Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
I'd start with the free guides under Education up top. Listen to the podcasts. Pick a niche and master it.
Vague statements of 'the best way possible' from low post members who know nothing of your goals or situation should be viewed with great scrutiny @James Lee.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
I'd start with the free guides under Education up top. Listen to the podcasts. Pick a niche and master it.
Vague statements of 'the best way possible' from low post members who know nothing of your goals or situation should be viewed with great scrutiny @James Lee.
Property Manager · Gary, IN · Member since 2015 · 66 posts · 60 votes
10y
Absolutely. I agree with Steve.
Don't take my word from it there is a ton of education out there on what is a good cap rate? To pay cash or not? How to buy leverage? What is a good cash on cash %. What areas to buy in and not? How to refi? But the true value to you is how does it effect you the investor in the best possible way, what kind of risk you are ok with. Etc.....
As far as Stevens negative connotation about me?
I'm sorry I have been busy building people's portfolios I haven't had time to post on bigger pockets.... I have seen that this is something I should be doing if I want to be known. And we all know that perception is everything...
We have been a part of thousands of transactions over the last 10 years... Most of our transactions happen by face to face meetings and we look at what the investors goals are and then help them try to reach them...
I am happy to help in any way possible :)
For now, I want to learn the basics and find out how to calculate if it's a good rental investment property. Do you sell cashflow properties?
Other than a personal application of that question, the general "selling a cashflow" is an exit strategy for buy&hold investors like myself. (hint, see profile)
Property Manager · Gary, IN · Member since 2015 · 66 posts · 60 votes
10y
A good cap rate in a market that does not see huge inflation (like the Midwest and Alabama etc...
Is 9-11%. Other areas like California and New York or Seattle you will be looking at 6-8% as good cap rates
A simple explanation of a cap rate
A cap rate is what you profit per year (after all expenses) divided by how much the all in cost of the Property is...
Assuming you pay cash for the property the amount you pay for the mortgage PI does not come out (if leveraged)
Cash on cash return = your total profit with ALL expenses taken out divided by the total amount of money you have in the property
If you buy turn key cash flow properties you have to look at the whole picture... If the property is brand new (or built in the last 10 years) you will probably be in the 8-10% range.
Older properties you can see the 10-12 range if you buy the properties all fixed up and rented and managed..
If you can find a great boots on the ground person to work with you to help you
1. find properties
2. Close the deals
3. Rehab the properties
4. Rent the properties
5. Manage the properties
Then I think you will be more on the 11-13 cap range
I prefer this strategy as well if you have cash
For example... If you have $100,000.00 in cash and want to buy turn keys leveraged you have 3 choices
1. Buy one house cash and stay in the cash position.. Although low risk this is a slow way of creating wealth and it is not taking advantage of the low interest rates or all the tax advantages that the US has with owning real estate
2. You can buy 4-5 turn key properties putting 20% down meaning at the end of this your cash is out and gone forever until you make your money back on rents or you sell at some point to get your money back
3. You buy one house at a time with cash, get a wholesale cash price, set up deferred refi up when you buy and refi within 6 months getting 70% -75% of appraised value back
With cash on cash returns at this point over over 100% and often get all of your money back with cash on cash returns of infinity!!!!.... This is my favorite strategy as you are all into the property at a much lower Ltv and if the economy tanks you have 30% to drop before you are in trouble..( even though a cash flow Propery does not know what it is worth even in bad economies because it is still cash flowing) your payments are lower so you are keeping more of the money monthly and did I mention you get most or sometimes all your money back... Using This strategy you are almost unlimited on how many deals you can do because you should not run out of seed money to do deals...
Sorry for the long explanation but this is how I bought 60 rentals last year and plan on buying 50 plus every year till I reach 500 and then maybe sell off the portfolio and start working on another one :)
I also only do lease options. This gives me a minimum of an extra $3,000.00 in my pocket up front for the non refundable option fee... A true investor should always be looking at how quickly can I get all my money back that I put into a deal....
Thanks
Tom Olson
I would love to speak to you or anyone else looking to get into cash flowing properties about a new program that we have implemented in the Birmingham, AL market. Our program is pretty much exactly what @Tom Olson describes in the post above:
1. find properties 2. Close the deals 3. Rehab the properties 4. Rent the properties 5. Manage the properties
The result of these 5 steps is you, the investor, getting into turnkey properties for way less $ and with way more equity than if you purchased an already rehabbed house from a turnkey provider.
@James Lee or anyone else interested in learning more, please PM me and we can connect and go over the details.
A good cap rate in a market that does not see huge inflation (like the Midwest and Alabama etc...
Is 9-11%. Other areas like California and New York or Seattle you will be looking at 6-8% as good cap rates
A simple explanation of a cap rate
A cap rate is what you profit per year (after all expenses) divided by how much the all in cost of the Property is...
Assuming you pay cash for the property the amount you pay for the mortgage PI does not come out (if leveraged)
Then I think you will be more on the 11-13 cap range
Thanks
Tom Olson
I gotta agree with @Steve Vaughn. Beware. Tom, your idea that a cap rate is your profit per year is flawed. Also it ONLY uses operating expenses for calculation, not all expenses. Cap rates change for time, location, and area type. Buying using some "range" of stated cap rates is for fools. A cap rate only measures what the market is paying for NOI (whether profitable or not), nothing more.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Don't buy any guru programs, don't buy any properties out of state, and never ask a barber if you need a haircut. Everything you need to learn is right here in the BP forums, in the library, and from mentors at local REI meetings. There is a great REI meetup in lake forest every month; just investors helping each other out, no sales pitches ... the rest you will learn hands on as you go. If you don't already own your primary residence, that is a great place to start. I grew a nice little portfolio of cash flowing single family homes in nice neighborhoods in SoCal simply by turning my primary into a rental when I bought my next place ... it can be done locally.
Real Estate Broker · Southeast · Member since 2014 · 175 posts · 63 votes
10y
@Steve Vaughan I'm not sure what how many posts you have has to do with anything besides showing how much time you spend in front of a computer or mobile device. Some of the largest and most successful investors I know and sell to have no social media presence what so ever and I would accept their guidance and act before ever polling online. BP is definitely a valuable source of information but # of posts is just that, # of posts - we all started with 0, right?
@James Lee remember, we are all in the same business here. Everyone got to where they are using different methods - who is to say which is the best fit for you other than you? Do your research, talk to as many people as you can then act based on your findings and how you are most comfortable. Beware of those who put others and their methods down because what may work for them may not work for you... be open minded and absorb knowledge whenever you can.
@Tom Olson thank you for your input, I enjoyed reading your post and how you got t where you are.
As always, if anyone is interested in speaking about Birmingham, Alabama, PM me. I can help you invest or just share war stories :)
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
@Jarrod Cook- thanks for a fair response. Nice jab about sitting in front of a device a lot!
It's not the number of posts, but the quality. If someone has a low post count AND is vaguely or not so vaguely referencing a program of some type rather than providing content and value, then my radar kicks in. Apparently it resonates with others as well.
When I chimed in, his posts were classic 'guru' language. Lets review: "I can help you with this" "I can help direct you" "I do and I can help you buy rentals in the best way possible" Spit it out, man! Share! Enlighten us! For only $1997....you can, too!... I was sure that was coming next.
Oh - lease options, his only strategy apparently, is his 'way to buy rentals the best way possible?' Funny that. Contradictory on multiple fronts. I have done many lease options and write about how to and not to do them freely. I am not vague about it in any way.
I will be fair and mention @Tom Olson again. Maybe he'll answer a question about how doing a lease option is the best way to buy? I have never bought with the execution of a lease and option. Only got title and 'bought' after exercising the option. Discuss among yourselves. Peace!
Real Estate Broker · Southeast · Member since 2014 · 175 posts · 63 votes
10y
@Steve Vaughan glad you liked my "jab". it took a few times then deleting what i wrote before I finally got it right :)
i get your point and appreciate it as I do most posts. i am here to help others but also here to learn - that sounded a little Billy Madison for those that remember that movie.
I did not mean to be vague about our program, I have explained it fully in other posts and did not want to hijack this one. I thought a simple mention would suffice and anyone who wanted to learn more could PM me to speak further.
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
10y
James I noticed you are in in Irvine. You should look at Women's invest club in Irvine that is not just for women. Many of your questions will be answered
Real Estate Agent · Saint Louis Park, MN · Member since 2015 · 213 posts · 82 votes
10y
As a relatively new member in the learning/soaking it all in phase as a newbie investor who works full time in K-12 education, BP is essentially a 'media center' of information. I have never purchased any 'guru' programs, so I won't comment there, but can tell you that most motivated and hard working people are willing to work, read and learn from those who know best - and I believe those all exist through members and media on BP. In the world of teaching, much like on BP, there are no true secrets to real estate, or magical ideas that aren't already on the forums and podcasts and blogs.
@James Lee I would commit to being active in reading blogs on BP, listening to the podcast, attend local meetups and build relationships with people. That's what I am committing myself to doing in the next 3-6 months. Just keep on digging and asking questions man! Buying someone a lunch who is an expert in your area is almost always better than signing up for a course or program online. SH
Taylor, MI · Member since 2015 · 11 posts · 4 votes
10y
I'm surprised no one mentioned using the search platform. Any time I've had a question I've just typed it in to the platform and...BAM! Answered. This is why I don't have many post yet have learned more information than any "Program" can provide.
Waunakee, WI · Member since 2015 · 63 posts · 28 votes
10y
@James Lee speaking for me personally I would not spend big money on gurus or academies. You can learn most of what they teach by reading a few books. The millionaire real estate investor, and Brandon Turners's two books just came out and they are all very good. I've read two of them and am 3/4 through the other.
A guru seminar can cost you a couple of grand, those books cost me like 30 bucks and a trip to the library. I am a buy and hold investor so the material may be different if your looking at wholesaling or flipping. But find the niche you want, learn as much as you can quickly and use the guru money towards your down payment.
First, don't go to any seminars or purchase any guru stuff. It's just a waste of money (generally speaking). Here is what I did. Once I realized I wanted to start doing this I started saving up money (as much as I could because I had no idea how much I'd need), then I spent 2-3 years just reading books. I probably read 100 books in 3 years. In 2010, I bought my first SFR (sub-$100k) and now almost 6 years later, I've got 12 and am looking for #13 and so on (I have the cash for multiple). FYI, I never stop educating myself (keep reading).
It's not rocket science. As you read through the books, they will explain all the "numbers" in a myriad of ways and you'll get it (read enough on BP and you'll get it to). The concepts are not difficult. It's simple math really. All I really care about is cash flow, which is rent - expenses (see, simple). Over the years I've developed a spreadsheet that spits out all kinds of numbers, does IRR analysis, etc. But in the end, my cash flow tab is the only one I really look at closely. The other stuff calculates so it's nice to see, but if it meets my cash flow goal, I buy the property. All 12 positively cash flow quite nicely. Of course I've had unexpected expenses along the way which have hurt cash flow for short periods of time (you can't avoid that type of stuff).
So in the end, figure out what you need to cash flow monthly and just jump in (when you're comfortable). Sub-$100k properties are a great place to start. Even unrented, they only cost you ~$500/month. The one thing I preach is to make sure you are comfortable (not happy, just comfortable) with the worst case scenario (it goes unrented for a long time). If you can afford that, the "risk" is low in my opinion. If it goes unrented and you'll be having a hard time putting food on the table or paying your own rent/bills, then perhaps you're not quite ready yet to buy properties just yet.
James I noticed you are in in Irvine. You should look at Women's invest club in Irvine that is not just for women. Many of your questions will be answered
Thanks. Yes, I been to a couple of their events. I am waiting for the next cash flow 101 event.
Rental Property Investor · Fond Du Lac, WI · Member since 2015 · 261 posts · 78 votes
10y
I'm sure all of the advice you could ever need has been suggested already, but for me personally, the BiggerPockets Podcast has been huge! There are over 150 of them now and they all have great tips and pieces of advice
Norwalk, CA · Member since 2013 · 6 posts · 0 votes
10y
Hello everyone , i'm a newbie from norwalk, CA and I wish I would of found BP before I purchased the guru stuff, I could of used that money for a down payment. Live and learn, we'll I'm back to square one but with -0- money any advice on how to buy with no money or very little money down ?