All Forum Posts by: Ali Boone

I'm kind of a 3 strikes I'm out kind of girl. This property teeters that. Small population town so very small tenant pool, already known issues with the property condition (what happens if those repairs end up costing a lot more than you think?), and a couple other questions.

Keep in mind if you're talking about a 5plex, that changes the dynamic of things because now it's a commercial property and not residential. That means the value is now based on the income, not on the market. Which means, the value won't increase if you can't increase the rents, and those will be determined to an extent by the market. And financing on commercial is different.

My favorite way of checking rents is to call local property managers and ask their opinions since they are the boots on the ground folks renting properties out all the time. You can offer to throw them a couple bucks to run some comps if need be.

At that price, it's unlikely you're analyzing it wrong. I've not really heard of a $1M+ 4plex that would cash flow. The reality is *most* properties on the market aren't likely to cash flow. Have to find certain markets, certain areas of certain markets, and certain price ranges and property types.

All my properties except one came from turnkey providers and I help people buy from turnkey providers (I run the turnkeys Facebook group, etc.) Presumably they should all cash flow, but if you get into some of the new construction turnkey deals now, might not.

There's a lot of turnkey options out there. Do you have a specific price range, budget, property type preferences, etc? Or just starting out and trying to navigate it all?

What's your budget? And do you want a property that needs some work so you can add value, or do you want something turnkey/rent-ready? As far as 4plex or SFR which is better, really just depends on the area and the numbers.

Quote from @Ryan Taylor:

Quote from @Ali Boone:

As some others have said, drop the 50% rule out of the equation. Exactly the point you're bringing up about it is why it's not a helpful metric--it really doesn't tell you anything. Stick with actual numbers.

If the property you're talking about is in a good solid growing neighborhood and the property doesn't need any work, this looks like it could b ea good deal. But there's a lot more that goes into saying whether something is good or bad, not just the numbers. These numbers look good IF there are certain other low-risk factors about this property. But if it's in a rougher neighborhood and/or the property needs a lot of work, the numbers aren't great. And lastly, how is the purchase price compared to market value? That's yet another factor.

 Thank you for that Ali.

Prop is in decent area...no major repairs needed and other listings in the area are comparable to the purchase price...as well as the ones that have sold in the last month or so...based on all that I know, and what I'd dont know...I can only now hope that I make the right decision 😁

As long as you've checked everything you can, you've run numbers, sounds like it's in a good area... seems like it could be solid! Only last thing you could do would be to contact some local property managers and tell them the address and ask their experience with tenants in that area--is rent demand high, how's the renter pool in general for quality, longevity, etc. Overall what you're asking about is the rentability of the property, and confirming the realistic rent amount. If it's an easy one to rent, it sounds like a winner to me! Assuming you've had a property inspection confirm the condition of the property, etc.

From a long-term perspective, $10k won't usually make or break an investment (you'll be writing all of that off, too). But if it's going to put you in a dangerous financing strain initially, may not be worth it. I think it's best to gauge it based on your capability of covering that level of cost. If you can cover it, could still be a great deal.

Are there any other properties in that same neighborhood that pop up for sale that would have better metrics? If not, then all the more reason to consider this one. If there are, no real reason to stick to this one.

Since @Charles Carillo hit all the good ones, and you already said Rich Dad Poor Dad, can I plug my own book? ;) It's on Amazon- NOT Your How-To Guide to Real Estate Investing: Life Lessons on Hacking Your Mind Before You Hack Your Wallet.

Also, any idea what strategies you're interested in or what you'd like to learn from books? That will make a difference for recommendations, too.

The only way to really do it here is by assuming you're going to be negative cash flow for quite some time before the rents catch up to what you pay. Fixing up has been the only thing I've really seen here, or flipping. Even that can be tough with bidding wars though. And all of it will require a high level of capital. Ultimately, to answer your question on how people make money here, is through appreciation and over the long-term. Because of the entry prices and negative cash flow, a lot of CA investors invest out-of-state. Don't forget too in CA that it's incredibly tenant-friendly here, which makes it even more risky.

I rent where I live now and only buy rental properties. My first home was one I bought for myself, but I did that when I naively thought owning your own home was the best investment. Later after I got into real estate I learned otherwise (much to my dad and grandpa's annoyance because they had tried to convince me getting my own house wasn't an investment and I was too stubborn to listen at the time), and when I took a job transfer I rented out that house, and only bought rentals from there on out.

There are some situations where buying your own home can work, but I'd argue it's not the majority of them. One consideration is how much you'll have to pay in rent versus what your expenses to own would be. But the short answer to your question is- YES, and it can be a great idea to buy rentals before a primary!

Most importantly... ROLL TIDE! Second, it kind of depends on what you want to do in REI as far as what the best next steps would be. There's soi many different ways to invest, you'd want to find a gig that is somewhat related to what you want to learn. Any ideas on what that is?