All Forum Posts by: Bill F.

Don't mention it man. That's why we are all here on BP. Good luck in your hunt for multi family and hopefully you don't get any more snow this year!

@Brad M. If you don't need the rental income to replace your W2 income and you plan on taking advantage of amortization, tax benefits , and appreciation vice cash flow, utilizing some form of leverage will allow you to have control of more units. You can keep working for the next 20-25 years while your tenants pay down your principal every month. When you retire you'll own the properties out right and can live off the cash flow. At least that's the theory!

Caveat to the previous sentence is that the properties you buy must support all expense, fund your reserves, and debt servicing, while having some cash flow left over as a buffer. The last thing you want is to pay out of pocket to have snow removed because Boston got hammered in the middle of May (or some other unforeseen expense).

My main point with asking what you plan to do with the money if you sold was to see if you had a deal you could pull the trigger on tomorrow if you had capital. If you did I would have suggested seeing the condo and going after the deal you had in mind.

Seeing that you don't, I'd recommend talking to banks and find out the best method to go about pulling equity from your property/properties. Having grown up on the North Shore when you say you want to invest " in the Boston Market, and towns/neighborhoods within a few train stops from downtown." I see that painting with to broad a brush. That could mean a lot of things. Do you want Back Bay or Mattapan, JP or Brookline, Quincy or Chelsea? Condos or Multi family, SFR or Townhomes? With a city like Boston you really need to narrowly define in what and where you want/can to invest. You can pick property types and go to the areas with lots of those types or vice versa. If you focus on one neighborhood in JP for instance you'll become an expert in it, knowing the good, bad, and ugly of it. Same hold true for property type. You could become an expert on the Condo market/rules and regs ect for Alston.

In terms of the best method to evaluate deals, since you don't have a focus on cash flow I'd stay away from Cash flow/ROI to make your final consideration. IRR/MIRR will give you a way to take account for ammonization, appreciation, and tax benefits.

@Joseph Rios I think you answered you own question. If you don't want them as tenants any more, don't transition them month to month.  I wouldn't turn this into a federal case though. Get them current today on their rent and agree to not show the unit for the next 11 days, but make it clear that their lease will not be renewed and come April 1 you will begin the evection process. If they can't/won't pay what they owe, start the evection process today.

With respect to the dog, you made your bed and now you have to lie in it. Take it as a learning point; in the future ensure they hold up their end of the bargain before you  give them what they want.

Hope this helps.

@Brad M. has great advice about an action you can take now to possibly increase your rents while you decide what to do. 

@Erik Cabral Welcome to BP!

The decision to invest in NJ or NC comes down to what your strategy is. 

If you want to buy and hold NC has much more landlord friendly laws than NJ.

If you are looking to flip Jacksonville may not be the place for you since there is a large amount of new constriction that you'll be competing with. The city still does not have an outer boundary like you are used to in the northern states so often time it is cheaper to move outward rather than rehab existing homes. @Chris Martin hit the nail on the head about population growth. Jacksonville is a company town that exists solely to support the Marine Corps. You will get very little appreciation in this market, mainly cash flow. 

About an hour south in Wilmington you may have better luck with flips owing to the fact that its a larger city with a college and a more diverse employment base. 

Feel free to PM me if you have any questions.

@Ryan Keenan DO you have a VA loan?

You cannot do a cash out refi and leave the home. Cash Out Refi's have the same occupancy requirements that as normal VA loans.

From  VA Pamphlet 26-7, Revised Chapter 6:

You also bring up another good point; do you track geometric return on Combined Annual Growth Rate.

@Account ClosedI'm out of my depth here, but from my understanding if you are offering ownership in a security (think stock, but not traded on an exchange) to individuals you don't know or have not meet, you must meet certain requirements with the SEC. If you want to find individuals to partner with you on a Joint Venture, I think BP has a dedicated forum for that.

@Corey G. I'll echo what @Tyler Mullen and @Jeff Wallenius have said; there is no one right answer. A hybrid approach may be the best. Save the CF for a set period of time or until your choice become more clear. In six months no better investment option present themselves, than pay down a portion of your highest interest rate debt and lock in that return. Determine how much to save based on the market at that time. Then wait another six months and repeat.

 I dislike the snowball method for the simple reason that it is a sub optimal choice. It has been shown to work better than the highest interest rate method for people who have a large amount of consumer debt. However, you don't have consumer debt, who have asset backed debt. You didn't make the choice to borrower from your future self in order to have gratification now. You are an investor who is making sacrifices now for their future benefit; you can see the rational of paying off your highest interest rate loan and don't need a behavioral psychology trick to keep you on track.

The difference in paying down an 8% loan vice a 7% loan on a $250,000 balance is $208 a month, which could cover most of the CapEx for one of your units.

@Bryan Hancock I think that the maximum any investor can expect over 25+ years is 20% or less. Granted this takes your question to the extreme of both capital and investment acumen and may not answer the mail when with regard to an individuals net worth, but looking at Berkshire Hathaway's returns since inception (1965) you'll see their compounded annual gain in Market Value is 20.8%.  Granted most everyone in the world does not have the opportunity, skill, personality, or access to funds as BH, however I think its a useful from the sense that:

1. We can track both their returns and growth of capital due to their availability in the public domain.

2.  BH's success stems from two partners growing a business over 50+ years.

3. While we on BP like to focus on RE, they got the start in investment and the insurance business and then expand from there. At some point net worth stops being about where you made your money in the beginning and more about how you allocated your capital once you have it.

From 1965-1990 they had wide swings in their returns (from -48% to +129% in the span of two years) in the past 20 years however their returns have reverted to the mean.

Check out their annual report for the chart (page 4) that has all of their returns.

http://www.berkshirehathaway.com/2016ar/2016ar.pdf