Archinect
anchor

As architects, where to invest? Real Estate?

Hi to all,

We are investing in small properties such as 1-2 family houses. If you have the money available, do you prefer to invest in small or big projects? What are the benefits for each case? please let me know your thoughts.

obhastudio.com OB | X

 
Sep 6, 17 1:54 pm
Non Sequitur

Is this a serious question?

Sep 6, 17 2:12 pm

Yes it is. If you have any opportunities to invest, where you put your money small or big projects? 

Sep 6, 17 2:33 pm
chickaletta

Just to clarify, the two choices are big and small, correct?

Sep 6, 17 2:36 pm

Yes, they are. Just you know, we are investing in small projects right now. However, I have friends that are investing in bing projects. For you guys, what are the best choice in overall?


Sep 6, 17 2:40 pm
LITS4FormZ

Always Go Big!

Sep 6, 17 2:52 pm
won and done williams

Definitely big. Go big or go home. (Damn, LITS beat me to it.)

Sep 6, 17 2:52 pm

How big? What do/did you do to go big? what is big for you?

Sep 6, 17 3:25 pm

Size isn't everything

randomised

I'd definitely invest in Small's properties since he's the original BIG.

Sep 6, 17 3:34 pm
JLC-1

big is 180 mph winds 

Sep 6, 17 3:56 pm

the dark hatched area

Sep 6, 17 4:49 pm

except for the fracking

geezertect

Glad to see Florida was readmitted to the Union.

(it's underwater, but yeah)

jla-x

BIG Underwater live work play communities with North Korean proof bomb shelters.

fictional\_/Christopher

The great lakes?

if you mean North Korean proof like whiskey, then yes

Agree with you David Curtis

"Size isn't everything"...Big ideas with one step at the time....

Sep 7, 17 2:23 pm

Ideas are easy, it's the follow through that seems to be a problem for many (if not most) people.

mightyaa

The number one rule is location.  Better to have a small project in a hot area than a big one in a bad location.

Commercial big if you can afford it...  The why is higher returns because the rental rates get adjusted to the market, the quality of construction is better, better maintenance (also a minus because higher costs), easier to update to current trends, etc.   

Sep 7, 17 2:43 pm
Wood Guy

Oscar, if you don't know about it already, check out this site: https://www.biggerpockets.com/. They have a great podcast and an active forum and network for real estate investing. This one is also worth listening to: https://realestateguysradio.co...

I'm part owner of a few rental properties but we are gearing up to get more. The podcasts make it sound like Ohio, especially Cincinnati, is a place to get good deals right now. Personally I'd rather own more locally. Currently we have 1-3 unit properties but would like to get into the 10-30 unit residential market. Anything in the commercial world is a bit risky right now, as the market is changing rapidly. But people always need a place to live. Are you looking at buying and flipping, or buying and holding? 

Sep 7, 17 2:52 pm

In some point agree with you mightyaa.

Wood Guy. I like those links, thanks. However, you did prove my point regarding to focus in small projects first and then move to big projects. But you think is  a mistake for someone to invest in big projects right on the start than initiate with small project with lower risks?

Sep 7, 17 3:43 pm
Wood Guy

Oscar, it depends entirely on one's goals, aptitude, and a million other factors. In general, yes, starting small makes sense. Most of the guests on those podcasts are self-made and have a variety of building sizes, but almost all of them started small, and most still have at least a few smaller buildings. If they provide positive cash flow and can be used for equity.

But hey, if you can financially swing a larger project and have a good support network then why not go big? There's more to lose, but also potentially more to gain. 

wurdan freo

oscar... this is a pretty dumb question... but I'm assuming your lack of insight might be a language barrier... or greeness...common sense teaches us crawl before you walk... walk before you run... etc. 


Bigger projects equal bigger risk/reward... a small one family that nets the developer $200k when sold is great for a small develper. But if youre managing a billion dollar pension plan, you NEED to invest in bigger projects. whats your real question?

Sep 7, 17 4:45 pm

Wudan freo, thanks for your comments. However, I don't manage a billion dollar pension plan. I just want to get your experiences in small and big projects. Have you have any real estate portfolio? how many investments do you have? how many properties or houses do you have? Can you share with us any tips other than " A BILLION DOLLAR PENSION PLAN?

Sep 7, 17 5:00 pm
wurdan freo

Oh my dear Oscar.... here's some advice... "Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering." - Yoda

thisisnotmyname

Build a building for your firm.  Have part of it be rental space for tenant(s)

The most well-off architects I know have all done this.

The brokest firms I know are renting space in skyscrapers for "prestige".

Sep 7, 17 8:07 pm

I second this

ecnal

I always think education is a worthwhile investment.

Sep 7, 17 8:30 pm

Always? Have you conversed with students?

Non Sequitur

Not at 50K a year for a M.Arch.

Wurdan freo - thanks for your comments, but you sound with lack of knowledge and experience. I doubt you have any investment in real estate. Anyway, thanks for your comments.

thisisnotmyname - I like your comments and in some part is true. thanks for your opinion.

ecnal. - Agree with you. However, we need to get financial education as well in order to do well in life.

David Curtis.- Can you elaborate more about your previous comments regarding "always? Have you conversed with students? I would add to your comments to the "public in general"

Sep 8, 17 9:35 am

Please do.

randomised

This material is gold for another Zoolander film.

Sep 8, 17 2:31 pm

you are welcome

randomised

You're not the main character here though ;)

radomised and David Curtis.- so, welcome to zoolander film, you are the duo directors. 

"Non Sequitur - Not at 50K a year for a M.Arch"... I am still thinking is a good investment as long as you will be educated in financial matters for your professional life or business. When you start to make smart investments in small projects and then move to medium or big projects, you will see the difference.

OB | X @ obhastudio


Sep 8, 17 3:07 pm
Non Sequitur

No, it's not. There is no situation where spending 50K a year on an M.Arch can be seen as an investment.

Even if it means you get to sleep with a super model?

Non Sequitur - Depends, if you are able to make a profit in the future of this investment in your education, I think is worth it. Of course, if you have the diploma hanging in living room is different if you have it in your own office or firm, right?

Sep 8, 17 4:15 pm
randomised

I don't trust people who need to convince me of their proficiency, achievements or what-have-you by hanging their diploma(s) up on the wall, at home or in the office.

I hung up my license on the wall (after ten years) I was afraid the cats were going to break it.

Thanks guys for your opinions,. please let's go back to the original topic. I'd like to ask you, if you will be able to invest in small or big properties, Will you flip it or your hold it and crate passive income? please let me know your thoughts.

Sep 9, 17 7:58 pm

Invest in ammo and tequila, not necessarily in that order.

Sep 9, 17 9:11 pm
The dark hatched area
Sep 9, 17 11:34 pm
randomised

Flip or hold? SUPERFLIP!



Sep 10, 17 12:19 am

Make sure it is greased, before you "flip" it.

Personally I focus on quality. I find there are plenty of other people who focus on flipping.
Sep 10, 17 1:21 pm
geezertect

Impossible question to answer.  Too many variables.  Depends on long term appreciation, current cash flow, other investment opportunities, etc., etc., etc.  Why are you asking?  Curiosity?

Sep 10, 17 1:28 pm
He appointed himself cocktail party host
Sep 10, 17 2:12 pm
mantaray

We hold a few properties, currently 7 units total split between 3 properties.  It really depends so much on the rental characteristics of your particular market.  I'd say generally you will tend to make more money on properties with more units -- basically if you're doing residential rental market, your ROI for a single building goes up with the more units you can squeeze into it.  We're hoping to get into some 6-unit properties b/c in our town that's a real sweet spot for income generation.  It really depends on the characterstics of that particular neighborhood, however... and in our town, landlords typically take on a lot (not just maintenance but utilities costs too); I can imagine that if you're looking at a market where tenant takes on full utilities costs, the numbers would be better for fewer units (even single-family maybe).  Unit SIZE makes a difference as well... is your market primarily driven by families or college rental?  If so, you might do better witha 2 3-bed units.  Is it more solo folks? then 3 2-bed units will make more money.  However, smaller units turn over more frequently and there's more competition in the market... 

All this off the top of my head, to say: pay attention to the dynamics of your particular market, and that's how you'll have your answer.  Our best performing unit is currently our lone single-family but that's because we picked it up for a steal so the mortgage is super low.  Really depends on so many different dynamics... 

Sep 10, 17 5:10 pm
mantaray

I second the recommendation for the Bigger Pockets podcast & website.

Sep 10, 17 5:12 pm
On the fence

Sorry....stock market is where I invest my money.

Sep 11, 17 12:02 pm
simonelectric

Yes, they are. Just you know, we are investing in small projects right now. However, I have friends that are investing in bing projects. For you guys, what are the best choice in overall?

Sep 13, 17 4:59 am

On the fence...Thanks for your comments, but I am rather to stay out of the stock market. if you are good at it. good luck!

Simonelectric... I prefer small projects for now and then move to the big deals.

In overall, I prefer to hold and create cash flow, this is the game of wealthy people. Flip properties, for me will be secondary choice. Of course, depends the transaction deal.

Sep 14, 17 8:52 am
randomised

Ehm Oscar... simonelectric is a fake account or a bot whatever...it literally copied your own response word for word, lol, and does so in other threads as well. Don't know why it isn't blocked yet.

Thanks for the information.

Sep 14, 17 11:14 am
cipyboy

On a much smaller scale scenario,would it be lucrative to buy a duplex on FHA ? one is yours, the other to be rented?

Sep 14, 17 11:21 am

Can be an alternative cipyboy. however, I prefer to go with traditional with 20% of the value of the property to avoid PMI. Everything depends how good is the deal and where is located.

Sep 14, 17 1:00 pm

2, 3 or 4 family-house is the ideal for small investments and then you can move and invest for  properties with more units.

Sep 14, 17 1:01 pm
chickaletta

Oscar, are you investing by getting an equity stake from design fees for these properties or are you using cash to buy them? If you are buying them, are you using your cash or someone elses? Do you manage the buildings you own?

Sep 14, 17 1:33 pm
jla-x

Don't put all of your eggs into one basket. 

Sep 14, 17 2:10 pm

yes, lots of baskets, definitely.

mantaray
Yes, cipyboy, ABSOLUTELY. GREAT way to get into the investment real estate game: build equity through your renters' money! FHA loans (typically 95/5 financing) are perfectly fine as long as your cash flow covers the additional PMI cost, until the point where you've built up your 20% equity (either through your standard monthly payments over time or, if you're lucky, through property value appreciation and a good refi) and then you can drop the PMI. After dropping the PMI you get a windfall of hundreds more income per month :-)

As in all investment real estate, whether any of this makes sense or not is totally dependent on the dynamics of your market and the specifics of whatever property you're looking at. But, in nearly any large city in the US (NOT Boston NYC or SF) the rental markets are strong and housing can often be found for not too much, if you have the bank's backing. And don't forget, the projected rental income helps to qualify you for the loan--the bank will take that into account, so you don't need to prove that your monthly salary can swing the entire mortgage. Most everyone I know has gotten into this game including quite a few friends who financed thru FHA loans. Best advice: if you're thinking about this at all, go to the bank early--even if you're nearly broke--to find out what your targets are and what the potential picture could look like for you. Then watch your specifical local market-- BOTH for home sales and for rental rates-- for at least 1 full year (hopefully more) before you actually jump. Have fun!
Sep 14, 17 5:47 pm
cipyboy

wow. that is a ton of good advice right there. thanks mantaray

mantaray
FWIW, I disagree with Oscar about only taking on 80/20 financing (to avoid PMI). That's because, unless you live amazingly cheaply/ don't have a family, it will take quite a few additional years to save 20% (plus financing costs!) than 5% down -- and meanwhile, housing purchase cost is going up in that time (in most markets outpacing savings interest), thereby erasing the value of part of your savings that you've been working so hard to put aside. Generally, the absolute earliest you can possibly afford to buy into the rental market is best (assuming as always that the pro forma of your purchase works out). That way, you can start lining your coffers with rental money which outstrips the cost of the PMI anyway, in the same time that otherwise you would still be saving for 20% down -- and if you're in a decent market, your building might appreciate enough for you to refi and drop the PMI before you alternatively would have finished scrimping and saving to your 20% anyway. The rental real estate market works on monthly cash flows -- not on overall total investment cost (after 30 years mortgage)--so it makes less sense to save up extra down payment in advance than it does with a traditional single-family residence. Basically you are taking time to save in advance, spend more upfront, and then essentially slowly repay yourself at a slightly higher monthly rate than you would otherwise get -- versus buying something quick at a lower price, and getting slightly less of a monthly income for the first few years (until you drop your PMI at which point investment returns for both options would match).

Does that makes sense? Investment property runs on leveraged investment. It doesn't usually make sense to leverage yourself slightly less by waiting 5 years longer.
Sep 15, 17 12:23 pm
mantaray
Plus, eliminating the idea of saving to 20% down means you can potentially afford a larger property with more units at 5% down, and as discussed above, the more units, the higher (exponentially) your income stream so basically you want to take what money you have, and buy the biggest thing you can afford -- which is probably going to mean a lower down payment (unless you are wealthy already haha!)
Sep 15, 17 12:26 pm
wurdan freo

Oscar... in a previous life I owned 5 units. Sold them all. Was a landlord for over 5 years. 


Please tell me, in Bayamon, what constitutes a good deal? 


Purchase Price?


Location?


Rental rates?


Target tenant?


And seriously... what's the point of your question? Because it seems very vague to me. Big project or small project? 

Sep 15, 17 6:00 pm

I'd say invest in attempting to "reform" a (former) sex worker, then when she and her "agent" ignores you repeatedly, focus on musicians. When I say invest, I mean your time. Your results might vary.

Sep 15, 17 6:47 pm

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