After a long time saving and learning I've got the nugget I want to use to begin my REI journey. My current plan is:
Single family 3/2's along the McKinney to Dennison stretch of 75. Looking in lower middle class areas where cash purchase + rehab comes in at 120k. While I'm local (Allen) I need to approach this as if I were out of state. That means working with an agent, gc and property manager who can work online and with minimal physical presence. I have access to legal and accounting from my software consulting. I'm looking BRRRR to hold, but should have flexibility by not needing to finance out of the gate should a different exit be needed.
My next step seems to be contacting agents and property management in the area. Once the hunt begins in earnest finding a contractor will be the biggest hurdle. I've been reluctant to make these calls in the past because I don't want to waste people's time. Now I'm ready to move forward and it's time to meet people.
Wish me luck!
Best of @Andrew Jones !
I’m still in my learning and planning phase. But I’ll be following in your shoes as early as Q1 2021 if I find the right deal.
Hey Andrew. Nobody ever wants to make those calls. It’s the people who do that are successful.
Good luck on your journey!
I like your thinking. I think there is probably better opportunity in the small towns like Van Alstyne, Leonard, Bells, Bonham, Maybe Celina or Melissa if it is older original home and maybe Sherman. That is price wise. it would be tough to find much for $120,000 any more in Allen or McKinney I would think.
My suggestion is never be hands off with GC. There may be some you can be hands off with, but I think that is rarer in the smaller places and you see stories all the time on different investor forums about people losing their money to GCs. Even the best ones I would think you want to be there pretty often while they are working and checking quality and progress and pay as you go. No big deposits up front.
The risk with the smaller towns are the trades and PM. There may be one guy that does AC, one that does electric, etc...so your jobs can take longer, potentially pricier, and if you have to get people from another neighboring city they might charge trip fees and such. PM there might be one that is really active in a lot of those places. You can also potentially self manage.
My thought is you want or need to be involved some...and not just turn it over to a 3rd party. Some people probably get lucky and it all works out like that, but I think some people also get robbed. Same with any other investment.
Thank you to everyone for the encouragement!
@Bruce Lynn , you're right about areas like Allen. My 3/2 in an older neighborhood would go for 200ish, that's about 4% appreciation. It's just outside of my price range right now. However, if it's in your range, Allen is a great place and probably pretty low hassle. Next door is a rental, and I've had two neighbors over 17 years. Anecdotal, but the other rentals nearby are well kept and occupied. The local EDC has a lot of growth on the roadmap, even now.
As for contractors, I'm hoping to find some referrals or at least get references. I'm willing to pay a bit more for reliability, particularly on my first outing. My plan is to split the draws into 3 or 4 pieces, progressively larger, as the properties I'm looking at will probably support projects of that size. While I'm expecting to do walk throughs on draw days, it's not practical for me to wander around construction sites since Old House + Construction Site + Wheelchair = PITA. Photo/video communication is going to be important for similar reasons. I anticipate doing more work on the front end vetting and am willing to accept that. Are there other steps I can take to mitigate the risks associated with comparatively smaller pools to draw from?
@Andrew Jones Hi Andrew. I know of a very knowledgeable realtor in the Dennison area who is also an investor. Send me a message if you'd like!
The best Property Management companies have contracts or agreements with contractors who they use for trouble calls and repairs if the property owner wants to use the PM's contractors. When you vet the property management companies in your search, get the details on their process of repairs/trouble calls, the names of the contractors they use, etc. Some PM companies would handle the rehab of the property for you, using their contractors. Just perform the due diligence in your PM selection and their contractors.
@Christian Oaxaca will PM. Thanks!
First offer out.
...and got outbid. Looking for next!