All Forum Posts by: Shannon Robnett

@Bobby Romadka I love what @Julie Hartman had to say just about the laws and landlord tenants' responsibilities.  As a 27 year veteran of the RE game, I would highly encourage you to outsource what you do not know until you have enough first-hand knowledge on your own to do the task cost-effectively.  I can't sit here in a position of piety and discourage you from going the route that @Brittney Peabody did because that is the way I have done things in the past, but again 27 years of experience has led me to "stay in my swim lane". 

Look at it this way from a different perspective.

You and your wife currently work.  When you are doing this work you are getting paid and you are a bit of an expert which will garner you a good return on investment instead of getting off from your job and rushing home to put on your property manager coat and handle those issues along with the frustration and inefficiency of being new at the whole PM game.  If you hired someone to be your PM and backfilled that cost by working additional hours at the gig you already have as an expert you get the best of both worlds as far as trading time for money.  Because regardless of how you look at it you are doing just that its just a question of are YOU getting the best deal?

On the job learning is awesome when someone else pays the tab, just remember YOU as that landlord pay that tab!!!

@Wesley Canhedo real estate is a game of now in a lot of ways.  Right now you can get the equity for a small investment of time and effort and that can be very useful in the very near future.  Let's say we are headed into a bit of a down turn in the next 3 years.  A renovation now would put you on the nice end of the rental market and would increase your rentability in a down market.  It would also give you a better escape plan if you needed it when the market cools a bit, or allow you to sell for a better profit when you find your next project. 

I am always a "do today what you can because no one knows tomorrow" kind of guy

@Julene Webb Idaho is HOT HOT HOT! Why are you looking to invest out of state? What is your preferred vehicle (SF, MF, BRRRR or commercial)?

@Jonathan Ramos not only does the math check out so does the history of house prices in Boise.  I am sure you could do the same chart for your home town with prices and interest rates from those years.   Some of us have been around this game for more that a quarter of a century and have seen a thing or two.

@Jay Hinrichs you are like Paul Harvey!!! And now for the rest of the story!  Development is not as simple as turning on a switch!

@Greg Weik I tend to agree with you on this.  There are plenty of "rich real estate investor" people on both sides of the aisle that with the super-slim majority that one party has right now it will make it very tough.  Besides, when did a politician actually do what they said they were going to do when they ran?

@Bryan Crawford You definitely need to form a legal entity and exit plan.  Not to rain on your parade but I have seen it happen all too often when things don't work out for a couple what the property gets stuck in a custody battle.  Hear me out!  I know you guys love each other and it will never happen to you but it's good practice regardless.  If you guys were married the courts would be there to ensure a split of the assets should you guys not be able to continue life together, but without being married they will not intervene nearly as readily, and what about the event of someone's untimely passing?  Then families and heirs get involved along with banks and probate.

I always tell people "good documents make good partners and let's draw up those documents while we are still in love"  and this advice has never hurt me!

@Jonathan Ramos I think you misunderstood me I was not advocating one way or another I was simply stating what had happened and what will continue to happen with our current construction cycle.

But did the overall cost of housing really increase? I mean I get that the amount the house is purchased at has increased but take a deeper look at the true cost of ownership. 3 examples

2006 you could have bought a 3 bed 2 bath for $175k in Boise Idahoand put an 8% mortgage
on it and paid $1284 monthly and in 30 years you would have paid $462K
for the house.

In 2017 you could have bought the same house and paid $250K for the
house with a 5% mortgage leaving you with a payment of $1342. In 30
years the house would have cost you $483k.

And lastly in 2020 you could have bought the same house for $350K at 2.75% interest and in 30 years you would have paid $514K for it.

So when we look at our economy did your house really go up in value $175K? Did you money go down in value sure because of the fed pumping fiat currency?

or

Have you really only seen a moderate rise in total cost of 30 year
ownership($52K divided by 22 years is 2.6% appreciation) but your
monthly housing ownership cost appreciated even less?

@Jonathan Ramos you are correct it is a problem happening in a lot of areas around the nation and there are really quite a few factors that need to be looked at to truly appreciate the magnitude of it. In order to do so, we need to go back to the great recession and the 10-year blood bath for the real estate developer. We came out of 2013 with a need for 1.5M housing units that had not been built from 2008-2012 for many reasons related to the global meltdown. since then we finally get the fires of the economy stoked and rolling again but there are supply and demand issues.

So as we have seen the demand go up for workers and tradesman we have realized that from 208-2015 while we were going through the great recession all our tradesman had been retiring, retraining for a different line of work, or failing to recruit new apprentices. Today our labor workforce for tradesmen is at a seriously depleted level only to be paired with record demand and housing prices. Where can they afford to live around the jobs that they are building?

And it all starts with the projected need for developed ground and actual availability. And for 8+ years nobody developed any new subdivisions. Developing a subdivision is typically an 18-24 month process so when demand finally began to climb we were 24 months before anything new was online. In that time frame, the inventory was gobbled up, so lot prices began to climb rather rapidly.

Supply and demand in Boise Idaho have been on the seller's side for about 3 years now but Covid really knocked it out of whack in a bad way. We all froze for 3 months in March and watched what was going to happen to take a bad thing and making it worse. New construction starts dipped by 40% YoY in April throwing an already thin market into a tailspin.

We have seen serious migration from the larger cities where higher-paid workers are exiting in mass and taking their jobs with them. They have created bidding wars for what was available to resettle their families in areas with wide-open spaces and less regulation on activities. People who have been chained to a city for a paycheck have decided to free themselves to finally pursue the move to a local they have always wanted.

This sounds great right! But now we have even more competition and at the end of the day, your labor force loses out and has to move further away to a less expensive place they can afford. This makes the staffing of the projects you want to be built even harder and more expensive. This cycle is giving bankers and appraisers fits in keeping up with pricing and FHA limits and all the other issues of a rising economy.

I say all that to say it's not just as simple as developing some land and getting builders involved but in the next 24 months, you will see things start to normalize. That is if we didn't in all of this just add to the shortage we had to start with?