I've lived in the Knoxville area for about a year and I'm trying to find a good way to break into the local real estate market. I've been doing research on renting properties, etc., but I'm not sure where to start - work with a CPA, or an agent, start an LLC, etc. Any advice or things to watch out for would be much appreciated :)
My recommendation would be to attend the local REI to start networking. Also get comfortable with understanding and running the numbers. Learn what local rents support. Talk to a lender and understand what all of your cost would be on a loan. Closing costs have been a bit higher than I thought. Establish your target criteria, price range, age of property, rehab/light rehab/turnkey, neighborhood, exit strategy....
Research Asset Protection and get started on the right foot. I use Anderson Business Consultants and we are in the processes of setting up my entities.
Thanks, that's all good advice. I've been particularly concerned about accurately estimating closing costs since that's usually the one that comes back to bite you at the end of the deal (in my experience at least buying my personal residences). I'll definitely look into joining the Knoxville REIA so I can hopefully get a good start and meet some knowledgeable folks :)
@Colin Courtney The Knoxville Reia is an AWESOME way to network and learn. Networking is everything in this business. Sometimes good deals will get passed around off market. Make sure to tell every single person you meet what you are looking for, and somebody might have a property that fits your criteria or at least know some solid wholesalers that they could connect you with.
Strongly encourage you to read Brandon Turner's book on rental property investing before getting started. This will help you learn how to establish criteria and crunch numbers, and get familiar with some solid strategies. In particular, the BRRR method is a great way to acquire rental properties in the Knoxville market right now.
Definitely don't start the LLC...it's way too early in the game. You don't even know what you'll end up doing much less know whether an LLC would be advantageous [for the thing you don't have yet]. First thing- just study up. Learn about options, learn how to run numbers, learn how to analyze properties, etc. Go to REIA meetings to help you learn and network. But keep studying. Then start casually shopping. Maybe with an agent but keep in mind most agents aren't all that up on investments. Maybe call some local property managers and see if they are agents. They'd be more familiar with investment properties.
Hope that helps!
@Colin Courtney I'd start with the basics - pick a niche you want to focus on. Within rentals you can look at SFH, condos, student housing, multi-family, mobile homes, etc. Next, I'd look at the area of Knoxville you want to focus on. Powell is different than near the university which is different than West Knox. Then you can use that criteria to start talking to wholesalers, agents or those in the local REI. In my experience, the narrower I made my criteria, the better the deals that came across my desk. Happy to connect and help further.
I'm really blown away by the great responses, thanks everyone. I'm really hearing a lot of good things about multi-plexes, especially since financing up to four-plexes is in the same residential bracket as traditional single family homes. I'm thinking a mix of the two sounds like a good bet with buy-and-hold, so I'll start looking around and seeing what's available while I get financing setup.
i'm new to rental investing too, but here is what i did. First, come up with game plan.
1. Do you want to invest locally or out of state. I think Knoxville is hot market now so maybe good to invest locally. I invest in Indiana.
2. Decide what route you want to take (e.g. flip vs rental). i think rentals are easier to grasp at first. SFH or MFH or something else?
3. speak to multiple real estate broker and property managers (if you are intending to use them). Find the ones that are hard working and you would like to continue working with.
4. based on your strategy, learn about what you need to look out for when you look for properties. For instance, for rental, you want to look for ones that don't have lots of yard, because when its vacant you would have to pay a lot for mowing. you don't want builtin pools for the same reason. Multiple garage is a plus, etc.
5. based on what you find out from no4, find properties that fit the criteria. Run them through your PM/RE Broker. see what they think (how much can it rent for, does it require significant amount of work, is the area a good growing area, etc.)
6. Crunch numbers, if it makes sense make an offer!
Hope that helps!