Real Estate Investing Portfolio Consultation

Arron Paulino · 2023-09-28T22:43:28-07:00

I have now been investing in real estate since the pandemic in mid-2020 and have gotten the hang of analyzing deals as well as actually adding SFRs from Memphis, TN to my portfolio. I've kept my first rental since that time and it's been good so far. It had plumbing issues which cost me but I've held onto it since it had good rental numbers.I've had a second property that started off good but got fire-damaged so I had to sell it off after insurance paid off my mortgage and recoup a little of the investment.I've continued to add to my portfolio and I now have 6 SFRs currently rented out working on my 7th SFR BRRRR and also my first fix and flip. The return on investment has started to decrease due to the higher interest rates after the pandemic and it's taught me a lot of patience.My first fix and flip has been quite a learning experience. I have been screwed by a supposed "lender" who ended up scamming me a few thousand and a contractor that hasn't completed his end of the deal. I do not really want to put it back onto the market as I would only get what I paid for it and ultimately lose the money I paid the contractor for this project. It has been frustrating to do this but I see this as a learning experience on what to expect and not do for future deals. I am trying to find out if I need to sell off any properties or just keep doing what I am doing. I am looking for private lenders on my own time as hard money lenders are good for the short term but the cost to borrow from them eats into the potential profit. I do want to keep my current rentals so I can build my passive income on the side and strive to be like other investors doing well with a decent amount of rental properties under their belt. Eventually, I'd like to dive into multifamily and gain experience there.I did start off being a private lender myself but wanted to get my feet wet with BRRRRs of my own attaining passive income on the side of my W2. It really was great being paid monthly or waiting until the end of the project to get paid out. I could go this route again once I complete my fix and flip and rental project. My goal is to match my current W2 even double or triple it so that I can just enjoy work without having to think of the financials of it.I appreciate everyone taking the time to read this and share any tips on what I should do moving forward!

James Martin

Property Management · Memphis, TN · Member since 2009 · 667 posts · 362 votes

3y

Congratulations on getting started in the rental world. If you’re trying to operate your portfolio from far, I really don’t see this being sustainable. I would partner with a management company that can be your eyes and ears locally. Some can help refer you to lenders and contractors.

1 Reply

Noah Laker

Real Estate Broker · Sacramento, CA · Member since 2021 · 517 posts · 408 votes

3y

What's up Arron, I'm a broker and property manager here in NorCal (100+ listings on Airbnb).

Congrats to you for the aggressive growth strategy, and for having the clarity of mind to learn a lesson instead of get discouraged and quit.

I think your story highlights the importance of working with trusted partners. When you're dealing with such sensitive transactions, your partners will make or break a deal.

If you're thinking of selling off properties to consolidate, you should look at each one individually from an equity standpoint and consider what you'll be doing with the proceeds. 1031 into something closer to home? A lot of my clients right now are coming to Sacramento from other areas, mostly Bay Area investors.

0 Reply

Jake AndronicoBusiness Member

Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes

3y

@Arron Paulino

Congrats on your early success! Appreciate the detailed post.

That's very interesting. My parents have an SFR in Memphis and it was fire damaged as well. Luckily insurance basically gave them a brand new house.

In my eyes, you do not "need" to do anything. If you're OK with your strategy and the issues that seem to arise with it, then chugging ahead may make complete sense for you.

If your overall goal is to match or exceed your W2 income without having to think about it, then putting managers in place and maybe even paying off your rentals is what comes to mind for me.

If you were to sell your properties and 1031 into a multifamily asset, that could be an interesting option as well.

I'm sorry you had some bad experiences with a few individuals - never fun!

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0 Reply

Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

3y

You didn't mention how you are sourcing properties.

This will be a big key to your ongoing growth and success.

Too many investors are only buying off the MLS and think getting a property at 5-10% below asking price is a "good deal".

The reality is that a "good deal" is one that meets your investment goals. So, offer that price or less, not anything based upon what the seller is asking.

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Arron Paulino

OP

Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes

2y

Quote from @James Martin:

Congratulations on getting started in the rental world. If you’re trying to operate your portfolio from far, I really don’t see this being sustainable. I would partner with a management company that can be your eyes and ears locally. Some can help refer you to lenders and contractors.

Appreciate you! I have hired property management from the start of my journey so I wouldn't need to oversee my properties daily but I still manage my property manager to ensure they are on top of things. They've been able to connect me with an in-house lender and contractor to make the BRRRR/flip process that much easier.

1 Reply

Arron Paulino

OP

Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes

2y

Quote from @Noah Laker:

What's up Arron, I'm a broker and property manager here in NorCal (100+ listings on Airbnb).

Congrats to you for the aggressive growth strategy, and for having the clarity of mind to learn a lesson instead of get discouraged and quit.

I think your story highlights the importance of working with trusted partners. When you're dealing with such sensitive transactions, your partners will make or break a deal.

If you're thinking of selling off properties to consolidate, you should look at each one individually from an equity standpoint and consider what you'll be doing with the proceeds. 1031 into something closer to home? A lot of my clients right now are coming to Sacramento from other areas, mostly Bay Area investors.

Hey Noah! Nice to meet you and see you're also from NorCal.

I know I really wanted to get an aggressive start at the beginning since I have time on my side rather than wait. I've been patient and willing to learn on my journey so I don't fall for the same trick twice.

Totally agree! I am learning to really vet my team and make sure they have credible references to back them up so they aren't all talk.

I like the idea but I also want to build a stable and profitable portfolio with enough units where I can work for fun and not have to push myself too hard. I'd move to Sacramento due to the better living opportunity but I enjoy the life I currently have in the Peninsula. Maybe down the road.

1 Reply

Arron Paulino

OP

Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes

2y

Quote from @Jake Andronico:

@Arron Paulino

Congrats on your early success! Appreciate the detailed post.

That's very interesting. My parents have an SFR in Memphis and it was fire damaged as well. Luckily insurance basically gave them a brand new house.

In my eyes, you do not "need" to do anything. If you're OK with your strategy and the issues that seem to arise with it, then chugging ahead may make complete sense for you.

If your overall goal is to match or exceed your W2 income without having to think about it, then putting managers in place and maybe even paying off your rentals is what comes to mind for me.

If you were to sell your properties and 1031 into a multifamily asset, that could be an interesting option as well.

I'm sorry you had some bad experiences with a few individuals - never fun!

Thanks! I just wanted to lay it all out there and see how the community may be able to advise me.

Small world. The one that got fired damaged had potential but met a tragic end quickly before I could benefit from it.

That is what I figured as I do not plan to do anything drastic anytime soon. I like the idea of continuing to add to my rental portfolio and building experience along the way to prove to other investors that I am the real deal. It's been up and down with the return on investment monthly due to property inquiries or nothing going on which I like more.

That is the overall goal. I have property management in place since the beginning and working on paying the property off over time.

If the right opportunity did come up, I would definitely consider this option. One roof with more units is easier to manage than multiple individual properties.

The pain is temporary but the learning opportunity is worth so much!

1 Reply

Arron Paulino

OP

Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes

2y

Quote from @Michael Smythe:

You didn't mention how you are sourcing properties.

This will be a big key to your ongoing growth and success.

Too many investors are only buying off the MLS and think getting a property at 5-10% below asking price is a "good deal".

The reality is that a "good deal" is one that meets your investment goals. So, offer that price or less, not anything based upon what the seller is asking.

I obtain properties via the MLS or off-market.

I am on a lot of mailing lists so I get emails daily. I did make sure that these properties fit my buying criteria and are in areas that I've identified as good sections of certain zip codes.

I also use a spreadsheet to calculate the numbers of a property MLS or not so I don't just buy any deal.

For sure! I make sure to go off of my reasoning rather than the seller's at the end of the day.

0 Reply

Noah Laker

Real Estate Broker · Sacramento, CA · Member since 2021 · 517 posts · 408 votes

2y

Quote from @Arron Paulino:

Quote from @Noah Laker:

What's up Arron, I'm a broker and property manager here in NorCal (100+ listings on Airbnb).

Congrats to you for the aggressive growth strategy, and for having the clarity of mind to learn a lesson instead of get discouraged and quit.

I think your story highlights the importance of working with trusted partners. When you're dealing with such sensitive transactions, your partners will make or break a deal.

If you're thinking of selling off properties to consolidate, you should look at each one individually from an equity standpoint and consider what you'll be doing with the proceeds. 1031 into something closer to home? A lot of my clients right now are coming to Sacramento from other areas, mostly Bay Area investors.

Hey Noah! Nice to meet you and see you're also from NorCal.

I know I really wanted to get an aggressive start at the beginning since I have time on my side rather than wait. I've been patient and willing to learn on my journey so I don't fall for the same trick twice.

Totally agree! I am learning to really vet my team and make sure they have credible references to back them up so they aren't all talk.

I like the idea but I also want to build a stable and profitable portfolio with enough units where I can work for fun and not have to push myself too hard. I'd move to Sacramento due to the better living opportunity but I enjoy the life I currently have in the Peninsula. Maybe down the road.

Sacramento will welcome you with open arms! Holler at me any time.