All Forum Posts by: John Public

I don't understand why I should be offended by your response... then again I didn't really understand your response myself but maybe you didn't understand my question so I will attempt to explain it further.

I have no doubt that anyone CAN find positive cash flow in SFH's in CERTAIN markets (like Texas and Ohio). However I also believe that it is so hard to do in some coastal cities that it's almost not worth the trouble looking if your strategy is to buy and hold for SFH's.

Thats basically what I was saying, sorry if I was unclear. And if someone knows of any strategies to do this I would love to hear them myself.

Is it even possible to "find the right SFH" for positive cash flow in some markets? I'm talking specifically Boston, San Fran, NYC, Miami, LA, etc... If I have to leave my 1-hour driving zone to buy something anyway, I'll be damned if its a SFH. That's why I'm thinking multi-family properties for myself. There's no benefit to getting a property manager for one SFH thats far away (cost too much per unit), and managing it myself is infeasible if I want to retain my current job and salary here. I understand there's more risk in going bigger, but there's already elevated risk either way by choosing to go farther or pay more closer.

I don't know where most of you guys live but, it's my firm belief that certain cities have passed the threshold for new buyers to make positive cash flow (at 20% down payment or less). And that in those markets only tactics like wholesaling, flipping and/or lease optioning is really your only option. Buy and hold just doesn't work right now in those places. Maybe staying on the sidelines for a while really is the best option there.

I know the easy answer is "well just move!". But thats not an option for many a would be investor. :(

I don't know if their already is a sticky or not but a thread on good contract clauses for beginning investors might be nice. Obviously snippets of clauses from other peoples contracts should NEVER take the place of a good lawyer to help one buy real estate. But a thread like this might give us newbies good ideas for putting into our own contracts.

Thanks I will give it a look.

Got it.

BTW, I like that quick trick for apartment buildings about making sure that the current monthly rent should be about 2% of the unit price. That makes it really easy to know the most I should offer for an apartment building by just taking:

Current monthly rent / 2% * number of units in building = price I should no exceed on building offer (thats divide by 2 percent not multiply).

So Mike would you say that plugging in whatever numbers that come out too approximately 50% percent for the expenses into a property analyzer program (assuming all other factors remaining the same) would that give you a reasonably accurate number of your realistic cash flow on a property?

Also would this be just for SFH's or also for apt buildings too?

Mike, I don't think anyone was suggesting buying a rental for appreciation. But Vacman might have been asking if it was wise to buy properties in areas of good cash flow as a priority over areas with historically good appreciation (even if they have no cash flow). And like you I think the answer to that is yes properties with positive cash flow is better. Which is exactly why I haven't bought anything here in South Florida so far and am looking long distance, even if I have to pay a prop manager and stay on top of them constantly.

Also it would be great to buy a property with 100% financing and the more under ARV one buy's it for the more likely one is to get 100% financing. However its still really hard for us newbie investors with no proven track record to get a bank large or small to give us a loan on an investment with none of our own "skin in the game" so to speak. I have no doubt you have no problems getting 100% financing from your bank. But then again you know and deal with that banks president, and have more than proven to them that you stick with your properties and pay off your loans. However for us starting out in the game we can't just tell a bank that, we have to earn their trust for a few years. Thats what I'm seeing so far anyway. But maybe I'm just looking in the wrong places for money then.

Oh well I will keep looking anyway. I just think its a bit tougher for the newbies to get good financing deals than experienced investors. If you know of some good places I could find lower down financing pleas tell, I'm definitely looking and am all ears.

Vacman

Yeah I guess it would be kinda hard to get 100 properties in 10 years without some kinda appreciation working for you. I was sorta thinking that there would be some appreciation anyway since most properties seem to appreciate over time even in the worst markets. However there would probably also probably be times in there where lending standards would losen a bit to where you can more easily find 0-5% down financing (not in the next few years though). Then all you gotta find are those deals that are so good that they positive cash flow with 0% down. But I guess thats the holy grail of deals right there too.

Maybe I was just a bit over ambitious with the number of properties you could buy in 10 years there. :wink:

Its funny my dad (maybe most in the baby boomer generation feel this way) always taught me that appreciation was a given in real estate. Even if just a little. However these days with the run ups being caused by people treating REI as the next (get rich quick/stock market/retirement fund/pick your investment) scheme, its starting to look like appreciation is truly no longer something we can rely on. Then again maybe its just where I'm located. What do you guys think?

http://www.marketwatch.com/news/story/home-prices-go-negative-first/story.aspx?guid=%7B30B54985%2D2189%2D4AE9%2DB8E5%2DECF89F6095F3%7D

I do agree that a mix of both cash flow and a good market is the key to maximizing profit in the long run, and there are probably many good points in that guys book. But it sounds like it over emphasizes appreciation over cash flow when both are important.

Another thing that positive cash flow lets you do is immediately go out and look for another property to buy because your not using your salary from your day job to cover the negative cash flow on the other property. Sooooooo.... then you could theoretically buy 100 properties over 10 years or so. I think I would rather have 5%-7% inflation on 100 properties than 35% on 1. Obviously you would use his strategy to buy more than just 1 house in 10 years, but it surely couldn't let you buy more than maybe 5 of them in that time period if they are breaking even or negatively cash flowing right? And how can you guarantee they will all appreciate by at least 35% either? Not to mention by the time you own just 1 tenth of these properties they will have a positive cash flow of $5,000 a month (10 * $500/mo), thats more than many people make in a year!

Someone please correct me if my logic is seriously flawed here.

Yeah what is it about Amarillo (or Texas in general) that makes prices so cheap. And for that matter why does it seem that half the people on this forum from the small town of Amarillo. :lol: