New Member from San Francisco, CA

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New Member from San Francisco, CA

Kristian Clemens
Member since 2019 · 12 posts · 3 votes
Hello BP community! My name is Kristian, and I'm a newbie (OK, longtime lurker) in my late 20s from San Francisco. It was always my dad's dream to build a portfolio of rental properties that would enable him to quit his job and do whatever he wanted. He never made it past his first unit, but he inspired me (15 years later) to start looking into the possibility of investing in real estate. I graduated from Cornell University in 2013 with an economics degree and now work for a midsize bank in downtown San Francisco (not a particularly original path, but it's worked for me!). My first priority when I got my job a few years ago was to pay off my student loans. Then I started saving up to move into my own apartment. Now I'm financially stable enough that I'm looking to invest some of what I have saved into real estate, with an initial emphasis on cash flow.

I've been listening to the BP podcast and Real Estate Rookie for over a year now, and I've read a few of the excellent BP books. Yes, I'm yet another young aspiring investor in an expensive market, so I've decided to educate myself as much as possible and prepare for the leap into long-distance investing! My leading candidate market is Milwaukee, WI, and I'm looking at either SFR rentals or duplexes with property management.

In the short term, I want to buy one residential property in 2021 and then decide if I want to keep going. As I'm studying for a difficult work-related exam in June, I'll probably be looking to "take action" in a few months. Ideally, the first deal would be as close to "turnkey" as possible so I can get my foot in the door, and I can decide if I want to take on more ambitious projects later. The books really laid everything out very well, but I can't shake the feeling that there are many aspects (e.g., the inspection and diligence phases) of a purchase that I simply won't be well equipped for when the time comes. If anyone has any words of wisdom or advice for a newbie who wants to buy his first long-distance property in 2021 (besides "stop taking crazy pills"), I would love to hear it! I can already tell this is a great community, and I've already achieved my first goal by becoming a part of it. Thank you!

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Steve RozenbergPro Member
Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
5y

First thing I would do as others in here have stated is figure out "WHY" you are doing this. Once you know that and you know your end goal then you work backwards. The goal has to have a finite destination and time limit on it.
For example you may say your goal is 20 houses in 20 years (paid off) earning $20,000 per month.. (20,20,20 goal).
Now you know where you're going and the timeframe for this to happen. From here you can build out your strategy, for example here you would want to have the 20 properties purchased the first 10 years so that they can use the final 10 years to pay themselves off. This means that you have to buy 2 properties per year which means you have to close on a property every 6 months which means that you have to find a property in 3 months to have it on the market and rented the following 3 months.
And the properties need to have a final cashflow of $1,000 per month after all expenses are paid. This will dictate where you purchase and look for properties based on that number alone.
My point is that you always start with the end in mind and work it backwards, this creates the strategy (Buy and hold, flip, Wholesale, Notes) which will be driven by the tactic (SFR, MFR, Mobile homes, Short term rental etc)
I always coach people and explain that the property is actually the last piece of the puzzle not the first.

Hope this helps

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  • John Sledge
    Investor · San Antonio, TX · Member since 2020 · 75 posts · 16 votes
    5y

    @Kristian Clemens Congratulations on starting to learn and working to move forward with your first property.  One of the main keys to success is the due dilligence prior to making an offer.  Since your first property you want to purchase is turn key, the main thing is to analyze comparable sales of similar homes to ensure that your purchase price works for that market.  When you get the point of value add properties then you must analyze sales of renovated homes to determine the renovations needed to compete with the higher selling homes.  Best of luck, John  

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    I also read the Long Distance Real Estate Investing by David Greene before I purchased my 1st turnkey property in Cleveland, OH. I felt that turnkey was the easiest way to get started if you have a 9-5 pm job that keeps you busy. Also, I read a lot about Martel Turnkey and I felt that their model was very transparent for rookie investors like us so I connected with them and was able to close on my 1st out of state rental. Let me know if you want to connect and chat about the purchase process. 

    1Reply
  • Bryan Noth
    Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    Welcome to the BiggerPockets forums @Kristian Clemens! You are taking great steps with self education and identifying criteria for your REI, keep up the good work and keep us posted on your progress

    0Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    Kristian....get pre-approved with a lender first.

    0Reply
  • Steve RozenbergPro Member
    Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    First thing I would do as others in here have stated is figure out "WHY" you are doing this. Once you know that and you know your end goal then you work backwards. The goal has to have a finite destination and time limit on it.
    For example you may say your goal is 20 houses in 20 years (paid off) earning $20,000 per month.. (20,20,20 goal).
    Now you know where you're going and the timeframe for this to happen. From here you can build out your strategy, for example here you would want to have the 20 properties purchased the first 10 years so that they can use the final 10 years to pay themselves off. This means that you have to buy 2 properties per year which means you have to close on a property every 6 months which means that you have to find a property in 3 months to have it on the market and rented the following 3 months.
    And the properties need to have a final cashflow of $1,000 per month after all expenses are paid. This will dictate where you purchase and look for properties based on that number alone.
    My point is that you always start with the end in mind and work it backwards, this creates the strategy (Buy and hold, flip, Wholesale, Notes) which will be driven by the tactic (SFR, MFR, Mobile homes, Short term rental etc)
    I always coach people and explain that the property is actually the last piece of the puzzle not the first.

    Hope this helps

    3Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y
    Originally posted by @John Sledge:

    @Kristian Clemens Congratulations on starting to learn and working to move forward with your first property.  One of the main keys to success is the due dilligence prior to making an offer.  Since your first property you want to purchase is turn key, the main thing is to analyze comparable sales of similar homes to ensure that your purchase price works for that market.  When you get the point of value add properties then you must analyze sales of renovated homes to determine the renovations needed to compete with the higher selling homes.  Best of luck, John  

     @John Sledge Thank you for reading and for the advice! Yes, I'm trying to look at as many properties as reasonably possible in the market I'm targeting. Fortunately, I think I'm starting to get the hang of it, although I've found such large variations between different neighborhoods. I think understanding renovations will be a worthy future goal if I decide to move beyond that first property. For now I'm taking baby steps and enjoying the journey!

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y
    Originally posted by @Aj Parikh:

    I also read the Long Distance Real Estate Investing by David Greene before I purchased my 1st turnkey property in Cleveland, OH. I felt that turnkey was the easiest way to get started if you have a 9-5 pm job that keeps you busy. Also, I read a lot about Martel Turnkey and I felt that their model was very transparent for rookie investors like us so I connected with them and was able to close on my 1st out of state rental. Let me know if you want to connect and chat about the purchase process. 

    @Aj Parikh That book was great, but I think I'll need to read it one more time to get all the information. That describes me exactly- I have a full-time job and don't want to make real estate a second job, but I also don't want to use my job and life as an excuse for inaction! I'll have to check out various turnkey providers, as well as looking into properties that require very little work to be rent-ready, as I want my first experience to be as positive as reasonably possible. I am always interested in getting more knowledge and being better prepared, so I would love to take you up on that offer if you are willing!

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Brian Noth Thank you for the encouragement! As I mentioned, it may be a few months, but I am looking forward to taking action and getting off the sidelines. I looked at and researched apartments for an entire year before I rented my first one, so I have no problem being patient, but if all goes well, I will have an update (positive or otherwise) by the end of 2021!

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Brian Garlington Great advice- that's exactly what I plan to do first. My parents convinced me to get a credit card when I went off to college, so I'm fortunate enough to have very solid credit and a 10 year history. This is the one part of the process that I feel most confident about right now.

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Steve Rozenberg I had heard about "starting with the end in mind", but the finite time limit and the way you broke it down in the second paragraph were a revelation for me. My goal is to buy 1 property by the end of 2021 with cash flow of $150+ per unit and a cash-on-cash return of 15% (although I've been cautioned not to become too inflexible with those numbers). I am a very numbers-oriented person, and having those numbers in the back of my head will keep me on track and prevent me from the dreaded "shiny object syndrome" that we millennials frequently suffer from.

    If it doesn't go well, I have a good job at a great company, and I enjoy investing in the stock market, so I have a fallback option and am not afraid of failure at all. If it goes as planned, I would like to buy 10 such properties within 5 years... and then start paying them off with the "snowball" strategy that paid off my student loans 5 years ago.

    By the way, I'm a big fan of the long-distance BRRRR video/article series that you did with your mentee Joe a few months ago. For newbies like me, breaking things down step by step and identifying specific actions to take can be really valuable. If I decide to graduate to more ambitious long-distance projects, I'll go through that series a few more times. Your advice definitely helps, and I appreciate it!

    0Reply
  • Lynn T.
    Real Estate Agent · San Francisco, CA · Member since 2016 · 105 posts · 21 votes
    5y

    Congratulations on getting started! First deal is generally not the bed deal, just need to get in. Welcome to BP! 

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Kristian Clemens Definitely. Just direct message me and we can set up a time to chat about the turnkey purchase. 

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    5y

    @Kristian Clemens the first thing to do is very clearly and quantitatively define your goals and objectives. This will help you identify the market that will best help you achieve your goals. There are a lot of good investment markets so don't limit yourself on any particular one until you have identified all your options. Don't become biased toward any particular market until you've done some research. Milwaukee could very well be a good market for you but ask yourself why it's your leading candidate. How does it stack up against other markets. Since you're already investing out of state, you have an opportunity to invest in whatever market fits your objectives and criteria best. Look for strong economic and demographic trends such as growing populations and jobs with a diverse, modern economy. Next look for markets with low taxes and insurance rates. Taxes are your largest single operating expense (Wisconsin has pretty high taxes. The look at markets that are landlord friendly (Wisconsin is fairly landlord friendly) If cash flow is your primary goal, I would add Indianapolis and Kansas City to your short list.

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Lynn T. Thank you for the encouragement and for the reminder that it's more important to get a good deal than to wait around forever for a perfect deal!

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y
    @Mike D'Arrigo
    This is really helpful, and I appreciate your taking the time to write it out so clearly. I haven't heard it yet, but I'm expecting to start hearing "you're crazy, don't even think about investing out of state" from relatives and friends any minute now, so it's great to hear something more constructive.

    I'm currently leaning toward Milwaukee for two reasons. One is the seeming abundance of properties that appear to provide the kind of cash flow that I'm looking for ($150 per month per unit and 15% cash on cash return), although I know I have to do a lot more work if I actually start purchasing any of these properties. The other is that I have a competitive advantage there- one of my good friends from high school lives there and walks 6 miles to/from work every day, so I can get honest opinions about neighborhoods without having to get on a plane (as I see my 91-year old grandfather every week, a plane trip is a risk I'm not currently willing to take). Demographic trends and property taxes would be my biggest worries right now. Having said that, I definitely have not "chosen" a market.

    To make a long story short, your point about looking at other markets and considering the specific criteria that make a good market is well taken. I'll certainly consider Indianapolis and Kansas City as well. Thank you for your feedback!

    Originally posted by @Mike D'Arrigo:

    @Kristian Clemens the first thing to do is very clearly and quantitatively define your goals and objectives. This will help you identify the market that will best help you achieve your goals. There are a lot of good investment markets so don't limit yourself on any particular one until you have identified all your options. Don't become biased toward any particular market until you've done some research. Milwaukee could very well be a good market for you but ask yourself why it's your leading candidate. How does it stack up against other markets. Since you're already investing out of state, you have an opportunity to invest in whatever market fits your objectives and criteria best. Look for strong economic and demographic trends such as growing populations and jobs with a diverse, modern economy. Next look for markets with low taxes and insurance rates. Taxes are your largest single operating expense (Wisconsin has pretty high taxes. The look at markets that are landlord friendly (Wisconsin is fairly landlord friendly) If cash flow is your primary goal, I would add Indianapolis and Kansas City to your short list.

    0Reply
  • Laura Rolerat
    Hartland, WI · Member since 2018 · 13 posts · 7 votes
    5y

    I invest outside of Milwaukee county, but I know that in Milwaukee there are good areas and bad areas. Be sure to do your due diligence in that respect. Someone told me about a turnkey company here run by some military veterans. I can’t remember the name offhand but can try to find it if you’re interested.

    0Reply
  • Joshua McMillion
    Rental Property Investor · Madison, AL · Member since 2019 · 487 posts · 658 votes
    5y

    @Kristian Clemens

    If you're looking in the Milwaukee area, the veteran turn-key company is called Storehouse 3:10, and I highly recommend them. See link below. 

    https://storehouse310turnkey.c...

    Sincerely, 

    Joshua  

    1Reply
  • Laura Rolerat
    Hartland, WI · Member since 2018 · 13 posts · 7 votes
    5y

    @Joshua McMillion that’s the one. Thanks!

    1Reply
  • Joshua McMillion
    Rental Property Investor · Madison, AL · Member since 2019 · 487 posts · 658 votes
    5y

    @Laura Rolerat

    No problem, glad I could help. 

    Sincerely, 

    Josh 

    0Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    5y

    I live and invest in the MIlwaukee market.  I'd suggest connecting with a local PM in Milwaukee before buying a deal here.  Like most big cities there are rough areas, a PM will help guide you on your desired area to invest in.

    0Reply
  • Sonya Mays
    Realtor · Milwaukee, WI · Member since 2015 · 7 posts · 8 votes
    5y

    @Kristian Clemens welcome to the BP family! And congrats on taking your first steps to real estate investing, whether baby steps or giant leaps, enjoy the ride and make it a great one. It sounds like your dad was a great inspiration, and now you will be a great inspiration to someone else many years from now, as you are well on your way to achieving your real estate investment goals. As @Brock Mogensen stated, it's best to connect with a local PM/Broker who knows the area and can help provide guidance and support for a successful navigation.  Try not to worry about everything or it can drive you crazy. I used to be a super crazy perfectionist wanting everything to be perfect before diving in, but over the years I've learned that sometimes you just have to dive in and trust a higher power. Keep up the great work and much continued success! 

    0Reply
  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    There are several property managers in Milwaukee that will also handle the rehab/repairs and get the unit rented if you find the property. They may even have clients looking to sell existing rentals. PMI and Welcome Home Milwaukee both offer this option.

    Captain Save-A-Home LLC
    WebsiteView Page
    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Joshua McMillion @Laura Rolerat I heard about that company (not directly by name) in one of the BP podcasts a few weeks ago. When I looked them up, they seemed to have universally positive reviews. I'm sure they have a waiting list a mile long, but I'd love to work with them when the time comes!

    0Reply
  • Kristian Clemens
    OP
    Member since 2019 · 12 posts · 3 votes
    5y

    @Brock Mogensen Great idea- one of the aspects of real estate that isn't crystal clear is what we called "the order of operations" many years ago in school. I think that I'll start by getting prequalified by a bank for a loan, then work on finding a good investor-friendly agent, and then find a good property manager who knows the area as well as I know my hometown. 

    0Reply
  • Chad Wong
    Investor · Kaneohe, HI · Member since 2019 · 2 posts · 0 votes
    5y

    @Kristian Clemens, I can relate. I live in Hawaii and all my friends think I'm crazy for investing out-of-state. I'm an engineer, so numbers were really important to me too, so I set-up a spreadsheet to quickly analyze deals to make sure it was within my rent to value ratio. Since I didn't have close friends that were into real estate, I had to look to find other like-minded individuals who would join me on the journey and become mentors/accountability partners. I joined a group called simplepassivecashflow, the creator of the podcast/site happened to be from Hawaii and had 11 turnkeys before. Since then I was able to buy my 1st property in Birmingham, Alabama and see the "bigger" picture. I've been told "your network is your net-worth" and it couldn't be more true in real estate, you'll find that it's mostly a people-based business, so I encourage you to continue networking and building close relationships with other investors!

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