9 reasons To love your PIG.
PIGS. For the newbie they often represent the entry point into real estate investing. For experienced investors they may be a pleasant or painful reminder of where they came from or an active part of their portfolio. This article explains why I am a proud owner of 54 little pigs and why you can love them too.
The definition of a pig is a little squishy. Generally, the amount of $30k is used as a starting point. I would add the following: an older home of 1-4 units past the first life cycle of most of the major components of the house, in a depressed area (usually in the Midwest) and is occupied by a tenant base described as poor or working class. Every home is unique so every pig will fit this definition with varying degrees of accuracy.
9 reasons to love your pig-
1. The price- You see people bragging about them on posts or run across them on Craigslist. You wonder, how can a house be that cheap? Is it for real? I am here to testify! Yes, you can buy houses and even rehab them for under $30k. $15k was my target price all in until just recently. I acquired over 20 units for less. I have increased my target to an astronomical $20-25k per unit on my newest properties due to increasing competition. I now have 54 units in various stages of development.
2. The location- This is where I live. I am within 2-3 miles of most of my properties on a daily basis. I am a local and familiar with the neighborhoods and surrounding towns. It makes it much easier to handle any issues when I can be there in 15 minutes if needed.
3. The management- I like controlling my investments directly. I made every mistake possible when I started. None of them where big enough to sink my fledgling real estate career. I currently manage my own properties with help from my legal assistant. When I am ready, I can turn them over to a property manager and know how to monitor their work.
4. The maintenance- I started out doing it myself. I enjoyed learning everything that goes into the remodeling of these properties. I no longer do most of the renovations myself. Because of my experience, I can speak knowledgeablely with my contractors and ensure the optimal cost vs quality tension is maintained in each unique situation.
5. The tenants- I know the people who rent my homes. I am from a small town. While I maintain a fairly strict no friends or family policy, I'm familiar with the individuals and class of people renting my homes. I take pride in trying to provide safe, clean and properly maintained properties they can call home. Most people are good and decent. With the proper systems in place, you can avoid most of the others.
6. The financing- to be specific, creative financing. I have been able to use owner financing and private money for the majority of my deals due to the low entry point. I would not have been able to qualify for bank financing when I started out as a college student with a young family. But even I could come up with $12000 by putting a loan on our cars. That is how I bought my fourth house- all in!
7. The deals- I like to hunt for deals. I like putting them together. I get to do the "fun stuff" more frequently with cheaper properties and work on my skills. I have a wealth of experience I can now use to grow my company as I move into doing this full time.
8. The risk- I am a consumer bankruptcy attorney. I deal with failure on a daily basis. I have never had a person file bankruptcy because a $30k property took them under. I have filed multiple cases where someone still owed $100k+ on a foreclosure from CA or AZ and they couldn't deal with it financially.
9. The freedom- I would love to syndicate 300 unit apartment deals. I think I have the aptitude and capacity to grow in this industry. I would not have gotten very far if I started there. I now have a base to build from. I can play the monopoly game and trade up or become the biggest fish in my little pond. I had to start somewhere and so will you. My first little piggy was my first step to wherever I chose to go.
What is your experience with pigs?
Disclaimer- No legal advice is offered or intended.
Comments (2)
I agree! The more investors tell others to stay away from PIGS, the less competition I have ;-)
The learning experience I've made in my 'war zone' tops anything I would have learned anywhere else. And I was able to buy with cash after the crash.
I only work in one small neighborhood and I live there as well. It was never to be a long-term landlord, but there is a major development right next to this neighborhood, that has increased the values and will keep doing that, as things progress.
I have also now collected almost a whole block and created an artist community. Everything's fenced and there's only one gate, that gets closed at night. So, I have better tenants, than are normally in the area and they know each other now and are looking out for each other, instead of each one for themselves. I also get higher rents than the other properties in the neighborhood, because creatives are willing to pay more to live in a community. It's a big draw. And the fact that we're fenced and gated, they aren't so afraid of the crime stigma that the neighborhood had.
Michaela G., over 7 years ago
Pigs, seems people love them or hate them.
Michael Sarrail, over 7 years ago