All Forum Posts by: Ali Boone

People tend to interchange a recession with a housing crash. In all fairness, they did go together during the last one in 2008-2009. However, of the last 5 recessions, that was the only one that had housing prices drop. The rest experienced an increase in property values, not a decrease.

I assume you're alluding to the version of a recession where the prices do drop, which isn't likely to happen this time around. As far as the rental properties, if values did drop, yes just hold it and don't sell it until they recover. A solid rental property in an area with demand will continue to perform through a recession. Like someone else said, rents actually went up in the 2008-2009 crash.

Quote from @Erik Browning:

Kind of a dorky name, but Hipster Investments has solid properties with a decent bottom line. I have no affiliation with them: https://www.hipsterinvestments...

I agree, it's a very dorky name! People like it way more than I do, and I created it :) Thanks for the plug!! Always happy to help in any way.

Also for anyone looking for feedback on turnkey companies and other people's experiences, I run a turnkeys Facebook group. Not sure I can link to it in here but if you just search turnkey rental properties on FB, it should come right up.

Quote from @Patrick Megill:

@Ali Boone Thanks for the help. I spoke to my wife about it and she seems to be on board so now I am just studying and running numbers on example properties while building up my savings!

Awesome! I realize now when you said your family, I wasn't thinking of a spouse, I was thinking more like parents, siblings, etc. It definitely does matter what your wife thinks! :) That's awesome she's on board now. Have fun! The exploration of example properties and such is a fun part of the journey.

Yessss. Base hits! Base hits to me? You don't have to get the property with the absolute highest cash flow right away, it's okay to lose a little on your tries so you can better learn and do it better next time, and it's just one foot in front of the other. Example- lots of people want $5k, 10, or $20k in passive income a month. That's great, but if that's your first milestone for success, your on a tough journey. Yes the plan to get that much eventually, but start first-- how to get $1k/month. Then $2k. Then $5k. It's a bit of a seesaw because you have to keep in mind your bigger goal so you don't exhaust all your resources too soon, but the point being to not forget about the smaller steps first. Just get that first property. Then the second. Then the third. Rather than trying to get your entire portfolio right out of the gate. Another example could be with flipping-- you don't have to do the highest return flip right out of the gate. Start with something more cosmetic and simple. Succeed with that one, do a slightly more challenging one. Then keep getting better. That first one might only get you $5k profit, that's okay. Build up to the $10k profit level. Then the $25k level. And up and up.

B-a-b-y-s-t-e-p-s!

I think your first step is going to need to be reframing that "everything looks like a horrible move" mindset. That isn't going to get you anywhere good, and you'll probably lose some sleep. 

There will always be something going on in the market that can put a concern in someone's head about whether they should invest or not. Are prices too high, is a crash coming, we're teetering a recession so should I hold off... the list is endless, and it never goes away completely. Given that, the best thing you can do in my opinion is to really educate yourself on how rental properties (in your case) profit (there's 5 ways they profit, spoiler alert) and understanding in more depth how those income streams happen and are sustainable. The more education you get on this front, the better prepared mentally you're going to be going into a property and in setting yourself up to actually succeed with the property.

Turnkey and BRRRR are on opposite ends of the spectrum, both with major pros and cons. But there's also every version in between those options, so there's always a way to make something work. Mindset and knowledge are your powerhouses for it. Hope this doesn't sound like some pie in the sky artsy fartsy eternal optimist response (because it kind of does in my head, and I don't mean it to), but maybe just a plug for a good starting point to get you facing in the right direction.

I can't link to it in here, but I run a turnkeys Facebook group (easy to search) and there are lots of market discussions on there and info on different providers, etc.

A short answer to your question though-- yes, most of the turnkey providers will work with you start to finish. Baltimore definitely has some good turnkeys but a lot of people don't like Baltimore as much (I love it myself), Cleveland could have stuff but last I knew they're really short on inventory and I'm not sure what turnkey providers are left there now, and Memphis has gotten pretty strapped for cash flow and a lot of those providers have been flocking down to Birmingham for properties, which has now left Birmingham pretty strapped for inventory too. Other markets- Kansas City is still bumping, St. Louis (kind of saturated now, but a lot available on the Illinois side).

There's a lot of ways I could go with a response, but I'll stick to the shortest one right now. Is the 90-day requirement a necessity? My guess is that time crunch is playing a massive role in your overwhelm. Buying a MFR for cash flow is great, but it's worth a smidge of time to sit back and really learn how to do it and how to be successful with it. When there's a lack of that knowledge, combined with a 'I have to do this quickly!', that's the fastest ticket to overwhelm that I can think of.

Whereas, if you're like, "Okay, I want to buy MFRs for cash flow. Cool, now what?" And then you go out and figure out-- what do I need to learn for this to work? And you start to go down that path learning what you can about how to make that work, and then once you feel wayyy more prepared knowledge-wise, you say, "Okay, time to find a property." At that point you're going in wayyy more prepared and very likely with a lot less overwhelm.

I'd say slow your roll a little, and you'll see a big difference in how you're feeling! At a minimum, be able to state clearly to those agents or PMs what you actually want. My guess is you may not be able to do that in depth just yet.

All but one of my properties is out-of-state--I'm in California, no cash flow. Out-of-state can be great, it's just a bit different than local, obviously. The key is going to be in the team you have for the property(ies). The other factor is whether you're wanting something that needs work or something more turnkey/rent-ready. That will make a difference for risk factors.

Have you run the numbers on your primary home to know whether it will cash flow at all, or meet your desire for it to cover some part of your new mortgage? I assume you are talking about when the mortgage is paid in full, so the rental income would not be less the mortgage payment. The other option is that if that mortgage is about to be paid in full, you could refinance it, pull out all of that equity, and split it between several rental properties and not just one. I would run the numbers on both the scenarios--the scenario you mention and figure out the path to that next 20% down, and then the scenario of pulling out that equity and getting several rental properties initially- would that income cover that refinance.

Two things about your family. The first is- it doesn't really matter how they take it. Even if they take it poorly, it's more of a situation that is then on you, whether you can proceed despite their objections. If you can't, that's what you need to work on. Trying to change them is a much less efficient route to take. With that said though, the best explanation you can give them is the same explanation you are giving yourself as to why you should proceed with REI. If you aren't clear enough on exactly why you're doing it to be able to explain it to them, you aren't clear enough on it within yourself and you may want to clarify that. We all know generic reasons why it's good to invest in REI, but what are the deeper reasons and more thought-out reasons? Part of that answer is likely going to be in understanding the numbers, how you plan to profit with a certain property type or strategy, etc. When you can give uncontestable information as your explanation on why you feel good about moving forward, you're a) more likely to succeed yourself and b) going to be less dependent on other people's opinions.

As far as buying a primary and turning it into a rental in a few years, just make sure you understand all the numbers so that when you do turn it into a rental, it can actually be profitable. Especially if you do loans under 20% down and end up with PMI, that's an even bigger hit. So make sure you know what you're doing there, but you definitely have time to figure that one out.