Newbie to 5 units in 7 months!

Newbie to 5 units in 7 months!

Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
I want to personally thank the BP Community for being so helpful and very humble with all of the questions us newbies always have. With the help of this great network my wife and I were able to start our OOS investing career at the close of 2017 and we are very blessed and thankful to say that we currently have 5 units under our belt and are in the midst of acquiring 2 more before the close of this year with the amazing growth that we gained from our first unit which we are in the process of doing a cash out Refi on. Alot of people here in the Bay Area think that OOS investing is crazy, that I'm out of my mind and that you can never grow wealth this way and that you should invest here in the Bay and blah blah blah so it was very difficult to learn and go at this alone until I found this beautiful network of good folks doing it everyday! My thing was always, sure I can invest here in the Bay Area but by the time it would take me to acquire $150k down payment I could have taken the opportunity and purchased 5 properties out of state that cash flow positively getting more bang for my buck. All I needed was a good team in place which I'm blessed to say I have in the 2 markets that I'm currently vested in. Our first deal (SFR ranch is sitting at a 10% COC return after all expenses, vacancy, maintenance, capx,property management, PITI etc.. our second deal (4plex is sitting at an 8% after the same expenses with meat on the bone to get me closer to a 9.5%) For all of those that were newbies like me hearing negative things and that you cannot build wealth, I'm here to tell you that yes you can! We have so much valuable information at our fingertips to make this possible especially with the amazing community here on BP! Thank you again all, I'm humbled and very much appreciate all of you! Junior
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Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y

You never mentioned where you are investing out-of-state.

See this reply in the discussion

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  • Rental Property Investor · New Castle, DE · Member since 2016 · 376 posts · 158 votes
    8y

    @Junior Soares Congrats on forward progress to financial freedom!!!  I'm a newbie with analysis paralysis :(  and am going to fund my 1st buy and hold multifamily with a HELoC.  What calculator do you use to analyze your deals?  I've run across a few on the site, but was wondering how you calculate your deals.  I have to get into gear as time is money!!

    If anyone else has any calculators they use, I'm open...

    Well wishes to you, your wife and your family :) ... Cassandra

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    8y

    Congrats Junior!

  • Rental Property Investor · Willow Grove, PA · Member since 2014 · 10 posts · 4 votes
    8y

    @Cassandra Sifford also a newbie suffering from analysis paralysis! 

    I'm doing CAP rate > 10%, profit of $200/mo, and the 1% rule. Trying to find properties that check off all 3.

    What are you using? 

    How does the HELOC work out for you? I cant get over the interest payments - and I'm debating selling some stock in my brokerage acct to use as my down payment on my first property. Figuring out financing is my next hurdle.

  • Member since 2018 · 1 post · 0 votes
    8y

    So congrats to you and how do you get started??  I'm a former RE Agent in the Bay Area & yes, the prices are ridiculous there....so how/where did you find them, etc etc etc

    Thanks,

    Joan Phillippi

  • San Francisco, CA · Member since 2017 · 3 posts · 0 votes
    8y
    @Caleb Heimsoth what do you mean be careful about 500 to 600 types apartment?
  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Originally posted by @Albert Chen:
    @Caleb Heimsoth what do you mean be careful about 500 to 600 types apartment?

     Hard tenants to manage.  Stop paying rent.  Evict them.  They trash your property etc 

  • Rental Property Investor · Brookline, MA · Member since 2015 · 23 posts · 7 votes
    8y

    @Caleb Heimsoth so maybe the best way is to use a warranty deed to retain the title insurance, and have a Heloc set aside in case the lender call the note due?

  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Originally posted by @Ruei-Jiun H.:

    @Caleb Heimsoth so maybe the best way is to use a warranty deed to retain the title insurance, and have a Heloc set aside in case the lender call the note due?

    Sure if you want to go through all that trouble.  But if you have the cash to just pay off the note, just buy the property in cash and then deed it to whatever you want.

    I leverage property when I buy.  I will then pay them off ahead of schedule, and just put them in a llc when that happens. 

  • Rental Property Investor · New Castle, DE · Member since 2016 · 376 posts · 158 votes
    8y

    @Brian Cox ... Hello fellow newbie LOL  It's something that I'm trying to get past and become more comfortable with.  Still learning about the numbers and what's going to cash flow best.

    I've downloaded some of the calculators here on BP just to play around with properties that look promising. I'm most interested in multifamily investing ($100 per door) and between 8-10% cash on cash ROI. I've been starting off with the 1% rule as well. Looks like we're headed in the right direction!

    I've researched about 8 banks and credit unions on their rates per my current credit score and have been paying off my credit cards left and right.  I'm looking into M&T Bank as there are no upfront fees and currently running a HELoC promotion at I believe to be 1.99% that will last for 6 months (switching to variable thereafter).  They do have interest only payments during the draw period, but I'm going to pay it down quicker to have more available for another investment.

    Well wishes to you also!

  • Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
    8y
    @Cassandra Sifford Thank you, Cassandra. I very much appreciate the kind words. I don't use any specific calculator to be honest with you. I basically run the numbers based on what the rental income will be factored in with all of the expenses and if the end result is at least 9-10% return on my investment I go for the deal. I factor in, PITI, 5% Vacancy, 5% Maintenance, 5% capx, 10% property manager, 5% contingency and whatever that final number is is how I base the deal. In the end it's all a risk but the more due diligence you do the less risk you will have. The worse case is you break even or lose a hundred a month here and there. In the long run, you win. If you hold it long enough and are in a decent area inflation will do its thing. Hope this helped a bit Best, Junior
  • Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
    8y
    @Andrew Syrios Thank you sir, I very much appreciate it
  • Washington, DC · Member since 2017 · 14 posts · 4 votes
    8y

    Was the mortgage loan of your first deal on your name or the LLC's?

  • Bridgewater, NJ · Member since 2015 · 100 posts · 31 votes
    8y
    @Kayee Wilson Out of state
  • Member since 2018 · 4 posts · 5 votes
    8y

    So if you want to profit $200/mth per property, and you want to live off of just that income, and lets say you can live off on $50k/year (which won't make you a world traveler), then you are looking at 20+ properties.  I've seen $100k duplexes offering that return if they are mortgaged for 30 years, harder to find when mortgaged 20 years.  Those $100k duplexes will take you roughly $25k to get into.  Sooo, if you have $500k sitting around, you will be making 10% on your money however you can refi at a 70% loan ratio so will get you $14k to reinvest so therefore you need $50k to get 3 duplexes ($25k for the 1st, $25k for the 2nd, refi both at 70% and use to buy your 3rd) so in reality you should only need around $330k to make $50k BUT you now need to pay a note on those refi's so that will reduce the $50k to, I don't know, maybe $35k .  I know all this off the cuff crunching may seem humorous but I"m just trying to quickly ascertain how good of an idea it is to invest in rental properties with the main idea being to passively maintain a middle class living?  If the idea is simply to have the rents pay the mortgage off in 15 years, then it makes much more sense as an investment if you don't mind 15 years of tenant and repair headaches, before cashing out.  I'd love to hear some feedback because at the end of the day, at age 54, I'm looking for some avenue for being able to retire without starving in 10 or so years.  

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    8y

    Some of these comments are downright rude and nosey.

    Good for you Junior! Keep striving!

  • Investor · Fontana, CA · Member since 2017 · 95 posts · 59 votes
    8y

    Great Job!

  • Shallowater, TX · Member since 2017 · 3 posts · 1 vote
    8y
    @Junior Picanco Awesome!!
  • Taunton, MA · Member since 2017 · 4 posts · 1 vote
    8y

    @david Zheng  it sounds like a lot of skeptisim as well.  great job @junior picano!   thank you for the motivation!!

  • San Francisco, CA · Member since 2017 · 3 posts · 0 votes
    8y
    @Caleb Heimsoth oh this on a scale from 0-1000? I thought you were referring to price ranges. I’m looking to get into multIfamilIes and apartments, mind if I PM you to pick your brain?
  • San Francisco, CA · Member since 2017 · 3 posts · 0 votes
    8y
    @Junior Picanco congratulations and great work! I’m still a newbie and would like to jump in the by the end of this year in multi family and apartments. Mind if I PM you to pick your brain? I was definitely looking to open an LLC for asset protection but it’s unique to me that you have three under your belt!
  • Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
    8y
    @David Zheng @Justin Jeffrey I complete agree with you guys. There will always be those individuals on these and other types of forums who are all talk and no action. In other words "haters" Thank you both for the very kind words and I wish you both much success in your real estate and personal investment careers! Junior
  • Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
    8y
    @Albert Chen absolutely, PM me lets connect
  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Originally posted by @Albert Chen:
    @Caleb Heimsoth oh this on a scale from 0-1000? I thought you were referring to price ranges. I’m looking to get into multIfamilIes and apartments, mind if I PM you to pick your brain?

     Sure go for it

  • Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
    8y

    Congratulations!  Thanks for sharing your inspiring story.  Just goes to show if you put yourself out there, good vibes will ebb and flow your way.  Keep it up bro!

  • Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    8y

    @Tom Chase - it depends on a bunch of things:

    1) What kind of financing and whether you can get all the financing you need. I finally solved this problem in the past few years.  I have formed relationships with investor friendly lenders that focus on the property and not my W2 income or tax returns.

    2) What kind of deals you acquire. Rentals in low income areas will be cheaper and cashflow better on paper but you'll get little to no appreciation. Rentals in high income areas will be more expensive and cashflow very little but likely appreciate well. I say "on paper" because low income properties cashflow less in reality. You will spend more money on maintenance, repairs, tenant turnover etc.

    3) If you buy right. Anyone can go on the MLS and buy an "investment property" but that doesn't mean it will cashflow. The numbers from the seller are skewed in their favor 99.9% of the time. You will never make as much money per minute as you can by negotiating. If you buy a $200K property for $175K by negotiating... how much time does it take? A few minutes? Let's say it takes a total of 3 hours of back and forth calls and emails. That's over $8,000 per hour.

    4) Whether you manage your investments properly.  There are countless ways you can make or lose money on a property (not overpaying for contractors, shopping for insurance, using LED bulbs, keeping up with maintenance issues before they turn into big repairs, getting quality tenants etc)

    I could go on and on but you get the point.

    Anyway, feel free to message me about any of the above.  I'm always willing to provide advice.  A good number of investors helped me when I was starting out and I enjoy paying it forward.

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