Originally posted by @Jeff Pickens :
@Michele Zugschwerdt a good agent will recommend several lenders to meet a buyers needs. Not just blow someone off. But a good agent also doesn’t won’t anyone wasting their time. That’s why pre approvals are so important to agents.
Yes, but that was not the situation described by the person I was responding to. They were just blowing her off.
@Salvatore Lentini how to honestly do this with no money to get started. Is it even possible?
Congrats on achieving your new goal!
What would you start if you live in an pricy area? Would you consider long distance at the beginning?
@Salvatore Lentini what to consider in buying your first home owner occupant and what are the numbers that needs to look at and making sure it’s profitable. Also, how to add more properties with the same income and already bought your first home. Thanks
Hi Salvatore! Congratulations on your success and thank you for sharing your knowledge. I live in CT and I am just starting out in real estate. I would like my niche to be in small family rentals and possibly scale up to apartment buildings. I would like to know how to start a direct mail campaign and how could I get on a wholesalers list?
Income. I live in NYC and ideally I would like to house hack in the Bronx but the prices of 2 family homes and even single family homes are too high. I have more than 3.5% of the purchase price for most of these houses saved, but I just don’t have the income.
Thanks @Salvatore Lentini , great post and congrats on your achievements.
I am in bay area, which is pretty expensive and competitive, even 50% or 70% rule won't work here.
my goal is to keep adding a cash flow property every year or two.
> exploring if I can get a duplex/triplex etc couple hours away from here and have it managed by a management company, they might charge 10% or rent , and the cashflow might not be more than couple hundred dollars a month. at least less vacancy rate here but if any major repair comes up, it may wash all earnings.
> other option is buying from wholesalers out of state, ie. TX/FL or midwest, but not sure how to manage the rehab part while being out if state ? property management company can do the tanet/rent part but might need your suggestions and thoughts on how to handle above two scenarios ?
I’m in college right now and have considered dropping out (the past few months) to pursue wholesaling full time as it has sparked a new interest. Although, my mother believes I’m being unpractical and wants me to wait until I graduate (to have a backup plan) but I have lost my love for school and I feel like I’m in a pickle and anyone who I ask advice from is doing the same thing (climbing the corporate ladder of the rat race). Do you suggest I start wholesaling part time as a side hustle and finish school or drop out and pursue wholesaling full time?
@Salvatore I’m interested.
@Leslie N Harmon I can understand the frustration. Most Realtors are in the single family market for primary homeowners. After a property is listed a lot of calls come in, some from lookers who are not serious. The requirement for the Pre qualification is the attempt to gain access to serious buyers who will be able to close on a deal. ￼￼ It requires a different understanding of the process to work with investors who will make multiple offers in a short time period. Aside from the attributes of providing help to solve a problem, the ultimate goal is to make money which is compared against time spent on the deal.
I've heard the absolute best "deals" for new investors using other people's money is wholesaling, chasing the foreclosure list, assigning contracts to build capital, etc.
Since it's not the sexiest thing in the world to print bandit signs, knock on doors of homes with high grass, and cold call, I think alot of people think they're worth more.
But I'm gonna do it. Gonna drop one day per week from my HOURLY job, which will only cost me about 400 per month, and commit two weekdays to marketing.
My style isnt cold calls, I'd rather hit doors, leave flyers and maybe a few bandits.
If I get one deal per month wholesaling, I make 10x what I would have made the days I'm taking off work, building capital and/or financing a way to source the marketing side to someone to work part time for ME!
Which frankly, is alot to do self managed and motivated.
I'm new to this, I'm in Texas, but if found a property that I could fix and flip, would you be interested?
I'm new to this, I'm in Texas, but if found a good deal on a fix flip, would you partner/lend if the price was 70-80% of the ARV?
I really want to house-hack, I think it’s the best strategy to get started based on the research I’ve done. The cities that I am willing to send my children to school in have very few multi family properties. So, it’s either house-hack in a not so great school district (not an option) or start off in a single family home (what I’ll most likely end up doing).
@Salvatore Lentini Thank you for starting this discussion. I started a discussion in another thread but would like to re-post it here for my reason why I didn't pull the trigger on my first deal.
My current goal is to look for properties for cash flow to help supplement retirement income in the near future (possibly 4-8 years from now.I could extend that time frame). For the deal below, after calculating the numbers, the COC was a small 1.2% return or $133 per month of cash flow. This concerned me because I was taking out a $130K HELOC. Is $133/month enough to pay back the loan in a respectable manner? That didn't feel right with me:
Anyway, the deal I backed out of was a duplex (both 3bd/2bth) in Riverside (43 y/o property)with a gross monthly rent of $3625/month. unit 1 at $1,950 because it was recently upgraded and unit 2 @ $1675 because there was a tenant in place for the past 10 years so rents weren't raised over time). It was previously in escrow but the buyer walked and I was able to review the inspection report (minor repairs and work but nothing major except for maybe foundation? see below for more)
The offer was $530k. 25% down (~$130k) with a 5.1% mortgage rate at 30 yr. After running the numbers on a spreadsheet my yearly cash flow projection was $1,593/year or $133/month, 5.1 cap, 1.2% COC Return. I used the following to calculate expenses: 5% vacancy, 1.16% property tax, 5% of effective gross income for repairs/maintenance , 10% property management, abt $1,100/yr gardening & utilities and $1000/year for insurance). This does not factor in paying back the HELOC.
The neighborhood was a solid C/C+, maybe B- neighborhood with several other duplexes in the neighborhood tract, which I'm pretty sure were all mainly rentals.
I did not go thru with the deal because:
1. Saturation of rentals in the area and concerned that in a downturn this could be a problem competing for renters or increase supply affecting rental rates. (maybe I'm wrong about this assumption? Maybe not a factor since there may be more people displaced from their homes and need to rent?)
2. A much older neighborhood that may not see much further appreciation potential? reading comments in trulia neighborhoods, it appears that longer term residents have complained about how the neighborhood has changed and no one cares for their property like it used to be.
3. I had some concerns my cash flow was too small of an amount to contribute towards paying down the HELOC in a timely manner. However, I believe thru regular savings I could probably pay it back over 7 years. Instead of saving, I would divert the savings to paying this down.
4. Maybe jitters of getting back into the market after all these years
5. 2 hour drive to get to the property, maybe even more if having to drive in traffic, thus requiring a property manager since I work full-time, which cuts into the cash flow greatly, which is my primary goal.
6. Concerns about foundation issues. I noticed through other listings in the neighborhood, foundation cracks appeared in the listing photos in the living room [flooring was pulled up]. All the homes in the area appear to be built by the same builder/developer many moons ago. This subj property was showing similar cracks around the outside of the house.
Other things I considered in favor of going for the deal is that in four years I could retire and possibly manage the property myself and recapture the property management fees.
I wanted to act and break free from the paralysis from analysis but opted to stay on the safe side. I accepted the fact that it was better to miss out on an opportunity rather than buy into a mistake.
My question to the community is would you have done this deal?
Did I miss something in this deal? Was my thinking off as far as the COC return. Should I have been thinking a different way? i.e. accept the fact that there was small positive cash flow of $133/month and chip away slowly at the HELOC and then maybe in 7-10 years (if enough equity was in place) do a cash out refi to pay off the HELOC? That thought seemed too speculative.
If anything this was all good practice for me to help me prepare to look at the next opportunity.
Oh and while I'm blabbing, the idea of capturing $100-200 / door as cash flow that I have been seeing in other discussions or hearing on the podcasts are these folks considering the COC on this? are they willing to accept a lower return or is it because they are buying relatively cheaper properties requiring less cash up front?
Thank you and look forward to your thoughts/comments.
@Salvatore Lentini what's holding my wife and i back is the down payment after that we are good.
@Salvatore Lentini thank you for posting this!!!
I have yet to buy my first property ! In my case it is the fear of ignorance and the lack of guidance that stops me from making a leap. I am doing as much research as possible but It is overwhelming. I would like to pick one thing and focus on it fully, however, knowing which one thing to pick is where I struggle. I wouldn’t know what to look for in a good deal yet.
First off thank you. I guess my hardest decision right now is choosing an area. I know I want to buy a multifamily for rental income. I’m stuck between where I live now which is pricey with high taxes, but also good rent. Downside is as a cop in the area, I also don’t want to be around familiar faces. It’s been a bit of an issue with people I’ve arrested spotting me. On the plus side, I’m can keep a close eye on the property, know who my regulars are and don’t have to move far from work, keeping me close by for overtime/ off duty work.
Then there’s the girlfriend situation where we figure a good halfway point. That’s about 30-40 mins from work, it’s a whole other world I know nothing about. Houses look great, definitely cheaper than my area in price and taxes, but I have no clue how the renters market is. To say I’ve driven through this town once is saying a lot. Also just the mix of personal and business I’m not sure if that’s the best of ideas. In either case a move like this maybe a year out for us.
Lastly, I’m halfway through my career with an option for early retirement in just 6yrs. Ultimately, I never want to shovel snow again and love Florida. Tampa area specifically. So I sit here thinking well why look around here, when that’s where I’ll end up.
So ultimately I’m not sure if to seek for an opportunity locally Hudson County, NJ area, to go for the midway point with the girlfriend, house hack and build this thing up together (Newton, NJ area) or just start looking at Tampa, since it’s where I want to go and where my buddy/retired coworker lives now and has agreed to manage any property I pick up (possible partnership).
In the interim, I’m just saving money and working overtime as I mull over the options, but I’m mixed on it all as each has its own strengths and weaknesses. Any advice would be well appreciated.
Thank you for being so generous with your knowledge and experience. 2 things, I live in a very expensive area (SoCal) and funding. I’ve found a few areas that are long road trip distance that make sense, but the funding is still a question mark. I have a little bit of cash, enough for a down payment and rehab of my first property (interesting in buy and hold, str, ltr) but just scratching the surface on funding. Any recommendations you have are welcome!
@Salvatore Lentini what hold most back is ANALYSIS PARALYSIS !! So many go to guru seminars, and do nothing. i hear it all the time. Bob I am going to research which area of Cleveland and get back to you, i just laugh. Research where on google ? I know I will never hear back from them.
@Patrice Holloway I’m also looking for ways to invest without having the 20% down.. what options are out there.
Knowledge, credit, money. 2 will be fulfilled by the end of the year