Introductions, and a few questions!

Introductions, and a few questions!

New to Real Estate · MI · Member since 2021 · 2 posts · 1 vote

Hello everyone. My name is Jeff, 27, and my wife, 25, have both had a vested interest in real estate for the last 2 years. In April this year we closed on our starter home, and have since been saving up and doing mountains of research into what to expect in this field.

We don't have any kids and don't plan on having any until we have at least 5 doors of real estate, in any combination of either single or <4 unit multis. We have a set roadmap on our financial and estate goals, and are both working two jobs each to get where we need as fast as we can. (We both work at one of the same jobs so we can still spend a bit of time together during breaks).

So for my questions...

1) are you or someone you know a real estate agent? My wife wants to be one, but we don't know which website / area would be the best to go to for getting certified.

2) when you bought your first rental(s), did you hire a management company immediately to tend to them, or did you manage them yourself? If the latter, how many unit(s) did you accumulate before passing them to a management company, if at all?

3) what would be your recommended minimum cashflow / cash-on-cash return for the very first rental property? Looking for percentage amounts, and my current standard is 18.5%.

Thanks for taking the time to read. and I hope to make good connections and learn a lot more here than I could alone! 

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  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y
    Originally posted by @Jeffery Burns:

    My wife wants to be an agent, but we don't know which website / area would be the best 

    2) when you bought your first rental(s), did you hire a management company immediately to tend to them, or did you manage them yourself?

    Welcome, Jeffrey!  I'll take a stab at a couple of your questions. 

    As far as your wife getting licensed.  I almost did. I was sponsored by a regional brokerage.  Here Keller Williams seem to have the best spirit of training and coopetition.  I'd talk to the DBs of brokerages she is interested in to ask.  The training for licensing for me was all online in 2011. 

    Definitely self-manage if your rentals are in your backyard.  There's a learning curve to do it effectively when starting out but to me it was worth it.  You'll need all the savings you can get.  Half of my portfolio now has a PM.  I do it for the time freedom, not cash-flow. 

    PMs are for when you're seasoned  and in the preservation phase or out of area investing or if you always plan just to have a job and up to a handful of rentals to subsidize retirement. 

    COC return requirements vary widely by area and what stage you are in. I used to get 18% no problem, but back then a good mortgage rate was 6.5% and prices were much lower.

    I am in an equity capture expensive market, you in MI are obviously in a CF market.  Nobody would sneeze at an 18% return, just stay in decent neighborhoods and screen well. 

  • Member since 2020 · 15 posts · 8 votes
    4y

    Sent you a message :)  Welcome!

  • Investor · Mobile, AL · Member since 2020 · 11 posts · 8 votes
    4y

    Hey Jeff, great to meet you! I'm a Turnkey property provider here in Mobile, AL and I personally own a couple of properties at age 25, so I'll take a jab at some of your questions! Before I try, congratulations on mapping out your road to financial success. One of my favorite quotes is by Seneca, which says “If one does not know which port one is sailing, no wind is favorable.” As long as you have a goal in mind and you're working towards it, you are a success. 

    1) I have my real estate license. I think it depends on which state you want to get certified in, that being said I'm in Alabama. I used a site called Mbition (Google it, idk if I'm allowed to post links here) but a lot of guys in our office use CE Shop. 

    2) I think my situation is a little unique here, but my Turnkey company works directly with our own in house property management company, which currently manages about 700+ doors. Our company charges a 10% property management fee and drops to 9% if you bring us 3 doors or more. If we sell you one of our properties, we give 8%. I got a discount because I work directly with the company, so that's why I went with a PM first thing. For a few months, I had no issues and I was thinking, why don't I just manage this myself? Then we had a freeze and my pipes busted, and it was a super busy time for me. My property management company took care of all of it for me after asking for approval, and it was one less thing for me to worry about. I like that it's convenient and they do a lot of the leg work such as tenant placement, working with section 8, repairs and maintenance, increasing rents after lease expires, evictions, etc. I've seen it first hand, there are quite a few headaches when it comes to managing properties. But maybe for your first, manage it yourself and see what you can learn from it. Also learn how to choose a good management company when you start scaling. 

    3) I look for 8% Caprate or more, double digit coc, and minimum of $200/mo cashflow. I feel like I'm kind of flexible here, it really just depends on how the deal looks. I'm doing some BRRRRs where I can get these numbers are better, but I also buy properties that are "Turnkey" or even MLS deals.

    Feel free to message me anytime, I'm trying to get the hang of teaching thing and I'm happy to help any way that I can. Also thanks for asking this, I'm excited to read a few of the replies here! 

  • New to Real Estate · MI · Member since 2021 · 2 posts · 1 vote
    4y

    Thanks everyone for the prompt welcomes!

    @Steve Vaughan, thanks for the little tips. It is a pretty tight market in Michigan! But I've lived here my whole life. I have a 60-ish mile radius around my home that I'm looking at, worst case. But I have my sights set in the micro market around the city I live in, so it shouldn't be a problem!

    @Eddie Sumerlin, yes it's not my goal to achieve richest man in the world. I just want to have it where I can work one job, my wife stays at home occasionally working her dream career, and living comfortably in middle class. We both come from poverty families, so it's really tough coming from nothing. We hope to change the family books and give our future children the life we both couldn't have. So we just have modest goals with maybe around 25-30 total doors of estate. But who knows what will come! 

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