Thoughts from a CPA and Looking at Puerto Rico by Austin Hendrickson
I hope everyone is having a great year so far. The real estate market is still very competitive with numerous investors fighting for deals. My personal residence has received a few direct mail pieces and I am not an out of state owner or delinquent on my property taxes, so not sure how I got added to a list unless investors are mailing large non-targeted lists. I have looked at many different properties but have not pulled the trigger on much this year as most of the deals the numbers are not making financial sense.
As a CPA I am seeing some red flags in the mortgage industry, with some situations reminiscent of the 2008 mortgage collapse. I have seen some mortgage lenders attempt to tell some clients to not take deductions on returns to raise their taxable income to qualify for more mortgages and some other lenders loosening up their standards. This is not to say another crisis is coming but perhaps a correction is in the future and investors should be diligent about not being too optimistic on deals they are looking at. As long as the deal cash flows with a decent safety margin or the property is acquired at a steep discount then a correction should not have too much of an effect. It will be the flippers and the over-leveraged investors who may be in big trouble upon a correction happening.
I have continued to look at other markets, specifically Puerto Rico. My business partner did some deal hunting down there and we put in an offer on a 10-unit bank owned building so hopefully that one goes well. It would be a very large project especially in a newer market however I have a network of people I trust set up there. For now I am focusing on selling a few properties I have in Minnesota to free up cash if the deal does go through. Otherwise I am also focused on learning more, especially through deals as that is how we learn the best!