All Forum Posts by: Stephen Stokes

@April Clark you can always rent vacation rentals....it’s just like boats to me, they are for renting not owning.

@April Clark it is just my personal beliefs so take it what it is but if you want to get into the hoteling business you should invest in a hotel. The STR craze has the opportunity to become at some point highly problematic with so many people buying "empty" houses. Just imagine if everyone that currently owns rental property converts them into STR...The rentals will do great and STR will face massive competition. At some point the margins have to come back in line but right now they are commensurate of the risk reward you prefer to take. I prefer the get rich slow through traditional rentals route as everyone needs a place to live and this method is time tested to withstand the ups and downs of the market. It has worked for so many people and built so many success stories well before STR became so hot.

I tend to stay away from what is hot at the time because I follow the logic of those like Warren Buffet who believe boring is more sexy. For example, tech stocks in the late 90's, or now for that matter will not find themselves in my portfolio. My friends will laugh and tell me I am losing out on sooooo much opportunity because my rents are 1/10th what they could be if I converted to STR but some day I will laugh when they go belly up in the down market while my tenant filled units keep chuggin along. I don't care about today, I care about the long term generational wealth and it seems you might be along the same thoughts so I thought I would share my personal rationale and why I chose long term rentals as my path to building wealth in real estate.

@Jordan Moorhead Yes, cash flow will not be possible buying on MLS, paying $50k over asking, in a sellers market. If you are only willing to play the game inside that box, real estate investing is going to be difficult for anyone no matter what market you look at.

Now give me a good off market, distressed seller situation where I can help solve a difficult issue, cash flow is attainable and desirable for any property type, in any location, in any market condition. The prevalence of these types of deals is directly correlated to the market conditions. In up market cycle they can be harder to find but in a down market they are ubiquitous.

Austin is certainly a great metro to invest and get good cash flow if you buy right. I love the phrase Money is made on the buy not the sell!

@Jordan Moorhead I am not selling my rentals but I am also not buying MLS properties for $50k over asking.

@Neil Narayan Yes sir I did and only history will tell the true story. Grandstanding in the good times is an easy feat for anyone with a voice. My guess is that it is mostly done to get attention and bring into the fold those who have less experience or historical perspective in an effort to gain short term. When was the last time you heard a real estate agent tell you that now (anytime) was a BAD time to buy to a newbie buyer? Never, that would not be very self serving. I myself have been in Austin nearly 35 years and lived through the 2008 crash first hand. To play it down as Austin had little to no impact is, well to say the least, something of a fools tale. Almost every street had 1/3 of the houses with for sale signs and nothing was moving. Foreclosure homes were ubiquitous. Prices declined significantly and many homes sat vacant in REO for months and months. Austin was not, is not, and never will be immune to the downturns in global real estate markets. Recognizing the weak and weakening fundamentals, not casting a shadow on those same fundamentals, and avoiding the trap of having a myopic focus on recent pricing performance serves to the benefit of the investor in their decision making. Spreading the false narrative of never declining markets does the opposite to distort reality and hinder good rational discord of thought. We are investors, looking for profitable and successful deals. When commenting on macro environment, the worst you can tell a well seasoned investor is that prices will never go down again. It tells them all they need to know about the lack of experience in the one speaking such nonsense.

@Neil Narayan I am always wondering who are these so called “experts” are that are referenced in articles like this. They never quote them by name so I can only assume the writer is in fact the “expert” they are speaking about. Certainly the health “experts” are all wrong left and right about the covid mania and suspect same about the real estate “experts” quoted in this article. I see zero value in a cheerleading article with no facts or statistics to back up claims. The true analysis us investors need to see include the facts and data that can be used to help us make real world decisions. Have a look at some more useful information here:

https://wolfstreet.com/2021/03/24/fha-mortgage-delinquencies-hit-17-5-in-30-metros-over-20-the-other-side-of-the-red-hot-housing-market/

The constant feed of cheerleading articles being posted by real estate “experts” claiming there will never be a drop in real estate is exactly the psychological sign that those of us that actually experienced the last major crash know to look for in an impending crash.

@Kenton LeVay your cash flow will be a net loss of $30/mo. Sell.

Math- rent x .75 subtract PITI.

@Jacob O'Connor I know someone who just purchased a $4.6M complex at 3.2% cap rate....people are throwing good money after bad deals all day long right now!

@Sarah Davis go for a 4bdrm preferably master downstairs and others upstairs with a game room/ 2nd living room. This way you all have enough space. I started this way and it made living with others much easier. Plus you can add another roommate and it will rent for higher later on as well.

@Michael Bruns

Not everyone can buy a house from a seller that owes more than it is worth. Yes, even in these market conditions that is possible.

Some people are also very private, don’t want tons of people running through their homes, afraid of covid, don’t like dealing with pushy real estate agents, etc. The reasons that someone sells off market now are the same as ever before.

Need to remember the reason we buy off market deals is to help people out of tough situations and solve problems not to take advantage of them. This is why we serve a value to the community. If you are guided by the right morals you will be successful. If you are trying to steal grandma's house from her....not so much.