What would YOU like to learn about real estate investing?

[BrandonS85]

What was your messaging? Post card, yellow letter, professional letter? We are only seeing 1-2 percent response rates.

More or less just "I'm a local landlord buying houses, please call me if you'd ever consider selling this" and they did, some at decent prices.

 

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[gClaw]

What is a 'decent' price?

Knowing as an investor you make your money when you buy...

You're not buying at FMV so what is your criteria when you're buying a property as a landlord that you use to determine if it's actually a deal or a dud?

You buying SF properties needing just lipstick (cosmetic work) or total rehabs or hoarder houses or...?

Glenn

 

[BrandonS85]

What is a 'decent' price?

Knowing as an investor you make your money when you buy...

You're not buying at FMV so what is your criteria when you're buying a property as a landlord that you use to determine if it's actually a deal or a dud?

You buying SF properties needing just lipstick (cosmetic work) or total rehabs or hoarder houses or...?

Glenn

For me it's a bare minimum of 16% NOI.

Some of both.

 

[Drew D]

Hey, I have a few questions I've been wanting answered for a while.

What's the minimum amount of money you'd recommend someone start with?

Do you recommend someone move for the sole purpose of real estate investing? Maybe property is to expensive in ones current location or can be bought much cheaper elsewhere? Do you think an area with more expensive housing can be more beneficial and it would just mean they would need to start off with more capital?

I should clarify that my interest is in rentals.

 

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[AdamMaxum]

#1 - I've been doing it more or less for a while and have it figured out. Now having said that, I'm gonna try and get a group of complete newbies to real estate and teach em how to do it this summer, record it all and use that for the youtube channel, hoping to see if it comes out well or not.

#2 - I rehab till I feel it's safe, secure and a decent fit for the market. Some stuff I do nicer, others I don't Right now I'm trying to figure out how to make something bullet proof AND look nice.

#3 - Sure, the thing about MLS you need to realize is that if it's price right, it will sell VERY quick so you need to be ready to look and buy immediately.

I appreciate the feedback, but I feel like there's no substance to the answers (not just mine) and you're about to sell me something.

 

[Daniel Pitta]

One of the projects I'm seriously taking on this year is to record the entire process of starting out, finding a cashflowing property, purchasing it, rehabing it , marketing it and earning residual monthly income from it.

As of today I've bought 49 rentals since July 2013, with another 2 under contract set to close in about 2 weeks. They make great cashflow, but on top of it I've set back a massive nest egg in terms of equity for some time down the road should I ever desire to wind down what I do. My goal is 500 rentals over say the next 5-7 years. At that point I expect to have no less than $25m in properties + $1m/yr in residual income AFTER outsourcing it all to a property management firm I'll be founding at some point in the future, in order to offload my workload onto other people and make it more fastlane-ish.

So, as a part of this, I'm reaching out to all the online communities and asking what YOU would like to learn about real estate investing. My hope is to take the top questions I get and show how things work in an actual, operating business that I run that is actively buying/investing/making money.

The top question so far has been "Where are you finding good real estate deals" so I put together a 17m video going over every single rental I've bought through today. I'm looking for input on format, pacing, editing and what ever else people want to give feedback on, but most importantly I want feedback on my video content.

Here's the first one -

View: https://www.youtube.com/watch?v=yVhP0-fzd7s


One suggestion I've had, which I may very well do is do a 3-4 minute video per property and talk about the history, and go into detail of how I got em, cashflow, my costs and whatnot.

Thanks for this, I will check out your videos and circle back with my own personal questions.

 

[BrandonS85]

Thanks for this, I will check out your videos and circle back with my own personal questions.

Sounds good, let me know. I've posted a couple videos about this triplex I've got in contract for $15k that should be a good money maker. I'm hoping to get it documented pretty decently when it's ready to close, however right now we've still got ~45 days left till we do that.

 

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[Daniel Pitta]

Sounds good, let me know. I've posted a couple videos about this triplex I've got in contract for $15k that should be a good money maker. I'm hoping to get it documented pretty decently when it's ready to close, however right now we've still got ~45 days left till we do that.

My goal is to save up ~$20k (more than halfway there) within the next 8-12 months, search for duplexes and 3-4BR homes in my area (DC Metro area - Montgomery County I.e. Very expensive) Specially for an owner-occupied rental. Once I find a good deal, I'll get on an FHA loan with seller's assist, live in one room, and rent out the remaining 2-3 units. Once the equity is added, either through forced appreciation in refurbishing the property or through paid down the mortgage (ideally both), I plan to refinance to a HELOC, eliminating my monthly PMI payment and closing costs for if/when I sell the property. You can actually get a first lien position HELOC with your local credit union, which I wasn't aware of until recently.

 

[BrandonS85]

My goal is to save up ~$20k (more than halfway there) within the next 8-12 months, search for duplexes and 3-4BR homes in my area (DC Metro area - Montgomery County I.e. Very expensive) Specially for an owner-occupied rental. Once I find a good deal, I'll get on an FHA loan with seller's assist, live in one room, and rent out the remaining 2-3 units. Once the equity is added, either through forced appreciation in refurbishing the property or through paid down the mortgage (ideally both), I plan to refinance to a HELOC, eliminating my monthly PMI payment and closing costs for if/when I sell the property. You can actually get a first lien position HELOC with your local credit union, which I wasn't aware of until recently.

It's a very useful tactic to get your foot in the door of high cost of living areas. In my area, there's just tons of properties cheap because most do not like the appeal of low-end , cheap properties. It would be like investing in the sketchier areas of Baltimore & DC. I've built a pretty decent business model around it and continue to do well. For house hacking though, if you're in a good area there's great ways to make some serious capital. I remember when I got my RE license in 2006, one of the guys there had just come back from Florida to Ohio. He house hacked his way from a $150k dump to a $850k one in the matter of just 4 years, living in it while upgrading.

 

[kubikdanon]

@BrandonS85 , Could you PM me? I am in Cleveland area and I am trying to get into real estate game, I have ~$50k to invest, and I'm trying to understand where to start.
I would greatly appreciate if we could talk a little bit.

 

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[Daniel Pitta]

It's a very useful tactic to get your foot in the door of high cost of living areas. In my area, there's just tons of properties cheap because most do not like the appeal of low-end , cheap properties. It would be like investing in the sketchier areas of Baltimore & DC. I've built a pretty decent business model around it and continue to do well. For house hacking though, if you're in a good area there's great ways to make some serious capital. I remember when I got my RE license in 2006, one of the guys there had just come back from Florida to Ohio. He house hacked his way from a $150k dump to a $850k one in the matter of just 4 years, living in it while upgrading.

My friend seems to think that due to how highly priced multifamilies and duplexes are in the D.C. area, that I'd be hard pressed to get a loan for $20k or less, and that I'm probably better off starting with a single family home and renting out the remaining rooms instead. At least for my first property. Have you or any of your colleagues used the HELOC strategy for financing? Apparently you can open one, even while in a first lien position, at 80-90% LTV. Some banks/credit unions even offer 100% financing apparently. A buddy of mine in Philly, who has rented out 6 properties, showed me this site, Replace Your Mortgage - Pay Off Your Home In 5-7 Years — How To Pay Off Your Mortgage Early With A Home Equity Line of Credit (HELOC), which goes into this strategy more in-depth.

 

[Denim Chicken]

Would you ever recommend someone who is not hands on (i.e. out of state investor) to tackle these C level properties? I gave consideration to some B- and B level properties in cleveland a thought, around Parma and such but I'm finding in Cleveland, the realtors selling the properties are also investors. And if they're not investing or selling a TK prop then I'm clearly the one who's paying the premium when they flip it to investors like me.

 

[BrandonS85]

Would you ever recommend someone who is not hands on (i.e. out of state investor) to tackle these C level properties? I gave consideration to some B- and B level properties in cleveland a thought, around Parma and such but I'm finding in Cleveland, the realtors selling the properties are also investors. And if they're not investing or selling a TK prop then I'm clearly the one who's paying the premium when they flip it to investors like me.

I wouldn't unless you've found an awesome PM company. They DO exist, but from what I've seen you've gotta do some major due diligence to find one that really puts a serious effort forward. We've considered doing it for some of our C grade stuff, but from those I've talked to, when I say I want 30%-40% of rents, they laugh and walk away. Now, I can justify it due to absurdly high ROIs, but some people want to get 30%+ ROI and pay 5%-8% on property management, and from my perspective if I managed it'd never be worth it.

 

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[Denim Chicken]

I wouldn't unless you've found an awesome PM company. They DO exist, but from what I've seen you've gotta do some major due diligence to find one that really puts a serious effort forward. We've considered doing it for some of our C grade stuff, but from those I've talked to, when I say I want 30%-40% of rents, they laugh and walk away. Now, I can justify it due to absurdly high ROIs, but some people want to get 30%+ ROI and pay 5%-8% on property management, and from my perspective if I managed it'd never be worth it.

I guess the problem is you dont know if you have a good PM company until you have a property lol. hate to gamble with my money and test the PM market in a city and find out theres no one great. That's the biggest hurdle for the out of state inventors whether they buy turnkey or not. I dont know if the PM is good until it's too late or I'm upside down on the property and the tenant has trashed the place.

I've still considered some B+ level properties which I've seen go for maybe $80k+ in the West cleveland area but turns out, a lot of the Property managers there are investors and real estate brokers themselves. I just dont see how it makes sense to buy something from them that they turn on themselves.

 

[Leoto]

So, as a part of this, I'm reaching out to all the online communities and asking what YOU would like to learn about real estate investing. My hope is to take the top questions I get and show how things work in an actual, operating business that I run that is actively buying/investing/making money.

Brandon,

First off, thank you for your post and your willingness to share your knowledge and experience with us.

One big question I've always had regarding rental real estate is: To what extent is it feasible to own a rental property in a different city/state from where you live? For the initial stages (searching, purchasing, rehabbing, etc.), I'm obviously willing to travel to wherever the target properties are, but once things are up and running, is it feasible to be a "remote landlord" by outsourcing the day-to-day stuff to a management company? I remember hearing somewhere that it's challenging to be remote and that one should physically be in the local area if at all possible. I'd like to get your thoughts on this.

Thanks!

 

[BrandonS85]

I think so, but in my mind it's mostly going to be with private partnerships. That's what I do with many of my properties in my part of Ohio, mostly because the banks I talk to absolutely hate <$50k properties, and for us it makes sense to take on partners for them. From what I see, there's 2 kinds of turnkey companies : Ones that do it to finance more rentals for themselves, and ones that make it their sole business model. I know of a guy who's re-sold 500+ turnkey properties all at substantial profit. In his case it makes a great deal of sense to re-sell marked up properties to investors.

Volume has a huge key to it all. From what my long-term plans are, to expand to multiple counties, owning 50-100 properties per county, it's not impossible to train people to do what you want for management, but we're talking much more money than many talk about.

Also, don't forget, plenty of people in Cleveland/Ohio/Etc who want to invest in rentals are poor plenty often and you can lend at pretty amazing rates. Rates high enough to compete with dumpy rentals.

 

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