patrick.net

Eman says

Fort Wayne,

Real estate is local. Without knowing the market and the parameters, how can anyone offer any inputs?

For me, I’m always a buyer and seller regardless of where we are in the cycle of the housing market. I’ve shared examples on here. The latest one is 846 Adams St in Albany. The listing agent said it would be ours if we offered $680k for it so I passed. I would be a buyer at $620k. It was in contract, and then fell out of contract. It comes down to who can perform, not the highest price. Agents don’t get paid unless the deal is closed.

thanks. any tips you can share on what you look for in a rental? financials i mean. out here it’s all over the place, 2,000 rent is not unreasonable for a 3/2 sfr. so i’ve been basing my buying criteria just off rent assuming 10% vacancy… out here that’s not unreasonable.

Fort Wayne,

I look at the numbers. Each building has to be able to sustain itself AFTER 6-12 months max. No one is going to sell us a property with 7-8 cap as people like to believe. Ask yourself this question, if a property gave you 7-8% return and also appreciate, would you sell it?

In general, sellers want market value, or even future value when they sell. I don’t mind paying “current market value” where I know I can unleash the upside potential to make the asset worth more.

Example: We just got a 35-unit asset sent to us for $6M. It’s not in our core market, but close by. That’s $172k/year. The asset is vacant and needs a ton of work. Let’s say it would cost $50k/unit to renovate and bring them up to snuff. They would worth $275k/unit once rehabbed. That’s about 80% ARV. Worth the effort? 🤷‍♂️

Rubicon says

“ You would have to factor in invested differentials between rent and owning, not just nominal paper equity gains, and equalize the equity gains against maintenance costs, insurance, taxes, etc.”

Nominal Equity gains is an added bonus for later in life when you retire early. Need 1M USD? Just sell one your rentals. On any comparison of renting vs owning, I would factor in ever increasing rents too to make it more realistic. Many homeowners today either paid their house off early or pay less in PITI than someone renting a 3B/2B.

I don't think residential is bad, but I know very few people that make it long term. They get roasted at some point. I fucked up and didn't buy my neighboring towns post office when interest rates were low. I could have had a $300k asset paid off in 15 years for next to nothing monthly with debt. When was the last time you saw a post office move? They generally don't own the land outside of major cities. Even big suburbs. It's all leased. And they don't move.

Rent. Moving to a new area, so won't consider buying for at least a year. But beyond that I don't buy at the top, as I don't like loans for more than the asset is worth.

Nobody ever went broke by selling too soon, bankruptcy courts are full of those who tried to sell too late.

Rubicon says

AmericanKulak says

Nobody ever went broke by selling too soon, bankruptcy courts are full of those who tried to sell too late.

Speaking of bankruptcy, we have historic low distressed sales

These stats are rough. Banks are going the deferment route after the last crash. Or just simply not foreclosing on owners. Banks suck at being land/property owners. I witnessed it first hand. They will figure out a payment arrangement that keeps the balance sheet solid. Many owners are FHA and VA and they have insurance to cover a default that they pay as well. It's highly unlikely that 2006-2008 happens again in our lifetimes. The loans were bad out the gate. Everything now is pretty solid and with low interest rates. People ain't moving and the banks are protected.

Only if they were over-leveraged to start with. Don't buy if you NEED the house to increase in value in order to make it workable.

Buy land in place where you can grow crops.

Bd6r says

Buy land in place where you can grow crops.

Lasagna Gardening is the new Bay Windows and Steelamogranite.

As a previous poster who was made madder by TDS would say:
How else can we grow the always important YAMS!

Eman says

Let’s say it would cost $50k/unit to renovate and bring them up to snuff.

Possibly so, but pricing on anything construction related is insane right now so that 50K might be way low.

AmericanKulak says

Lasagna Gardening is the new Bay Windows and Steelamogranite.

I was thinking more of 50+ acres.

First time I heard of lasagna gardening.