Newbie paranoid questions

Specialist · Member since 2019 · 494 posts · 220 votes

7y

@Aariff Kadar I am responding to #4. Mail is one of the more effective ways to find off-market deals. Think about working with a list broker to get a good mix on your list.

I'd try to focus on one or two markets so you can learn something about them.

Absentee Owners are good, but if you are working a competitive market, these guys might already be getting overloaded with mail.

Consider Seniors with Long-time Ownership and Owners with Low Financial Stability Scores.

Good luck!

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James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

7y

@Aariff Kadar

1.LLC or Umbrella (In CA, we need to pay $800 per year for LLC).

If you want to finance it with a 30 residential loan you'll need to put it in your own name. No LLC. Banks won't lend to an LLC.

2.Funding: Conventional loan not possible with LLC, How funding possible. Please give me some ideas.

Finance it man. No other business in the world allows you to borrow money this cheap. Best part about the real estate biz.

3.Should I get funds from credit card/401 and pay off for the property or going on Mortgage is a good idea for better tax return and increasing the wealth?

Mortgage. Do a 30 year mortgage. Best financing in the world. Leverage is good if it's good debt. Horrible if it's bad consumer debt.

4.How do you get deals on out of state properties?

The Bigger Pockets Marketplace.

5.How the fund transfer happens? Do we escrow and close it? How to trust that escrow companies and sending the funds to their wire?

You will use a state licensed title company.

6.How do you find out it is a good deal?

Run comps. Get an appraisal & a 3rd party inspection.

7.How do get local contractors to do some work on the property?

Hire a property management company. They will handle this for you.

8.How do you find Property management company in that area?

Google. Bigger Pockets. YouTube.

9.Do you use Turnkey investment companies to do everything for you?

I am a turnkey provider so I am on the other side of coin on this question.

2 Reply

Clayton MobleyPro Member

Birmingham, AL · Member since 2014 · 875 posts · 947 votes

7y

@Aariff Kadar It sounds to me like you may be overthinking a few things here. Definitely not an uncommon problem for new investors, but you could be making it harder than it needs to be.

For one thing, most new investors just starting out don't need to bother with an LLC. Especially if you're just buying one property at a time, it's usually an unnecessary hassle. Run the numbers on an insurance policy and compare it to the cost of the LLC, and include the cost of the operating agreement, not just the CA annual fee. Since traditional financing is the best way to leverage your capital at low rates, I'd skip the LLC for now.

As for your #3 - I would highly recommend you stick to traditional financing (mortgages) whenever possible. I do not advocate that anyone take out high-interest credit card debt or raid their retirement funds. If you don't have enough cash for a downpayment (25% of the property value), then your first step is to build up your savings. Do not sacrifice your financial future to starting investing sooner.

As for questions #6-8, this website will be one of your greatest resources. You can find connections to agents, contractors, and property managers (and turnkey companies, of course) all over the country. But again, you don't need to tackle everything at once. Your first step (after making a plan to ensure you have enough cash to buy something worthwhile), is to decide what kind of investment you want. Do you want it to be a full-time job? Do you want to do rehab work yourself? Do you want to be a landlord? Do you prefer to just collect rent every month and let someone else do the work? Your answers to these questions will point you toward a more specific strategy and make the research phase less overwhelming.

For example, if you do decide to go the turnkey route, then you don't need to find a contractor or agent or PM - because a good turnkey provider does all those things. So before you try to figure out how to make contacts in a bunch of different markets, I'd say tackle your research in this order:

What kind of investment do you want? Passive or hands-on DIY?
Where do you want to invest? Depending on your answer to #1, different markets might be better for you. If you want to buy houses and remodel them yourself, and then manage the tenants, you need to choose a market you can get to easily. If you go turnkey or want to use a Property Manager, you have more options since you don't need to be able to get to the property regularly.
Learn how to analyze deals. There are tons of threads here about how to look at numbers on rental properties and decide if they are a good bet. Learn about vacancy, maintenance, turnover, etc and then practice doing the math on properties you find on MLS or Zillow. It doesn't matter if you actually want to buy them, it's just practice.
Start analyzing actual deals in the markets you have chosen. Or, if you want to go turnkey, start researching which provider you want to work with. I won't go into all the things you should ask to vet a turnkey provider here, but if you are considering that option I'd be happy to give you a list to start with.

Don't let yourself get overwhelmed with all you don't know yet. Choose something to study, questions to answer, and answer them. Then move onto the next logical step.

Good luck!

1 Reply

Aariff Kadar

OP

Member since 2019 · 24 posts · 5 votes

7y

Thanks @James Wise and @Clayton Mobley

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