Investor · Randallstown, MD · Member since 2010 · 185 posts · 57 votes
I am not brand new to REI...bought a property in 2005. Well, until this year, I haven't thought seriously about more REI...bought second in September from an auction...didn't get deed until Nov, so it's still not completely rehabbed, but will be by Jan. But before the end of the year, we will close on 4 more properties...3 rentals and 1 flipper. The rentals are all in Michigan (where we're from) and were all cheaply priced. We're getting all 4 for under Half of what I paid for the one property we already have there...to be specific, we're getting all 4 for $24k. Anyways, 2 of them only require very minimal work....less than $1k....all are in decent neighborhoods. This is very exciting, but nerve-wrecking at the same time. Has anyone else started out like this...I mean, DIVING in because there's so many great deals?
I bought 12 the first year I really got serious about it. I spent the next 2 years getting them all performing and asking my self why the heck I started off by buying 12.
Buy 1 then don't buy anything else until that 1 is performing. Only then buy the next one. It doesn't matter how fast this process is for you, only that you follow that basic process. I remember in one 2 week period I suddenly owned 4 more houses than at the beginning of the month. I'll never do that again...lol
While I haven't worked on several ventures at once as in your case, I believe the issue will differ from person to person. As long as you aren't constantly feeling overwhelmed, behind, or out of control and instead feel you can actively manage each of your projects with the same vigor and attention to detail, I say go for it! Some people are overwhelmed with 2 projects simultaneously and some can handle several more. However, I believe the key is in the details. As you go through this ask yourself, Is my plate too full? And gauge this by monitoring your stress levels due to multiple projects, timelines being missed consistently, and funds availability to keep everything on schedule. Just a few thoughts to keep in mind, but you get the gist. Good Luck to you and your endeavors and Happy Holidays.
Yea, I agree with you, and I am totally on the same page. I'm thinking that these projects will tie me up for the first quarter of next year, but I should have them rehabbed and rented by April. Thanks for your input. Anyone else?
Yea, I agree with you, and I am totally on the same page. I'm thinking that these projects will tie me up for the first quarter of next year, but I should have them rehabbed and rented by April. Thanks for your input. Anyone else?
I did my first two deals at approximately the same time. While not ideal I was in a similar position in that I couldn't pass on the opportunity.
If you don't feel like you have the bandwidth for all the projects at once, you might consider either wholesaling the ones you can't/won't be able to handle or just simply prioritizing the houses and work on them one at a time.
If I were in your position I would prioritize the homes according to how much time/money each one will take to rehab
I'd start with the easiest ones first so you can get them on the market and get them rented. That way at least you can have some cash coming in while you're working on the ones that need more time/money.
I bought 12 the first year I really got serious about it. I spent the next 2 years getting them all performing and asking my self why the heck I started off by buying 12.
Buy 1 then don't buy anything else until that 1 is performing. Only then buy the next one. It doesn't matter how fast this process is for you, only that you follow that basic process. I remember in one 2 week period I suddenly owned 4 more houses than at the beginning of the month. I'll never do that again...lol
I did something similar. Late 2008-Early 2009 I bought a whole bunch of properties. Something like 9 or 10 properties. I had just started in 2008, but it all worked out because there was a system in place. Figure out a system that works for you, and STICK TO IT!
For example, when I did all those properties, I made sure all my ducks were in a row prior to closing--that included, inspections (duh!), scope of work, contractor bids & decided the contractor I was going to work with, the project manager was in place, property manager was ready, expectations for every person and what they were doing, etc... it's a pretty extensive list.
I pretty much put everything in place prior to closing and ran each and every property through that system. As a result, I was able to minimize holding costs & therefore financing costs on the flips, and minimize vacancy time on the rentals. So, above all else just make sure you have all your t's crossed and i's dotted before you start diving in. Hold your team members accountable and if things come up, deal with it and move forward. Run it like a business and you'll reap ample rewards!
4 properties for 24k with two only needing 1k in work! This scares me or this is Detroit (really scares me). Doing four small projects at once is not a big deal if you are contracting the work out.
Do you have a day job? This makes things harder. It is hard to manage a project from your cubical and try to work everything out at 5pm, two hours after all the workers go home.
I started out buying one at a time, but recently have been buying packages. The last one had 30 units and took 8 months to fully rehab every unit and stabalize. If you plan for it, it isnt a big deal. It can be stressful, but IT CAN BE DONE.
Thanks for all your input, guys. Yep, I'm currently lining up all my ducks, making sure my system is in place, etc.
@ Jeffrey, I know, right? $24k for 4 properties is crazy! No, it's not Detroit...it's a small town (where I'm from) that no one would probably know much about. But since I'm from there, I know all about it. The prices are absolutely crazy, and there's no problem finding decent tenants. The two that require minimal work LITERALLY just need to be cleaned, and have touch-up painting done. All appliances are still in place, and the utilities are still on. The hardwood floors and trimwork are in great shape. One of them is a two-unit..the other is a 3-bedroom. They are basically giving these houses away.
Btw, yes, I have a day-job, but I can do some things (make calls) from work. My dad is on hand where the properties are to manage the contractors, so we're good there. Sometimes I feel that this is just unreal.
I think you have to be prepared to buy when the deals come up. I bought my first rental in March '07 and then waited patiently until Sept. '09 until I found another deal, then another and another in rapid succession. I had 2 rental units in the beginning of 9/09, then by 3/10 I had 19. I just kept finding good deals and I was closing on a property every month. From 4/10 until about a month ago I just couldn't find anything worth buying or I got outbid on everything I was interested in. Finally, 8 months later I found and closed on my best deal yet, 4 single families in a package. Yes, you can get in over your head but as long as you have a plan and a good team in place, you'll be fine.
Thanks for responding, Mariah. So how long did it take you to get all your properties performing? Also, what method are you using for buying...bank, credit union, hml, etc? Thanks
Thanks for responding, Mariah. So how long did it take you to get all your properties performing? Also, what method are you using for buying...bank, credit union, hml, etc? Thanks
Most of them had tenants in them already, although they had deferred maintenance so I usually waited until the first turn-over, fixed them up, and raised the rent.
The last set of 4 single families I bought had only one with a tenant. One was ready to rent and the other two needed serious work to get them ready. My team is still working on the last one and we have not found renters for any of the new ones yet.
I'm not funding them all through my local credit union.
Considering how cheap those houses were how were you sure they did not have serious problems? I want to take a home inspection class to learn more about this aspect of purchases.
I bought 8 figures in houses in my first year. This year is probably also going to be in the 8-figures, but we should hit 9 figures next year. The amount you buy really depends on your skills and resources.
Here's an interview of my business partner for any new person who wishes to read it:
One of the biggest mistakes I believe people have made is thinking I have to buy xxx houses this year. I am amazed at the number of investors that call us saying that. People have always asked me how many properties I plan on buying in a certain period of time. There is no set answer if there are no deals to be found there aren't properties that need to be bought, if five deals that fit your criteria happen to pop up in a short period of time you need to be able to act on all. It may seem like a lot of work at once, but if you are buying good deals it will work out in the long run even when doing multiple ones at once.