18k Houses (Out Of State Investing)

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18k Houses (Out Of State Investing)

Jordan Scott
Boca Raton, FL · Member since 2017 · 10 posts · 3 votes

Hi I'm Jordan I'm new here, love the site, learned so much. I just bought my second house in Akron Ohio for $17k( I live in Florida) my first one I bought last year for $18.5k and it has been rented for $650 without one missed rental payment. I bought the first two cash and plan to buy two more by August of next year using income from my job. The plan after that is to start using leverage and cashout refi on my places, and want to own 15 total houses 4 years from now. Then I want to move onto multi families. I have an amazing property management in place who ive met and trust, and ive read to stay away from these houses but they are actually in decent neighborhoods and the ROI is to amazing to pass up, Just wanted to get everyones thoughts and advice.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y

I would be working on your refi .. you might find small balance investor loans for someone who does not live in the area pretty tough to get.. May take you a while to find a willing lender.

good luck with it

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    I would be working on your refi .. you might find small balance investor loans for someone who does not live in the area pretty tough to get.. May take you a while to find a willing lender.

    good luck with it

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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    Jordan Scott I think Jay Hinrichs hit on the toughest part of your plan. "Conventional" is out for your $18K properties. And if you did start buying properties you can get conventional financing for you'll hit your 10-loan limit before you hit 15 properties. Maybe you just keep buying cash and build your seed fund for the multifamily purchase. I don't know how banks will look at the "I" of your $18K properties but there's certainly no "D" to worry about at that point. Maybe one question to ask is where the number "15" came from before investing in multifamily?
    0Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    Yeah I agree with you and Jay in that financing might be hard, but i have just started looking into it. Ill let you know what I find out. Even without financing the out of state investments I plan on buying 3 houses cash a year with the cashflow from my places and income from my job. I'm aiming for 15 because i Believe that will give me the ability to quit my job and full time. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    absolutely nothing wrong with stacking these up debt free its a great plan.. as long as income is consistant and houses don't get trashed.. you should be in great shape... don't let folks tell you your nuts for not taking on debt...

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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    On the plus side, by the time you hit 15 your sample size will be much better than today's n=1. And if you have a PM you'll know if (or if not) they are someone you can scale around. If your all-cash SFR stricture works for you then you won't have to stop at 15. There no reason, after all, that you have to go multifamily.
    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    9y
    I could be wrong, but maybe someone who's a lender would set me straight if I am. Once you hit say 7-10 of those properties couldn't you do a portfolio commercial loan on all of them? Get one loan, bundled together
    1Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y

    @Caleb Heimsoth I'm no lender either but the terms for a portfolio loan are (in every one I've seen) different from the conventional 30-year-fixed options.  So you could end up paying points, have a different DTE ratio, having a fixed rate only for ___ number of years, pay a higher interest rate, etc.  It's not that you couldn't do a portfolio loan but some people (mistakenly, in my opinion) think it's just like getting a 30-year-fixed conventional loan, just spread across a bunch of properties.  

    2Reply
  • James Galla
    Attorney · Akron, OH · Member since 2016 · 535 posts · 389 votes
    9y

    Just curious, do you rent to college students, or are you going with regular Akronites?

    1Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    my first house is a 3 bedroom that is rented out to students that go to Akron U, my second weve had some showings to all Akronites this week but not one has been approved yet. Thats one advantage I like about owning propertes free and clear is we can afford to take oir time vetting tenants. 

    0Reply
  • Mitchell Schlau
    Santa Ana, CA · Member since 2016 · 1 post · 0 votes
    9y

    Hi Jordan, I live in So Cal where the housing prices are too expensive. My parents used to live in Boca and I have an Aunt and Uncle and cousins there. I am originally from Brooklyn, NY and will be in NY in September. I am interested in buying some houses in Ohio in the price range you mentioned. Can you be of any assistance?

    Best regards,

    Mitchell Schlau

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y
    Financing wise you would be farther ahead to shift your investment plans now rather than later to insure a higher chance of success. Instead of continuing down the small time hobby path of SFHs concentrate on saving and purchasing one MFH per year with leverage. Poor planning now will result in you having to liquidate later to meet your growth requirements ultimately taking 1 step forward 2 steps back. 

    You are presently planning is short sighted and will not succeed. Think long term now.

    0Reply
  • Daniel Montes
    Rental Property Investor · Brooklyn, NY · Member since 2014 · 92 posts · 17 votes
    9y
    HiJordan Scott how are you finding these properties an management I might be interested in this market.
    1Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    Im using the MLS

    0Reply
  • Miguel Nava
    Rental Property Investor · Houston, TX · Member since 2016 · 91 posts · 38 votes
    9y
    Jordan Scott and what about property management, how did you find that? is the property management company helping you get the houses rent ready?
    0Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    The property management i have in place is what makes it all work, They are family owned. They do all the screening, advertising, maintenance, evictions, prety much everything I pay them 10%

    0Reply
  • Steve Porter
    Investor · Akron, OH · Member since 2013 · 24 posts · 4 votes
    9y

    Jordan, I've been buying a lot of properties in the akron area. I'm curious as to whom you use for management, mostly because I've not found a really good company and am still looking but I honestly am thinking of just starting my own, because I currently already manage my own properties here in akron. 

    1Reply
  • Roger S.
    Investor · TX · Member since 2015 · 393 posts · 290 votes
    9y

    Wow,  I looked at Akron houses in that price range and they actually aren't too horrible,   For that kind of money here about all you can get is a burned out shell.

    0Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    I use all county neo steve, they are very honest if you go with them let thrm know I referred you. Roget its prettt amazing it? For 18k its hard to find a decent new car let alone a house.

    0Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    Quick update, i just rented oit my second house for $550. However I called my bank (USAA) and they wont do cash out refis for that small of a loan does anybody that will?

    0Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    9y

    There are two lending paths. A lending institution and private money financing. The only hope, IMO, of your refi via institutional money is via a portfolio-type tranche with a local commercial lender. And the odds of that, with you being an out of state investor, are damn near 0. If you had $1M in assets and were looking for $500K... maybe you would get someone's ear, but even then I'm not sure. There are zero institutional lenders based in Summit county, per the FDIC. So true local-based is out.

    Of institutions in Cuyahoga county, Credit First National Association has $0 in real estate loans, The Pioneer Savings Bank has virtually $0. Independence Bank has potential because they have about $30M of outstanding commercial (excluding OO) real estate loans. . But it's worth a call.

    Private money may be tough. Old housing stock, out of state investor, low asset collateral... all not great attributes. For some people, like me, that's three strikes. And that means you would be out, even at 50% of asset value. You may be able to find someone... but as @Jay Hinrichs points out, it may take a while. A long while.

    I largely agree with @Thomas S. that if you are planning MF investing, now is the time to start. I think you will find that the Akron market isn't like 10 years ago. Your search may take a little while longer than the cheap SFR. I have family in Summit county and have watched this market for a long time. MF is the only play I like there. The prevalent inventory of old housing stock has too much baggage for my taste, even after the GR when houses went for $1.

    Good luck! I think you have a decent plan.

    0Reply
  • Jordan Scott
    OP
    Boca Raton, FL · Member since 2017 · 10 posts · 3 votes
    9y

    Thanks for that info!

    0Reply
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