$1.3 million in deals done in 2 years from out of state!

293 Replies

Originally posted by @Lauren Banks :

I haven't been on this site in forever and your post really stood out to me! I am 20 years old and I am still in school, plus I am working a lot. What do you recommend someone like me do? I want to invest and I do not know where to start, I was also thinking of getting my real estate license in the next year any advice helps! Seeing people like you is a huge inspiration!

Theres so many different ways to start. I'm not sure what market you are in but if you are looking for a rental you could maybe find a duplex in your local market. Buy one, live in one side and rent out the other. I have out of state rentals and Im currently closing on a house remodel flip, and a house with duplex behind it all on one lot. 

 

I have been listening to BP for a while now but have never stopped to read any posts. I am so happy I did now. Thanks for sharing your story. I live in Jacksonville and am actively seeking my first deal.  Being very new to the process, I have the newbie nerves that are preventing me from taking the leap. I’d love to chat with you about the Jacksonville market if you’d be willing. 

I love your enthusiasm for connecting others and helping them to find deals! 

After reading The Go Giver, you've reminded me of its Second and Third Laws of Stratospheric Success:

2) Your Income grows proportionally to the number of lives you touch.

3) Your influence grows by putting the needs of others, first.

This is the kind of life I want to lead, and its awesome to see someone pursuing their dreams with the same kind of mindset (giving selflessly, recieving bountifully)!!

Great job! Thank you for the read!

Beautiful.. Gaining knowledge about REI, since an year. Ready to get my feet wet with first deal soon...Objective is to get a passive monthly income to sustain and give my time to help other people to achieve the same, with no expectations.

So how do you structure a deal with an investor where you manage the rehab? That is something I know nothing about and would love to learn how that might work. I am a real estate broker and naturally do more that I don't charge for. I need to learn the value of my skills and time. Where do you think I can learn this? What is your experience? Thanks in advance for your advice!

I am a real estate broker and also work in two areas that identifies properties that may need to be handled by an investor rather than the retail market. One is distressed homes needing creative solutions (i.e. not a clean short sale because of condition, tax or other liens beyond the first mortgage), and the second is with seniors homes where the seller and their family do not have the time, money or wherewithal to fix it themselves. In some of these cases, it is not appropriate for me to be the buyer either because of my fiduciary responsibility or funds at that specific time. I have a personal friend who is an investor but not local. If I manage the rehab prior to making it a buy and hold property for him, I need to learn how to structure a fair deal for my efforts and expertise in project management. 

I am a real nvestor In the Baltimore area. I would love to enter the orlando fla. Market as a buy a hold investor.  Any suggestions out there on how to reach across state lines a and maintain sanity.

Elenis, great article. When an associate of mine showed me how to leverage rentals with conventional loans I jumped into the buy and hold strategy because I was too busy with my day job as an engineer. After inquiring on Biggerpockets I was referred to a turnkey flipper in the Northwest Indiana (NWI) area. Bought the first 3 BR SFR for $85K netting 16% ROI. Then 3 months later bought a 2nd when the flip was finished for $95K netting 18% ROI. I used 401K funds I pulled out, paid the tax, and invested in the properties at 20% down + closing costs. The secret in this formula is that I am a W-2 employee with a >760 credit score. SInce the rents more than covered the monthly expenses all was good. Bought 2 more houses in same area directly from wholesalers and remodeled into rentals netting > 25% ROI. Since 2017 we own 6 rentals in St Louis and 4 in NWI all netting an average of 32% ROI. My wife and I can own up to 12 conventional loans with this strategy.

Regarding future 5 year plan I have not looked at 1031s because the appreciation in the markets has been low. Thanks for the tip though and I will look into it.  

For a bit more detail: Our strategy has matured to buying SFRs (3BR) in markets that are relatively flat (maybe 1%) where the rent to purchase price ratio (disparity) is great enough to result in +25% ROI. (These markets are not as attractive to flash in the pan investors. NWI has become an exception. Many Chicagoans are moving to Indiana putting pressure in the market and driving prices/rents/volatility upwards.)

Our goal is to close on 4 properties per year while I have W-2 income. I started social security and am rolling that into rentals. 

Because my current job has been very tentative (defense contracting in a large corporation on an niche system) my motivation has been to convert 401K funds to higher performing results that provide CASH FLOW to cover our monthly living expenses (mortgage, etc in California). This objective was accomplished in three years.  Since my job is still in place, we are rolling the excess rental income into newer properties. 

For safety, we have 3 months expenses in each property's accounts. When I apply for each loan this looks good to the bank. 

I would say the most difficult part was doing the first deal... the second most difficult part is finding good property managers. 

The most beneficial expense is the property inspection during due diligence. 

Summary: Our typical acquisition looks like  Elenis Camargo's   Property #2

  • St Louis example property in Dec 2019:
  • Purchase Price: $46,000
  • Down Payment: 20% ($9.2K plus $4944 for closing costs (including impound $1368)
  • Monthly Mortgage $146.86 30 yr fixed at 4.5%
  • Taxes $102/mo
  • Insurance $66/mo
  • 30 yr fixed rate of 6.0%
  • Monthly Rent: $825/month
  • Property Management: $83/month
  • Vacancy Loss: 8% annually
  • Repairs = $100/month (a bit high estimate for built in conservation)
  • Monthly Cash Flow: $301
  • Cash-on-cash return: 25.5% 
  • Disregarding maint and vacancy, upper boundary ROI is 40%.

Hope this is helpful... a good way to start as a newby is to research "turnkey" properties and learn to do due diligence. 

BTW, the properties were not bought via LLC. They are fully encumbered, fully insured and in trusts. The trusts have our LLC as beneficiary.

Regards,

MW





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