All Forum Posts by: Tyler Bobo

@John Erlanger

I'm not sure if I understand, so I probably don't!  
     If someone is buying at a 5 cap because they are anticipating a 10 cap, and they're going to rehab and force appreciation, or are in a strongly appreciating market due to rising rents, that's great.  But I do not anticipate rising rents or appreciation (except on ones I am rehabbing but that's not all for them) so if I want a 10 cap, I buy one like that or pass on the deal.  (Cap rate isn't my only factor, just using the 5 and 10 cap from your example.)

@Account Closed

To answer your original question on my last rentals:

I bought 2 mobile homes from one seller, both were on their own lot, so it was really 2 different properties, but one transaction.

Wasilla AK

$75,000 for both.

Property class was uh, mobile home... reasonable condition but if I had to class it probably B- or C+?

Cap Rate of 16.5% (not used much outside of commercial but I still like it on my spreadsheet)

ROI of 289% (I didn't put any money down at all, just some closing costs, so that number looks way higher than it would if I would've put money down) That's after accounting for 10% vacancy, 10% maintenance and 10% management, though I self manage and generally have less than 10% for vacancy and maintenance.

Single family homes around here do not cash flow well or have good cap rates if you pay market rates and get market rent. But four plexes can do ok and you can do well buying broken stuff.  Our immediate area (within 45 minutes or so) doesn't have a lot of multi family over 4 units though there are some.

@Ruark Adam Barrientos

Read a good book on rental property management before buying. There’s lots of books about buying good deals and how to do that, but a good deal goes bad quick without good management, and it’s not rocket science, but learning the basics from a good book can save you tons of time and money.

I listened to Brandon and Heather Turners book on managing rental properties and thought it hit all the good points. I’m sure there’s several other good ones. I had been a landlord for 10 years when I read it so I knew a lot of it by then but I sure wish wish I would’ve read something like that sooner.

@Brett Tvenge

Hi Brett, appreciation can be huge, but the reason why some folks don’t include it in their business model is two fold: 1) it is very hard to predict when it will end or reverse. Fair to say that rents too can change, so nothing is guaranteed. 2) it’s less useful to people who want or need cash flow. Cash flow, and tax advantages of rentals puts money in our pockets we can see immediately without having to refinance or sell. Of course the mortgage pay down and appreciation are huge wealth building tools long term, most investors are starting out where the cash flow is more important to them now.

     I like to make deals that I think will appreciate well, but for my position, it has to be icing on the cake! The cash flow has to stand on its own, even when appreciation has been strong recently (which it has been in my market too, most markets I believe.)

Cool hat, it’s a must.

I do not pay extra. It “saves” very little, and I can invest and beat that by many times over.  Makes more sense when interest is higher or for people at different stages of their life that it’s not worth the effort to reinvest elsewhere. Or just for the peace of mine to have their Mortgage paid off earlier.

This is a very easy way to make a boat tin of money. It is not unrealistic to buy at 50% of value that you can sell it for on financing. I bought one this year for $60,000 and sold it 3 weeks later for $120,000. I didn't sell it at a crazy price, I bought it at a crazy price because it wouldn't finance. By the way, bought it right off the MLS and it had been listed for months. I usually get 10% interest, and I can sell the note if I need the cash back (at a discount of course)

     It’s not fool proof, but when done correctly I consider it to be one of the most safe, and profitable, of any investing strategy. 
And... when you have all your money invested you can borrow to do it instead. 

Another one I did this year that we did actually do work on: purchased for just under $50,000 and out $20,000 plus labor into it.  We borrowed the $50,000 and pay our investor 10% interest, which is $500/mo amortized at 18 years. 
   We sold it for $140,000 and received 15,000 down, balance is being collected at $1100/mo and also getting 10% interest.  Can’t remember how long the loan is because buyer has some irregular payments as well to accelerate it.  So in this one we will make 600 profit a month, and only 20,000 of our own money. Over the course of the loans if they go full term we make tens and sometimes hundreds of thousand in interest one one deal, and That’s after paying our investors tons interest too. It’s absolutely crazy more people don’t do this!

     My only complaint is that we don’t get depreciation like on rentals so we pay a little more taxes on these.

     Also works excellent with land. I’ve bought cheap land for $5,000 and sold for $12,000, no work involved, just providing people with opportunity they wouldn’t have had before.
     

Hunting with primitive and traditional archery equipment I make myself. Have harvested 2 moose and a bear. And small stuffs. Also mushroom hunting and fishing and naps.

I’ve bought many properties with none of my own money. You should have money for reserves Incase things don’t go as planned. There are many ways to do this though, and it happens thousands of times a day I would imagine. 
My usual deal is that I borrow from a private lender the purchase and often repair costs, so I leave closing with a check to fix the property. When it’s done, we sell it and have done the whole thing often with none of our own money. Or if you like rentals, now you can refinance it (if you need to to get a better rate or any other reason) and have your rental with no money into it. So yes, very possible.

Lots of good suggestions, and there’s always more fish in the sea if you can’t pull one together. 
Big thing not mentioned enough is the terms. The price is half the battle, and not even as important if that’s all they’re stuck on. I bought a piece of land once for “their” price, and “my” terms, which was low down, low monthly, and no interest. Didn’t mind paying their price at all.

     With her price can you assume the mortgage or take it subject to? Can you do a sandwich lease option and make it work? 

I have said many times explaining to new investors the importance of terms over price: “I will buy any property at any price if I name the terms.”

  Toxic waste dump for a million dollars? Perfect! Zero down, large negative interest rate. 
Sometimes the terms could be they pay me! If the price sucks, think about what terms could make it a win!

If I found myself in LA and had enough cash, Id buy a plane ticket somewhere else😂