All Forum Posts by: Account Closed

Hypothetically, would you be more comfortable being over-leveraged or under-leveraged in your investments? And what's your reasoning?

I'm thinking the most optimal position would be to have a lot of leverage, but with enough cash reserves so I can choose to bail myself out in case of emergency. I don't think I'd want to shovel my hard earned money into equity that may or may not lose value.

All thoughts and opinions are welcome! I'm just brainstorming over here.

@Max I updated my post above.  I think you should read "How to Win Friends and Influence People". It basically talks about how people don't want to be told your thoughts, because they'll naturally get defensive like I did.  So if you want to be more effective with people you need to practice filtering yourself. 

@Max M.

It's more of a change in my body language to give better first impressions. I don't care if you personally think that you wouldn't treat me differently based on my first impression, I'm in sales and witnessed through my own experience the natural animal reaction that people have to me based on how I act. You can sit at home all day analyzing the implications of what other people do and deciding if it's good or bad or sad, but in the real world people are going to continue doing what actually works for them.

And I'm not interested in getting sucked into replying to an endless stream of your thoughts, so I'm going to quit replying to you after this.

I don't fear making bad decisions so much because I trust my instincts and my brain. My actual fear is that I won't be taken seriously by tenants or other professionals because I'm a short female with a high voice. So I'm practicing my assertiveness by being direct, standing up straighter with my chin up, and speaking lower and not smiling, I notice myself furrowing my brow too. Every time I slip back into my old nice and sweet ways I'll get a rude reminder of my weak positioning and it straightens me right back out. It's like I'm developing a Napoleon complex which is fine with me because Napoleon is cool.

Thanks for all the perspectives everyone. That's awesome how rent prices are more stable than real estate prices.

My original thought was that competition from other landlords brings prices down because they'd be scooping up properties for cheaper and wouldn't need to charge as much. But I see it's a lot more dependent on factors and I'll just have to figure it out according to my specific markets.

@Sibbir Noman I'm not looking downtown but I am sticking to the city and near suburbs because of the abundance of brick 3-flats all close to each other. Hermosa, Cicero and Pilsen are piquing my interest right now. Pilsen is weird it's kind of gentrifying because there are a lot of artist lofts there. The half-gentrified, half not-gentrified neighborhoods are confusing for me because it's like apples and oranges combined mucking up the numbers. Do you remember which suburbs you found that have good CF?

@Roger Vi Your reasoning about how people still need somewhere to live even in a downturn is what got me into real estate. My genius epiphany was that the population is always increasing and everyone needs to live somewhere, and thus Landlord became "what I wanna be when I grow up". I'm accounting for 10% vacancy and conservative expense estimates when playing with spreadsheets. That's good advice about having as much control as possible over the things you can actually control. It's also like any other business where you cater to the customer. If your tenants are happy because you're an excellent landlord, you'll be more protected against market trends.

@Kendall T. I wonder if that's an example of the differences between economic groups. It sounds like your friend mostly had younger tenants without families to house that could move around more freely or something.

@Joe Villeneuve That's a great position to be in and now I'm thinking if I wanna incorporate that into my strategy. Good stuff to think about. Right now I'm looking at what I think are B-/C+ working class neighborhoods, where I'm assume people make enough to support their families but not enough to save up for their own houses.

@Bill Gulley Cool website! I'm going to go play with graphs on it now.

I want to make sure when I'm buying rental properties, that they can remain profitable in any market. I ignore the possibility of the value of the property increasing,  I only am going to make decisions based on paying low enough for a property that'll give me my desired cash flow. 

However this can all go down the toilet if for some reason I buy at a good cash flowing price in a hot market,  then the bubble bursts and forces rent prices down and I'm not cash flowing anymore.  

I want to minimize my risk as much as possible, does anyone who has been affected in 2008 remember how much your rental income decreased in relation to your property value?

Thanks in advance.  I'm a beginner still trying to figure everything out so all insight and advice is appreciated. 

Ryan Mullin is right about not wasting time with a menial job. Use your entrepreneurial brain to figure a way to make money. I myself am too lazy for a 9-5 so I figured out how to avoid it, so I got 2 sources of self employment income that pay more money than any job I'm qualified for, for less effort. And I'm not special,  anyone can figure this out. Start brainstorming about how you can maximize income while minimizing effort.  It's like a simple equation. This is your survival at stake here. Everyone is still competing against each other for survival,  it's just easy to lose sight of this fact in a comfortable society with safety nets in place.  You can't depend on others forever you only can depend on yourself. 

I also agree with Steve Olafson about using your emotions as a tool that communicates with you,  rather than dwelling on them. You can't logically figure out emotional issues no matter how long or hard you think about them. But what you can do is eliminate the root causes of negative feelings and move on. 

Ok I'm going to get out of advice giving mode now because I can go on forever lol.

Welcome to BP Max.

I've noticed that thinking about my past and how I've been or how things could've been just brings my whole mindset down.  Tying your identity to being a basement loser will only bring you down too. Actually remove the word loser from your vocabulary right now.  Right now real estate is your obsession and you need to stay focused on it to better the world,  that's all you should be focused on. No more arguing with randoms online,  don't let yourself play World of Warcraft for more than a certain amount of time every day, etc. Simplify the clutter in your head.  Ignore things that aren't helpful or don't matter. 

Hit the reset button, whenever you start getting sad about your past be like "What am I doing?" Then snap out of it and realize you can't change the past you can only change the future.  Get tunnel vision on your goals.  Set up systems for yourself,  build a system in your head for how you're going to make your goals happen. My goal is to amass wealth and donate it to physics when I die. All my decisions funnel into that end goal now.

Right now your first decision is to instill good work habits in yourself so you can get a job and save up money.  After you get that ball rolling, then you can keep making more decisions to build on your plan.  Don't get sucked into learning and thinking forever and not taking any action.  You take action today.  Drink some coffee and get out there.  I hope this helped. Good luck! :)

@Joe Villeneuve

@Eddie Werner

@Danny Duran 

@Lumi Ispas 

Thank you everyone for the thoughtful replies! This is all extremely useful advice for me and I appreciate it very much.

What are your methods for analyzing a potential rental market to invest in?

I have a specific market in mind(Berwyn, suburb of Chicago IL) to start my investing career in, only because I grew up here and am familiar with the area. However I don't want to miss out on other neighborhoods that have more potential just because I'm used to Berwyn.

My overall plan right now is to find and focus on one target area in Chicagoland that I wouldn't mind living in for a few years, find and buy a distressed 2-4 flat for cash in that area, rehab it and live in one unit while renting out the others. Cash flow and ARV are both equally important to me, so it's like a hybrid buy&hold / fix&flip analysis.

So what I'm asking is: What are the best ways to get data on rental markets? How should I be analyzing the data? What should I be looking for when analyzing the data?

I'm pretty much brainstorming right now, so all thoughts are welcome!