Tuesday, October 02, 2007

Real Estate Slowdown Hurts My Cashflow

For the past four years, I've had some investments in four LLCs that flip properties in the San Francisco area. As you might have guessed, 2004 and 2005 were pretty good years for these investments and every couple of months, I was receiving checks for hundreds of dollars - and sometimes over a thousand. Now, however, the resale market has slowed down dramatically. Instead of the checks for $1,000 or more I was getting, the last check I received was for just under $20. And yesterday, for the first time since I've been invested in them, one of the LLCs did not distributed any money at all this period. The LLCs have not been able to sell some of their properties and so they have instead rented them out, so at least they are generating some positive return. But the particular one I got info on yesterday sold a property for a loss, so even the small rental income was offset by the loss.

I'm glad I decided to stop my investment at four LLCs. At this point, I think I can get a better return purchasing property and renting it on my own. (And, in fact, I bought Rental #1 instead of investing in another of these LLCs.) Now I just have to wait until the term of the LLCs is up (between one month and one year) so I can get my principle back for use in other investments.


Anonymous said...

Is there any (significant) risk of not getting your principle back?

Jason said...

One small positive is that as prices go up, and mortgages become harder to obtain, rental prices should go up.

Oh and passive income is the least taxed income, so that's nice too.

Shaun said...

Jason - yes, that is true, but I got into this investment for capital gains, not rental income. They are now becoming different from what I invested in in the first place.

Anon - there is always that risk, but in the past, the managers of the LLCs have always been pretty cautious about making sure they bought at the right price.

Anonymous said...

I have a home 2 yrs old trying to avoid forcloser in pearlriver la.not a flood area,almost2 yrs old and had no effects in the neighborhood from katrina.Just seeing if you know anyone thats intrested?If so contact me at!!!

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