Making Multifamily Money - Jan 10th 2024

Real Estate Updates

I am starting to look for a single family house to buy in Southern California as a primary residence and I will be documenting my home buying journey on Youtube.

From just scanning Zillow and going to a few open houses, there is low inventory despite high interest rates of 8%.  Due to low inventory, house prices didn’t really drop in California making it unaffordable given interest rates have doubled.  Why is there low inventory? Everyone (myself included) is sitting on their low interest rates of less than 3% so why sell and lose a good loan unless you are in a distressed situation.  

Assuming the average cost of the house is $1,000,000 with 20% down payment and 8% interest rate, your total all in cost per month to own a home is around $8,000/month (mortgage, interest, property tax, insurance, utilities) not including repairs and maintenance.  To rent in Southern California, it’s $2,500 which includes all repairs and maintenance.  Even if you househack your spare rooms and rent out 2 bedrooms for $1,000/month each, your total cost will still be $6,000/month with less privacy.  This is discouraging…

Real estate prices are going up and interest rates are going up, making me more inclined to never sell any real estate and continue to rent.  I consider my low interest rates as assets at this point.  Once interest rates drop again, housing prices will go up.  California is turning into a renter state since you can rent for one-third the cost.

Right now, my options are to continue renting at $2,300/month or moving into one of my single family homes that I already own if I want to maintain the status quo.  An alternative is buying new builds or new construction if available in your market.  You can have the builders pay down your interest rates if they are motivated to unload some properties about to be completed.  I would love a new house, but Los Angeles doesn’t have too many options from what I have seen.

What I Learned

To become truly successful, attach the reward or dopamine response to the daily actions and not the actual outcome.  Attaching the reward or dopamine to the final outcome will leave you feeling underwhelmed once it is finally achieved or make you expand the goal (i.e- going from 100 units to 1000 units) 

For example, if your goal is to retire from real estate with 100 units then attach the reward to making offers on deals consistently, not the final outcome of 100 units.  This will keep you motivated while keeping you present and less anxious 

Weekly Self-Reflections

Quiet your inner critic.  I am the most critical of myself, but it doesn’t serve me to be overly self-critical to myself.  Imagine if my inner voice was a friend.  Would I want to be around that friend? Probably not so it’s best to catch my inner self-criticism early on to prevent it from festering.

Video of the Week

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