Looking for financial advise and strategy for first investment.

Cincinnati, Ohio
Starting Out
3yFollow

Looking for financial advise and strategy for first investment.

Jonathan Peters
New to Real Estate · Trenton, OH · Member since 2023 · 10 posts · 3 votes

Hi all,

I am new to the investment game and would like someone I could connect with in the area to help me develop my best strategy. I live in Trenton, OH so I am between Cincy and Dayton. 

My dad owned 16 rentals at one point and witnessed first hand the troubles he had to the point he sold all his property off. I want to avoid his mistakes. 

I have some money set back for investing as well as equity in my house that I plan on refinancing next month. I had to file bankruptcy two years ago. The banks I have talked too said Refi will not be an issue as my Credit score has bounced back to almost a 700 and my debt to income is not an issue. Main reason for Refi is to get my ex-wife off the homes financing. I could pull an additional 80-100k out for investing.

That all being said I was initially going to pull some equity out and pay off remaining debts so I would only have my house debt and only have the one payment. and use my cash on hand to put down on a rental. But the more I learn and dive into this on a serious level the more I am unsure the direction to take.

The second thing on my plate is that I have the ability to purchase a lot and build  new construction and ether keep it and rent it out or sell it and invest into another build or rentals. My father has built custom homes his whole life and has subcontractors that work for him plus I used to build houses with him also. 

He wants me to purchase a lot large enough to build a few multi unit apartment buildings but I financially could not swing that on my own. My end goal would be to own a few 12unit apartment buildings and a portfolio of single family homes.

Any advice on helping me start out on the right path would be greatly appreciated. 

0Reply
14 views

Most Popular Reply

Mateo Oquendo-Chandler
Investor · Amelia, OH · Member since 2022 · 58 posts · 45 votes
3y

You mentioned that you wanted to avoid your dad's mistakes, but didn't mention what those items you wanted to avoid were.

Also as far as paying off your debt. I would use your cash to pay them off and not your home equity. The equity in your home is what will allow you to sleep at night knowing no matter how the market turns your house value will not immediately go upside down. 

You have options but none of us can really tell you what is best for you because you have to decide for yourself how you want your future real estate business to look like. New construction is nice, but has a longer time frame than a light-moderate remodel for a rental, so it depends on what speed and goals you are wanting to achieve in your desired time frame. 

Side Note: If you are interested in meeting other Cincinnati investors, you can find a local meet up in the Event & Meet up forums for Cincinnati. We meet on the first Thursday of every month and bring in a different speaker to educate and network with the group.

2Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Tyler EveridgeBusiness Member
    Real Estate Broker · Dayton and Cincinnati, OH · Member since 2019 · 80 posts · 74 votes
    3y

    Hey Jonathan, 

    I am a local investor and agent here in the Dayton/Cincinnati area. I primarily work with investors looking to purchase MFH like you mentioned. 

    It's great that you already have a lot of contact from your dad, and I would be able to fill in any gaps for any other needed referrals. 

    Feel free to reach out anytime, and I am happy to jump on a phone call as well. 

    1Reply
  • Mateo Oquendo-Chandler
    Investor · Amelia, OH · Member since 2022 · 58 posts · 45 votes
    3y

    You mentioned that you wanted to avoid your dad's mistakes, but didn't mention what those items you wanted to avoid were.

    Also as far as paying off your debt. I would use your cash to pay them off and not your home equity. The equity in your home is what will allow you to sleep at night knowing no matter how the market turns your house value will not immediately go upside down. 

    You have options but none of us can really tell you what is best for you because you have to decide for yourself how you want your future real estate business to look like. New construction is nice, but has a longer time frame than a light-moderate remodel for a rental, so it depends on what speed and goals you are wanting to achieve in your desired time frame. 

    Side Note: If you are interested in meeting other Cincinnati investors, you can find a local meet up in the Event & Meet up forums for Cincinnati. We meet on the first Thursday of every month and bring in a different speaker to educate and network with the group.

    2Reply
  • Jonathan Peters
    OP
    New to Real Estate · Trenton, OH · Member since 2023 · 10 posts · 3 votes
    3y

    I see where your coming from on the equity in my house. My thoughts were to free up the cash flow and direct it at investment properties. I’m in for a 10-20 year plan. My dad mainly invested in D class houses and renters. He spent a small fortune on legal fees for evictions and constantly chasing renters down and having to almost rehab the houses every time someone would move out. He sold his last two a year ago. 
    I understand the new construction is a longer time for a return. What are your thoughts towards build and sell to build up more capital? Market still seems a bit out of balance and I’m not sure how to determine what a new construction would bring in the Eaton Ohio area. I know in Trenton houses that were 170-210 new are now marketed at well over $300 which I feel is ridiculously over priced.   

    1Reply
  • Mateo Oquendo-Chandler
    Investor · Amelia, OH · Member since 2022 · 58 posts · 45 votes
    3y
    Quote from @Jonathan Peters:

    I see where your coming from on the equity in my house. My thoughts were to free up the cash flow and direct it at investment properties. I’m in for a 10-20 year plan. My dad mainly invested in D class houses and renters. He spent a small fortune on legal fees for evictions and constantly chasing renters down and having to almost rehab the houses every time someone would move out. He sold his last two a year ago. 
    I understand the new construction is a longer time for a return. What are your thoughts towards build and sell to build up more capital? Market still seems a bit out of balance and I’m not sure how to determine what a new construction would bring in the Eaton Ohio area. I know in Trenton houses that were 170-210 new are now marketed at well over $300 which I feel is ridiculously over priced.   


     I think your best source for those numbers would be talking to different builders about their recent/current jobs they are working on. Also, the sellers for any new construction homes on the market would help as well. Even if its the property management company you get in contact with, all the people listed would be able to tell you cost to build versus sale and over what timeline. And with Zillow you probably could even look at the recent sales for specifically new construction in an area as well for even more data points.

    0Reply
  • Jonathan Peters
    OP
    New to Real Estate · Trenton, OH · Member since 2023 · 10 posts · 3 votes
    3y

    Mateo Oquendo-Chandler thanks for the advise.

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    3y
    Quote from @Jonathan Peters:

    Hi all,

    I am new to the investment game and would like someone I could connect with in the area to help me develop my best strategy. I live in Trenton, OH so I am between Cincy and Dayton. 

    My dad owned 16 rentals at one point and witnessed first hand the troubles he had to the point he sold all his property off. I want to avoid his mistakes. 

    I have some money set back for investing as well as equity in my house that I plan on refinancing next month. I had to file bankruptcy two years ago. The banks I have talked too said Refi will not be an issue as my Credit score has bounced back to almost a 700 and my debt to income is not an issue. Main reason for Refi is to get my ex-wife off the homes financing. I could pull an additional 80-100k out for investing.

    That all being said I was initially going to pull some equity out and pay off remaining debts so I would only have my house debt and only have the one payment. and use my cash on hand to put down on a rental. But the more I learn and dive into this on a serious level the more I am unsure the direction to take.

    The second thing on my plate is that I have the ability to purchase a lot and build  new construction and ether keep it and rent it out or sell it and invest into another build or rentals. My father has built custom homes his whole life and has subcontractors that work for him plus I used to build houses with him also. 

    He wants me to purchase a lot large enough to build a few multi unit apartment buildings but I financially could not swing that on my own. My end goal would be to own a few 12unit apartment buildings and a portfolio of single family homes.

    Any advice on helping me start out on the right path would be greatly appreciated. 

     If you're looking to avoid problems with your tenants, make sure you stay out of the hood. Managing low income housing is going to be a daily battle. I assume that's some of the things that led your dad to sell off his portfolio.

    0Reply
  • Julian Garcia
    Wholesaler · Online · Member since 2023 · 14 posts · 2 votes
    3y

    Let’s connect contact me and I can help you. 

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    3y

    @Jonathan Peters

    Many believe unrealistic assumptions and often apply those assumptions to the wrong property classes.

    In our OPINION (always verify yourself!):

    Class A Properties:
    Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% the more recent norm.
    Tenants: Majority will have FICO scores of 680+.

    Class B Properties:
    Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
    Tenants: Majority will have FICO scores of 620+, some blemishes, but should have no evictions in last 5 years

    Class C Properties:
    Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
    Vacancy Est: Historically 10%, but 15-20% should often be used to also cover nonpayment & evictions.
    Tenants: majority will have FICO scores of 560-600, many blemishes, but should have no evictions in last 2 years. Verifying previous 2-years of rental history very important!

    Class D Properties:
    Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
    Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
    Tenants: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions.

    Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

    Logical Property Management4.9446 Reviews
    WebsiteView Page
    0Reply
  • Jonathan Peters
    OP
    New to Real Estate · Trenton, OH · Member since 2023 · 10 posts · 3 votes
    3y

    Michael,

    Thank you for this break down it is very helpful. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free