, if the market goes up much further, I may be a seller.

Learn how to run the numbers for buy-n-hold and wait until you find something where the numbers make sense (likely after this hot market goes cold) before buying in the AV or anywhere else. Otherwise, learn how to run the numbers for a flip and wait until you find something where those numbers make sense (may be able to find in today's market, but likely makes more sense in a nicer neighborhood), but that is a whole different ball game from buy-n-hold.

I have a similar problem; it is a "high quality" problem to have, but a problem none the less. My solution: wait until I see better opportunities in the market and/or build it up enough to buy a SFR rental in a good hood for cash. In the meantime, an alternate way to backdoor more money into your Roth is to Roth 401k and convert to Roth IRA, or traditional 401k and pay tax to convert to Roth IRA. Only problem is, you will likely need to quit your job before you can roll the funds. Or best yet, if you can claim self employment (easy to show "intent" to make profit to meet IRS requirements), solo Roth 401k. I'm not a lawyer, so keep me honest and double check everything.

If the money is really burning a hole in your pocket and you absolutely must invest now in RE, then look at REITs, private placements (assuming you qualify as an accredited investor), Notes, Hard Money Lending as options ... the 1st 2 will be passive but require high trust in others, the last 2 require some specialized skill and knowledge to pull off successfully. Feel free to reach out if you want to discuss further.

I live in LA (well, OC, down the road, actually) and agree with you Greg. Buying in LA today, renting it with negative cashflow, and hoping that rent and/or price appreciation will bail you out eventually is insanity. That is trying to squeeze a round peg into a square hole ... the OP or anyone else who wants to employ the buy and hold for cash flow strategy should move to a market other than LA that is more suited to that strategy (and there are plenty of them, but not LA today). Noticed I said today and not forever ... I actually pulled this strategy off in LA, but I bought in Palmdale (~1 hr outside of LA city, but in LA county), and I bought in 2009, and I bought trashed foreclosures where there was plenty of value-add opportunity. Different time, different market, different strategy. Today I'm considering getting my license to sell RE while the market is hot, or if I don't I will just get paid to wait until the market comes back down to where buy-n-hold makes sense again. If I were young, single, and w/out kids, I'd probably do a live-in flip, fix up over 2 years, maybe with some roommates, and sell tax free (or rent it out or continue to live there if the market tanks). Different time, different market, different strategy. When (not if) the market tanks again, I will adapt and adjust my strategy again. All the while, I put plenty down and invest with multiple exit strategies to cover my downside and ensure I don't have to give it all back to the bank if the market moves out from under my feet. To me, this is what it means to be a truly professional RE investor, as opposed to a gambler ... not saying that I'm 100% there yet, but this is the end game for me at least. The path taken may vary, but this same principal applies to any geography (LA to Florida, and all points in between) IMHO.