I’m Jason Rodriguez from Tampa, FL. I am 35 years old and am considering real estate investing as a career change. Now is probably the right time for me to do this. But first I need to learn much more about it and find people who can help me make smart decisions.
Here’s my current situation:
• I own a 3/2 house in Ocala, FL (I own free and clear and pay $4,400 per year in expenses – insurance, taxes, bills). The house is in a 55 and over community and is 80 miles from me. It’s listed for rent at $750/month. Currently no tenant.
• My only debt is the mortgage on my primary residence. I owe $165,000.
• I have $150,000 in various investment funds and high-yield savings, as well as a $20,000 in an emergency savings account. I can move this money anywhere at any time without penalty.
• My 401(k) currently has $80,000
• My Roth IRA has $1,800
• I work a full-time 9-to-5 job that I don’t enjoy. It has allowed me to make and save money, but I don’t enjoy going to work, and most of my time and energy goes into my job. I need more flexibility and control over my time and schedule. I need more freedom to do things I truly want to do.
• I’m currently working with my financial advisor to develop an exit strategy and business plan for transitioning to a career in real estate investing.
• One of my biggest concerns is health insurance. My situation is unique because I have one lung, and I have to get CT scans every 6 months and see my pulmonologist several times per year. I must have health insurance and have always assumed that if I don’t have employer-provided health insurance, I could be in trouble.
Starting out, here’s what I’m looking for:
• Guidance, advice, and ideas on how I – given my current situation – can achieve greater financial freedom
• Networking opportunities with people in the Tampa Bay area
Thanks in advance for your thoughts and ideas. My experience on this site so far has been great. A very helpful resource, and I love the podcast!
Involved In Real Estate · Palm Springs, CA · Member since 2011 · 144 posts · 78 votes
12y
Wow, you do have a rather unique situation.
I'm on the other coast of Florida, so I can't help much with Tampa area, but here are a few thoughts about the investing aspect.
Real Estate investing to become financially free takes time. Don't rush it or you'll end up buying bad deals. Analyze the properties carefully. My recommendation would be to find properties with a 100% return on capital gain (minimum) and a minimum of a 10% cash-on-cash return. I recommend this because you're building wealth at the same time you are building cash flow. Some invest only for the cash flow, I prefer the best of both worlds. These deals are not always easy to find, and you may have to analyze a large number of properties before you find one that makes sense. Don't get discouraged through the process, it WILL take time.
Build a team of people you can trust, and even when you trust them, always run your own numbers to check on everything. Though I am licensed and consider myself pretty good at what I do, I set up a series of checks for my clients so they know they're getting a good deal. I recommend that not only do they get every property inspected, but also get two or three repair/make ready bids on each property, at least a desk-top appraisal by an independent appraiser for the ARV (don't go just on what I say, pay the $100 to the appraiser to get another professional opinion on that ARV). Overall, double check EVERYTHING at every step through the process and get as much done as you can during your inspection period so you can back out of a deal and get your EM deposit back if needed, with the lease amount of hassles.
Don't rely on properties increasing in value (speculation). That got a lot of people into a lot of trouble when the market turned this last time. If you start working with an agent who says anything like "in a couple of years, it will be worth a ton more" RUN - DO NOT WALK- away from this person. They don't know how to work with an investor.
Be careful if/when you work with wholesalers. I've seen many wholesalers inflate after repair values to astronomical heights to entice a buyer. Some are reputable, but many are not. Stick with your checks and balances to ensure you are getting a good deal.
Leverage as much as you can. I'm not saying go for 100% financing, but do use other people's time, knowledge and money for as many deals as you can. Yes, it may cost you some money, but if the returns are high enough after the costs, it's worth it.
You mentioned the property you have in Ocala is in a 55+ community. My recommendation would be to not purchase in these communities (HOPA communities). You're restricting not only the pool of tenants for these properties, but also your exit strategy. If you don't have the property rented at $750/month, contact an agent in the Ocala area and ask them to run some rental comps for you (preferably in the same complex). There are usually only three reasons a unit goes vacant for any length of time: Cleanliness, condition, or price. Make sure the unit is clean, in great condition and priced appropriately for the area in which the property is located.
You are wise to stay close to your home base to look for properties. My thoughts have always been that your properties should be within a 1/2 hour drive from home or work. I have had some clients go further out, but if they're too far you'll not be happy when the toilets need fixing, or driving for 2 hours to show it to a prospective tenant.
Manage your own properties until you have at least 10 properties, then maybe consider hiring a property manager. If your properties are in excellent repair when you first rent them out, and you check everything between tenants you shouldn't have to do much other than collect your rent each month. Again this goes back to cleanliness, condition, and cost.
Once you have acquired enough in capital gains through your properties, you may want to look at multi-family properties (think 50 units, not 2,3, or 4) that you can reposition in the market...but that's a discussion for a later time.
I'm rambling on here, feel free to message me if you'd like and I'll be more than happy to respond.
Involved In Real Estate · Palm Springs, CA · Member since 2011 · 144 posts · 78 votes
12y
Wow, you do have a rather unique situation.
I'm on the other coast of Florida, so I can't help much with Tampa area, but here are a few thoughts about the investing aspect.
Real Estate investing to become financially free takes time. Don't rush it or you'll end up buying bad deals. Analyze the properties carefully. My recommendation would be to find properties with a 100% return on capital gain (minimum) and a minimum of a 10% cash-on-cash return. I recommend this because you're building wealth at the same time you are building cash flow. Some invest only for the cash flow, I prefer the best of both worlds. These deals are not always easy to find, and you may have to analyze a large number of properties before you find one that makes sense. Don't get discouraged through the process, it WILL take time.
Build a team of people you can trust, and even when you trust them, always run your own numbers to check on everything. Though I am licensed and consider myself pretty good at what I do, I set up a series of checks for my clients so they know they're getting a good deal. I recommend that not only do they get every property inspected, but also get two or three repair/make ready bids on each property, at least a desk-top appraisal by an independent appraiser for the ARV (don't go just on what I say, pay the $100 to the appraiser to get another professional opinion on that ARV). Overall, double check EVERYTHING at every step through the process and get as much done as you can during your inspection period so you can back out of a deal and get your EM deposit back if needed, with the lease amount of hassles.
Don't rely on properties increasing in value (speculation). That got a lot of people into a lot of trouble when the market turned this last time. If you start working with an agent who says anything like "in a couple of years, it will be worth a ton more" RUN - DO NOT WALK- away from this person. They don't know how to work with an investor.
Be careful if/when you work with wholesalers. I've seen many wholesalers inflate after repair values to astronomical heights to entice a buyer. Some are reputable, but many are not. Stick with your checks and balances to ensure you are getting a good deal.
Leverage as much as you can. I'm not saying go for 100% financing, but do use other people's time, knowledge and money for as many deals as you can. Yes, it may cost you some money, but if the returns are high enough after the costs, it's worth it.
You mentioned the property you have in Ocala is in a 55+ community. My recommendation would be to not purchase in these communities (HOPA communities). You're restricting not only the pool of tenants for these properties, but also your exit strategy. If you don't have the property rented at $750/month, contact an agent in the Ocala area and ask them to run some rental comps for you (preferably in the same complex). There are usually only three reasons a unit goes vacant for any length of time: Cleanliness, condition, or price. Make sure the unit is clean, in great condition and priced appropriately for the area in which the property is located.
You are wise to stay close to your home base to look for properties. My thoughts have always been that your properties should be within a 1/2 hour drive from home or work. I have had some clients go further out, but if they're too far you'll not be happy when the toilets need fixing, or driving for 2 hours to show it to a prospective tenant.
Manage your own properties until you have at least 10 properties, then maybe consider hiring a property manager. If your properties are in excellent repair when you first rent them out, and you check everything between tenants you shouldn't have to do much other than collect your rent each month. Again this goes back to cleanliness, condition, and cost.
Once you have acquired enough in capital gains through your properties, you may want to look at multi-family properties (think 50 units, not 2,3, or 4) that you can reposition in the market...but that's a discussion for a later time.
I'm rambling on here, feel free to message me if you'd like and I'll be more than happy to respond.
Thanks to you both, Buddy and Paul, for your insights and suggestions. Right now I'm soaking up as much knowledge as I can and trying to save money while I determine the best approach to take to achieve my goals.
I certainly appreciate your taking the time to read my intro and respond. This is very helpful and is one reason that BP is a great resource for many, especially those like me who are trying to get started.
Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
12y
Hey @Jason Rodriguez! Thanks for introducing yourself! It's great to have you here! Don't miss The BiggerPockets Podcast - they are great for learning how others are finding success.
Oh - and be sure to set up some Keyword Alerts- especially for "Tampa" so you'll be notified when people mention it here in the forums.
Real Estate Broker · Ellenton, FL · Member since 2010 · 101 posts · 23 votes
12y
Hello @Jason Rodriguezwelcome to Bigger Pockets--I've met so many people here and you will too. A great wealth of information can be found here.
I am a real estate broker who invests in the Sarasota, Bradenton, Pinellas & Hillsborough area. I am frequently up in St. Pete managing rental properties. We are currently using local wholesalers to help us find properties to fix/flip/rent etc (depending on area) as the MLS gets picked through so fast. I'm also looking into syndicating another multifamily deal.
I attend a few local REIA meetings as well and recommend you do to. However, before partnering with anyone I also recommend you speak to as many people as you can before partnering with someone. The good and bad people usually have reps.
Your situation is indeed unique and with all this new healthcare legislation I couldn't even attempt to help you with that. I "attempted" to sign up for that new healthcare site and it just became silly with all the errors. We currently have our own family insurance that we purchase ourselves as we are both self employed (my wife and I).
I agree with everything Buddy above said, however, just to ad on that property manager note--if and when you start looking for one, don't just hire on price. We did that when we first started haha, that was the worst investment decision we ever made.
Please feel free to contact me if you have any questions.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
Hey! Well the good news and bad news is that there are a million ways you can get into REI and eventually make it full-time or get to financial freedom or whichever way you want to go with it. The good news about is there are so many options, the bad news being it can be overwhelming having so many options. You'll want to figure out your goals and make a plan from there. If it helps, I wrote an article about just this spot a couple weekends ago-
Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes
12y
Welcome to the site @Jason Rodriguez , thanks for taking the time to introduce yourself!
I'd say you're in a good financial position to make some moves. Take it slow, educate yourself, and when you feel confident moving forward you can start picking up the pace.
Stay engaged here on the forums and you'll absorb info like a sponge! See you around the site.
West Palm Beach, FL · Member since 2013 · 11 posts · 1 vote
12y
Welcome Jason, the beauty of this forum is how much info and good advice can be found (like replies above).
I'm a newbie too ,but i I've learned a lot these past 10 days, educations-knowledge, patience and honestly will help to earn that financial freedom you are looking for.
I'll read Buddy LaRue advice at least once a week, from now until I got my first deal...
Rental Property Investor · St Petersburg, FL · Member since 2011 · 79 posts · 24 votes
12y
Brandon Turner -have you thought about incorporating a few search terms into the initial sign up page - might be easier then retyping that everytime someone new joins
Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
12y
Hey @Scott Seaman - great minds think alike! :) We are working on that very thing right now. Hopefully within the next few weeks it will be like that, so I can stop saying it! I must write that 50 times a day!
Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Jason Rodriguez welcome and congrats on considering the big switch. I too just left my job last December and it was great. HOWEVER, you will not be able to get approved for a traditional mortgage if you don't have a full-time job so don't jump ship yet until you're fully confident you have other income streams in place. One thing to think about is doing a syndicated deal. This is where you bring in other investors to buy a property and you all share in the profit. It's something I did this summer and, while there is a steep learning curve, the rewards are well worth the time and effort and cost it takes to put together.
Thanks, Joe. I am considering partnering with 1-2 investors who are also colleagues of mine...just to get my feet wet. Other than that, I am still seeking a rental for the home I own free-and-clear. My goal is to have a renter by the end of the year. I don't intend to stop working full-time yet. Not really sure when I will make that move.
Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
12y
newbie here also in tampa and I just stumbled on your post. My thoughts from my limited experience in just getting into the game are that the expenses on the house you own outright seem awfully high to me. Down here in Tampa proper there are homes where the taxes are between $350-1200 dollars and the homeowners insurance $800-$1200. These properties will also easily fetch at least $750 a month and in many cases $1000 + in rent. sounds like you have some decent $$$ and resources at your disposal, have you made any moves in the past couple of months since you posted?
Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
12y
hey Jason, sorry I never answered you back. We closed on a property on 2/21 and I went to work aggressively getting it cleaned up and ready for rent. IT's in the forest hills section of tampa off of Busch Blvd. its a 3 bd 1 bath 1200 sq ft Single family home with a quarter acre lot http://www.zillow.com/homedetails/9409-N-Albany-Ave-Tampa-FL-33612/45034605_zpid/
The house had been vacant for the better part of 3 years and there were some busted casement windows that didn't close properly so ants and spiders had invaded a couple of areas. Everything cleaned up well, we replaced the windows, added new stainless appliances, installed a new glass tile backsplash and fresh paint throughout along with new ceiling fans and VOILA, we got it rented effective 3/15 for $1295/mo which is without a doubt the very top end considering this unit only has 1 bedroom. We are very excited to be off to a good start.
We paid 92,500 with the seller paying $1500 of our closing costs because of the windows and lack of attic insulation. After 20% downpayment, $2500 in closing costs, $5200 in renovations, our initial investment is $26760. The monthly mortgage including insurance and taxes is $594 so this baby is cashflowing us $700 a month!!!
I just found out that the house directly behind it is going on the market tomorrow for $119k it's a 4 bedroom 2 bath that totals 2200 sq ft but about 750 of that is an old commercial space that was the families gunsmithing business. It had an actual shooting range in it! it's a long rectangular structure about 75 feet by 10 that doesn't have any windows in it. it is prime to be made into an inlaw apt. The problem is this house does need some work, most notably a roof so it would have to be an all cash offer. I'm talking to my realtor and some other individuals I know who are money people. I'm starting to make friends and family members believers now that they have seen the numbers on this first property. IT's exciting stuff!
Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
12y
one last thing, you said you own the house in ocala outright. So I guess $750 a month income is very solid, but depending on what the house is actually worth, I'm wondering if selling it to invest the proceeds here in tampa proper wouldn't be a better option for you. perhaps not now because you finally got a tenant but maybe when the lease turns over.