All Forum Posts by: Varun Parkash

Originally posted by @Thomas S.:

There are far better, passive investments, that will return higher rates. Put your money in a REIT and save yourself the stress of owning real estate.

I have no knowledge or research on it yet, to establish trust without it is dangerous. REIT can yield 6% but i am not sure if i control any appreciation or get any in that set-up. To make 6% of 60k (down payment) = 3.5k/year is not really my end goal. Please let me know if i misunderstood the REIT concept completely. Ignorance is not always a bliss.

Originally posted by @Andrew Ware:

I agree with Jay Hinrichs that this is a rough place to get advice about appreciation plays and I am one of those people. But I have evolved and nuanced my opinion over time.

I still believe it’s a mistake for beginners to start with a house that is only good if the market goes way up. I don’t want to see a situation where you don’t have any wiggle room the market goes down, there is a big expense with the property like a lawsuit, or you make mistakes because you are a new property owner. This is a blueprint for a big financial loss.

But if you have good financials without counting only on your job or have other money you can tap into. Or have other properties that can help ride out any storms. And you should also have experience dealing with tenants and properties. I think that having strong appreciation is an important part of wealth building.

It sounds like you are more in the former group.

Hi Andrew, thanks for chiming in. This is my 2nd investment property (this time - outside CA), I don't have experience with tenant issues yet because my 1st tenants in the 1st property have been long-term and good. 

Regarding lawsuits, I will have to secure myself under an umbrella insurance policy. A down-market can create issues of lower rents - which just like any other investment is a calculated risk. 

I make sure to get married, 700+ credit score tenants with stable jobs, no criminal history even if it takes more time to rent it out. I am in the 2nd investment for 5-7 years minimum. 

I have multiple income sources - so not a hand-to-mouth situation here. 

Originally posted by @Jay Hinrichs:

@Andrew Ware   Andrew I was making the assumption he was talking about PRIME IRVINE or OC ( Orange County CA )  not Texas or some other market were there is a lot of new construction that is being sold for rental purposes.  if its those markets then I would have different advice/opinion.

 Actually, this property is in North Atlanta region (not CA)

Originally posted by @Brent Coombs:

Originally posted by @Varun Parkash:

Originally posted by @Brent Coombs:

@Varun Parkash, so, about this "standard 20% down - FHA loan (30yr)". Are you saying you'd be living there (but will put down 20% instead of 3.5%, just to avoid Mortgage Insurance)?

Well, you'll always need to live somewhere, so why the worry about its CoC return?...

 Nope, its an investment property in which i will never live.

If that's allowable, it's news to me. Are you sure that it's an FHA loan (ie. reserved for owner-occupiers only, in the case of 1-4 unit buildings, afaik)? [What have you learned, that I haven't?]...

 Please excuse my error, it is an investor loan, I forgot the jargon for it.

Originally posted by @Brent Coombs:

@Varun Parkash, so, about this "standard 20% down - FHA loan (30yr)". Are you saying you'd be living there (but will put down 20% instead of 3.5%, just to avoid Mortgage Insurance)?

Well, you'll always need to live somewhere, so why the worry about its CoC return?...

 Nope, its an investment property in which i will never live.

Originally posted by @Brent Coombs:

@Varun Parkash, it looks like you're trying very hard to talk yourself into this. Are you simply looking for confirmation of what you've already decided, or are you genuinely expecting/hoping to be slapped around so that you'll snap out of it?

If a lot of the purchase price would be borrowed, then you'd be taking such a big risk!

And if none of it's borrowed, then is that the best investment you can come up with?

So, either way, my vote is: leave such new builds for owner-occupiers! Cheers...

Haha, well, it is a standard 20% down - FHA loan (30yr). I am not into flipping/older-property investments/rehabs or multi-family (will eventually get into them) at this stage as i don't have the man-hours to burn at the moment - so it is a class A property in good neighborhood.

I am not counting on this investment to give me $3-$5k per year - this is more to park the money & bank on some appreciation in next 5 years and then do a 1031 exchange. I already missed that boat of earning 3-5k in this area by 9-12 months. 

I am yet to find a deal on a Brand-New built - Class A SFR where i can get more than 3% COC ROI in Dec 2017 (with exception of 5% COC ROI on 200K 12+ year older condo's - which don't appreciate as much as an SFR) - such deals as per my research no longer exists unless you inherit properties or have solid connections with owner-selling directly or perhaps you guys may know it better.

Any properties closing in Dec 2017 can give 5-10k discount in selling price but to rent them out also takes 2-3 months in winters - so that vacancy eats up all the rent and you have to role the dice between booking something and have it built out by summers and then rent it out or suck-it-up now and close it in December to check your luck. 

I spent quite a lot of time researching Austin/Dallas markets, to get positive cash flow there with 2.5-3% property tax rates is nearly impossible unless you bought in early 2016 (look at homes sold data and its openly evident). 

Guys, i have been actively hunting down for a SFR property and came up with following analysis after doing BB Rental Property Calculator on a brand new SFR:

COC ROI = 2.78% when i have estimated:

1% Capex, 1% repair, 1% management (which means self-manage)

As per knowledge gathered on BP podcasts, it is advised to go for 12% COC ROI, in today's market, i could have gone in with 7-8%, but these numbers are looking bad.

This leaves me counting on appreciation alone. Is it better to research REIT's or look/wait for another deal, as market continues to remain on the high and this area appreciated 5-6% already in last 9-12 months. Also, speculations remain that market will crash after 3 years by 2021 (been hearing this saga since 2015 and we have been running in a record bull run ever since 2012)

At times I wonder that people who actually make loads of money from real estate investments will put out their secret study analysis here for everyone else to grab - while that area is still on a path of progress. The 80 city list fails to mention many such places. Google alone isn’t enough.

1. If I own a primary home (State A) and then buy a second home (State B) as vacation home - thousands of mile away - and eventually move to vacation home due to my job change - is it possible to covert the primary home to vacation home (refinance to get lower rate - but that won't work because primary home already got the lowest rate?) and convert the vacation home to primary and have it refinanced to get the lowest possible rate?

2. I read somewhere that a person can have 4 mortgages at a time as the max limit, is it true? For a couple - this number increases to 8 if husband-wife each own their independent properties w/o having each other's names on the title docs? Please share some constructive strategies if this is not true. I know that to buy beyond 4 properties - traditional big bank financing doesn't work easily and often regional/credit/small banks give out loans once you can show them your positive cash flow & appreciation portfolio.

Appreciate all insights from amazing folks on this forum, happy RE investing :-)

Originally posted by @Amit Bhavsar:

@Rick Baggenstoss

Rick thanks for pointing out James to me. Appreciate the details you have provided.

@James Park

Hello neighbor ! Went through your post and find the details very informative. Your research has definitely saved me a lot of time. I have been eyeing the Alpharetta, Roswell, Johns Creek, Cumming areas for some time now and cant agree with you more. Like many of naïve real estate investors, I have missed out on some of the deals in the recent prices as always had someone outbid me and the homes closed fast.

You had mentioned on my post that South Forsyth, looks promising. Also with its lower property taxes it looks attractive there. Some of my friends who appraised their homes (residential not rentals) for refinancing have found that their appreciated significantly. While I find its a long commute from Atlanta for folks working, I

Can you advise on which zip codes/neighborhoods in S. Forsyth would be good to focus on for rental markets.

Thanks again for all the details provided.

Amit

 Hi Amit, did you purchase property in N.Atlanta?