Need a team (agent, contractor, etc ) I'm a newbie phx,az
Member since 2019 · 37 posts · 6 votes
I just decided a week ago that I need to be financially free in 6 years.
My goal is to own a multi family rental that generates $200000/year or more.
I have to start off small because I don't have $2 million dollars laying around.
I've called agents, looked at properties on loopnet.com, started reading some books, and watched YouTube videos.
What I'm realizing is that I need an awesome team of professionals that can
A. Let me know if a rental deal is good or not
B. Help me get the best loan
C. Identify and fix and structural,mechanical, electrical etc issues on the rental
D. Manage the property 100%. Collect the rent, deposit the checks,answer the tenant concerns and complaints and other issues.
I'm targeting the Phoenix metro area. I love Tempe and Scottsdale. These communities seem the most robust for employment and entertainment. However I'm looking all over the metropolis.
@Derrick U. Hello Derrick. You need to go about this a different way. You, yourself need to know hat is a good deal. You need to educate yourself, research MSA's and add value to for another investor and see if they will put you under there wing. Raise capital will can talk about later. Have you been to your local REIA meetings, networking events, told everyone what in intend to do? You have a dream now. A team is not going to follow your dream yet. As you build yourself up your team will start to build up.
@Derrick U. are you in a position to act on a deal and close when you find one? Do you have the down payment funds available one net worth requirements to qualify for the loan? You need to have these pieces in place before you put together a team.
@Derrick U. Hello Derrick. You need to go about this a different way. You, yourself need to know hat is a good deal. You need to educate yourself, research MSA's and add value to for another investor and see if they will put you under there wing. Raise capital will can talk about later. Have you been to your local REIA meetings, networking events, told everyone what in intend to do? You have a dream now. A team is not going to follow your dream yet. As you build yourself up your team will start to build up.
@Derrick U. you’ve got the right idea but as @Greg Dickerson and @christoper hunter mentioned there’s some fundamentals that you’re going to need to establish that will bring legitimacy and value to a deal. Every real estate deal needs 3 things: Money, expertise and effort. You need to be able to contribute in at least one of the areas. Focus yourself on getting education and networking relationships to build value in these areas.
The Phoenix MF market is very hot right now at all levels. The entry level (< 20 units, < $3M) for C class value-add properties are running at 5 - 5.5% cap rate and are often swallowed up quickly by California 1031 money. So you need to be ready to pull the trigger on an offer very quickly and close almost as fast (due diligence and funding).
Good Luck!
@Derrick Umphlett Sounds like you’ve got a great goal in mind. What is your first step going to be in cultivating the perfect team?
@Derrick U., what do you bring to the deal? You want these people to do literally everything for you, while you just sit around? A team is a partnership, like many partnerships if it's one sided things will falter...
If you are just interested in investing cash with little to no work on your end look into a syndication
Before finding a team I would figure how a strategy to purchase that many cash flowing assets with no money. It's even harder if you plan to use a manager and contractors to take care of everything. I think you need to first answer some of your own questions yourself. Being an Investor and Real Estate Agent / Realtor in Lansing Michigan, I have clients ask me often to "find them good deals". Deals are different to different people based on several factors. Identifying what makes a good deal to you makes it easier for your team to help you accomplish what you want.
A. Let me know if a rental deal is good or not (You should identify what criteria you are looking for, and ask agents to find that for you)
B. Help me get the best loan (You should talk to a minimum of 20 banks, preferably small banks and credit unions, tell them what your plans are and ask their advice on what products are best suited for you and how to get started)
C. Identify and fix and structural,mechanical, electrical etc issues on the rental (You should network and not only get referrals from other investors on contractors but ask contractors to visit their job sites, learn the trades, learn what makes a good contractor in the first place)
D. Manage the property 100%. Collect the rent, deposit the checks,answer the tenant concerns and complaints and other issues. (Robert Kiyosaki and I both suggest managing your first few properties yourself. Again, you'll learn the complexities of it, what makes a good manager and be better equipped to hire one when you need one)
@Christopher Hunter
What is an MSA and REIA?
@Sam L.
Agent: gets the commission
Property manager: gets revenue from the rent
Contractor: is paid for and renovations.
@Christopher Hunter
I appreciate your advice but I work full time and on the weekends to raise capital for my dream.
Is there any other way to educate myself besides shadowing someone?
My biggest concern is buying a property that loses value after I purchase it and tenants that are inconsistent, that destroy the units, or that are litigious.
When I look at a property I ask myself if I'd want to live there and would I pay that rent. It's hard to figure out because most of the time I'd want to live in the apartment but I wouldn't pay the asking rent. I'm seeing a $1/sf to $1.50/sf for what I consider dumps. In fact I wonder who's paying these rents sometimes. It must comprise close to 50% of their income per month.
That's concerning too because what if a recession hits us again? These people won't be able to afford to rent these apts. Then what? People start moving in with friends and family and the demand for rental homes drops along with the price.
Essentially where are they getting these rent prices from? Are people so desperate to live in a particular area? I guess their job or school brings them there and they find themselves with limited options.
My dream is to one day (in six years) own something like this.
https://www.loopnet.com/watchlist/Folder?Id=16496626&ListingType=FS
Anyway these are my concerns.
You're new to real estate investing, so here's a little advice to help you avoid some mistakes I've seen others make in the past.
A. Let me know if a rental deal is good or not
Do NOT outsource your thinking. You have to understand that agents are salespeople, and only get paid when you buy something. Which leads to a natural motive to sell you something.
Plus, most agents don't understand how to analyze investment property, and if they only do it 10% better than you then it's only a matter of time before you trust their opinion and make a major mistake.
Your agent should help you see things you can't see... not piece together the entire puzzle. With my best clients, they have an understanding of the basics, but then I ask them "Well have you thought about this?" and they go "Ohhhhh I never thought of that... that changes things a bit."
That's the best partnership I can hope for, and you too. Don't outsource your thinking.
B. Help me get the best loan
It's okay to shop around for a bit, but you'll also have to find a good professional who can help walk you through the options and the transaction. It's a mix of service and product when it comes to choosing a lender. Explore your options, but don't pass up the A+ loan officer for the crappy one for 1/8% of a lower rate. You'll regret it.
C. Identify and fix and structural,mechanical, electrical etc issues on the rental
This will be determined when you do an inspection on a property you get a contract for during the inspection period. Usually your agent or loan officer will have a really good contact for this.
As far as estimates for repair, you'll need a contractor for that, and can easily find resources for that from your agent and lender too. Don't worry about that yet though... that's way down the line.
D. Manage the property 100%. Collect the rent, deposit the checks,answer the tenant concerns and complaints and other issues.
I highly suggest you consider self-managing your first property. How will you know if the property manager is doing a good job if you don't know what they're supposed to be doing?
Just last year I had the top-rated property manager in town come look at property of mine in Sacramento while I was out in Phoenix. I wanted to see what he thought it could rent for since we don't record leases/rentals on the MLS.
It blew my mind when he quoted $1,900... because we ended up renting it ourselves for $2,350. He was WAY off the market rent and his contract/service sucked too. I deal heavily with investment properties so I knew the market better than he did, and he's the property manager!
Outsourcing my thinking would've cost me $450/mo if I had gone with him. And the same can happen to you too.
For now I suggest listening to the podcasts, reading the forums, and getting educated on the market. Team up with a local lender and real estate agent as those will be the cornerstones of your operation.
Later on you can add the rest of the pieces. There's lots of opportunity out here in Phoenix, but lots of pros out here too. So study to become one and you'll get that $2M property in no time :-)
@Wes Blackwell
Thanks for the advice.
How will I know if I'm ready to purchase a rental property?
Most people are saying to start small and manage it myself but I have a full time job 3 hours from the Phoenix market. I don't quite see how that's practical. I understand however that I should understand the ins and outs of managing properties before I outsource it. I'll need to figure that one out.
Should I start with 4 units? 6 units? 10units? What's considered small? Should I stay in class a, class b or class c properties.
I feel like I know the areas in Phoenix with potential. I used to live there for 10 plus years.
When I see a property that's $1 million I don't know if it's $1 million, $2 million or $500,000. The rents are just as puzzling. These dumps in Phoenix are going for $1-$1.50/sf! (I.e. 500sf 1bd/1ba $750!! In Maryvale!!) what!!!! Absurd. Who's paying that?!? That comprises a large chunk of their take how income doesnt it?
Back to going small. Is the problem of one vacancy comprising a larger portion of your noi.
Well, I don't know all the details of your exact situation, but you could start with a single family home to get your feet wet and keep it under $250k.
You won't have as much ROI as a fourplex priced much higher, but you won't have as many headaches with tenants, termites and toilets either.
If this is your first go at investing in real estate, you should probably keep it under 5 units, as 1-4 units still qualifies as residential for lending purposes. 5+ is considering commercial and not where you should start.
Neigborhood type / class is going to depend on your personal tastes. Maybe it's an area of Phoenix you're already familiar with, maybe you want the highest returns possible no matter the neighborhood quality, maybe you'll take lower returns for a nicer neighborhood so you have less risk to worry about. To each his own.
I would consider talking with a real estate professional for 20-30 minutes to kind of flesh out your goals and the next steps to take. That's the only real way to do it effectively and get all your questions answered. Feel free to reach out if you need help or have more questions.