All Forum Posts by: Tom A.

Aaron Yates, your experience is pretty typical based on what I've seen and heard.

I should be at the MREI meeting Thursday so if you see me first make sure to say "Hi". I may be with my 11 year-old son, he loves the Shark Tank show and that's the theme of Thursday's meeting.

Welcome Brad! Good to hear you're off to a nice start. Make sure to say "Hi" if you see me at one of the REIAs. I'll probably be at the MREI in Troy on Thursday. They're doing a "Shark Tank" type deal making thing.

Welcome Aaron! You'll find lots of helpful people and a huge archive of knowledge from folks who are successful, positive and willing to share.

Don't let the negativity you encounter in your social circles affect you. They just don't get it, and that's OK, RE investing isn't for everyone. The negativity isn't uncommon. Sometimes the resistance comes from those who are unnerved by someone else taking initiative and working a plan. Get to know other local investors, you'll find support and encouragement from like-minded people.

Originally posted by Agha Abbas:

Joseph M.... I appreciate the fact that San Francisco is not a high yield area, but am I right in believing the fact that the property market is much more stable than Florida or Michigan?

Historically more stable? Perhaps, since Michigan did not have a housing bubble but did catch the downdraft of the economic collapse and the decline in manufacturing employment. Florida did have a big housing price bubble and fell hard. I'm not as familiar with SF's RE market but they did have a bubble as well.

As to the future, that's not easy to predict. SF may have a bright future due to the tech industry influence and the desirability of the city. That doesn't direcly translate into it being a good place to invest. The median home price is now over $800K. They also have rent control laws in the city for some properties, and a very strong tenants' rights organization.

Unless already high SF area wages shoot up, how much more price increase can the area's workers afford, especially if/when interest rates go up? On the other hand, Michgan and Florida have lower-priced real estate and have been harder hit by price decreases. They may have more upside.

Of course, I and others could argue the opposite will happen. Frankly, no one actually knows.

Price appreciation is speculative. Be careful you don't talk yourself into something that isn't guaranteed to happen.

Diversification is a good idea but beware of what has been called "deworseification". Different isn't always better. Investing in SF is, in my opinion, a move away from cash flow toward speculative hopes of price appreciation. Perhaps a better strategy is to invest in another cash flow market like Ohio or Tennessee. Or double down in the areas you are already in. There's value to knowing the area and having a known good property manager.

I don't have first-hand knowledge but see http://www.biggerpockets.com/forums/92/topics/73036-harbour-portfolio-lp for more on Harbour Portfolio.

I'd talk to a title agency to get some clarification on the tax status and ownership of the property.

Landon, I don't do mobile home investing but there's a book called Mobile Home Wealth by Zalman Velvel that I've come across that seems like a good read for someone in your position. At $12 on Amazon it's pretty low-risk.

http://www.amazon.com/Mobile-Home-Wealth-Zalman-Velvel/dp/0757002374/ref=la_B001JSHDH0_1_1?ie=UTF8&qid=1372041992&sr=1-1

There are others on the subject as well. A few books and numerous evenings reading Bigger Pockets forums and you'll be a lot further along the learning curve.

The functionality that Mike talks about is really helpful. There are a few other forums I use and although they don't offer email updates on threads, there is a little symbol next to thread title on the main page, which, if clicked, takes me directly to the first NEW post. It apparently knows when I last visited and what the last read post was. That would be a great feature.

J Scott's new construction thread is one that would benefit from that as it's already 9 pages long and I anticipate lots of us will be checking it on a regular basis over the coming months.

Welcome Allan! I think you'll find being in the dealership business and having flipped a few cars is actually pretty good grounding for real estate concepts such as making money when you buy (right), flipping wholesale and retail deals and keeping on top of the market.

I agree with John. The likely outcome is a cleaner balance sheet and enhanced viability going forward, as in a corporate restructuring.

The threats to assets like the historical car collection or the truly outstanding art collection at the Detroit Institute of Art are worrisome from a cultural perspective but not likely to affect real estate investment.

There's a real difference in perspective between those on the "inside" and folks around the country. The talk about bankruptcy makes outsiders nervous, understandably. What locals think however is that it will likely make things better. The problems outsiders fear will occur have actually already happened, and most Detroiters have just had to adjust to poorer police response time, unmaintained parks and other issues with city services over the last 5, 10, or 20 years. There's even a certain resiliency that's developed in the neighborhoods with the knowledge that in some matters, you're on your own.

Despite all the issues, parts of Detroit are thriving. At a suburban REIA last night the speaker, owner of a RE licensing school and a licensed broker and appraiser herself noted that the highest increase in value in SE Michigan last year was in the Midtown Detroit neighborhood which went up 40%.

This is not a case of $5K houses now being worth $7K. :-) Midtown is home to universities, cultural institutions and medical complexes and one of the top destinations for young professionals that choose to live in the city. Rents are also spiking there.

See this 6/18/13 article from the Detroit News, "Downtown Detroit rents go through roof":

From The Detroit News: http://www.detroitnews.com/article/20130618/BIZ/306180020#ixzz2WsNorQNq

Originally posted by Mubasher Riaz:

For a property, cash on cash return is net operating income/money I invested however when mortgage is involved, how can one calculate there return after paying off all the interest annually? Thank you

Not to get too complicated, but be aware that Cash on Cash return isn't the whole picture. Your level of risk (variation or volatility in return) depends on, among other things, your degree of leverage (mortgage or all cash purchase).

Stock market investors can buy stocks on margin, meaning they borrow some of the money, and that amplifies their gains or their losses. The same holds true in real estate investing. A highly leveraged investment can show high Cash on Cash returns, but be very vulnerable to small swings in cash flow. Both on the high and low side. The same investment property with the same swings in cash flow will show smaller changes in Cash on Cash return if it was bought with cash or just a small loan.