All Forum Posts by: Alma Mills

This might be helpful... in most states you don't need to know you were occupying someone else's land.

https://www.nolo.com/legal-encyclopedia/adverse-possession-trespassers-become-owners-46934.html

Buy and Hold 7 steps to a real estate fortune by David Schumacher

I would start local, or at least a place you can drive to. If your interested, you could look for some private lenders to help you get enough for a downpayment on a small multi family to live in. Or buy a single family then build one or possibly 2 ADUs in the back. Check the new state laws concerning those, pretty awesome opportunity for those who live in California.

When we bought our 4 plex in LA our goal was to pay less than $1000 a month on housing, fortunately we were able to live for free. Of course, after a few years they were paying us to live there thanks to increased rents. Opportunity exists here in Southern California but you have to find or create it, it doesn't just fall in your lap like in the midwest.

That said, we do invest in Ohio but it has been very challenging and might have been devastating if it weren't for our experience in our local market. Good luck and God bless

@Todd Wheatley it's hard to give solid advice without the numbers involved and your goals. Is this a flip or a buy and hold? Nice area or run down? The basic principle is you should be making a greater profit than your having spend to fix this. I.e. if it costs you 30k to fix you want to be making an additional 50k profit. You don't know for sure that will be the cost as things always come up. The seller doesn't want to deal with it for fear the cost will be too high.

I have done out of state rehabs in Ohio and they were not easy. I would agree with @Jay Hinrichs and suggest as your 1st OOS investment this might not be the best. Of course, if your a flipper and experienced in remodels this still might be a great deal. Make sure you get 2 quotes from well reviewed contractors.

@Marcello Di Gerlando I think this property sounds like an amazing buy and hold and think those suggesting you sell probably have different real estate goals than you do. 20k net with 33 days booked sounds awesome.

The reasons to hold are many, (1)appreciation is a big one, (2)the opportunity to use the property yourself is another you mentioned. You are sure to get a nice (3)cashflow especially as you have no mortgage and if you see a nice deal you could easily put a small (4)mortgage on the property to get out cash. (5) The tax benefits are great as well as you can depreciate the property and won't get hit with the tax for selling.

Time will tell if you like Evolve but that doesn't change the quality of the deal. Congratulations on the great property!

Doug,

I know DC is expensive, so is LA but I have never had $500k cash to invest and have 3 properties in town. You can invest locally with that kind of money.  Don't invest in the most expensive parts of town.  Did you listen to the recent podcast from the other investor who buys in DC?  He buys places that he can add 2 bedrooms into the basement and then fixes them up and rents them for Section 8 tenants who pay $5600 a month.  Yes, purchase prices are higher in our markets but so are rents and you have more than enough to play the big boy game.  If your business income is high even better as the lender will like that. You could also try house hacking and live in a unit of a multifamily property.  That is what I do.  Or try going out into the suburbs of Maryland or Virginia where you can get less expensive properties.  Of course, if you are adamant about going out of state you need to find a property manager you can trust.  You can do turn key too but that means you really need to vet your turnkey company very thoroughly. 

The reason I suggested house hacking is because they let you go in with lower down payments if they are 4 units or less from what I understand.  So if you go in with 10% down you could buy a $5,000,000 property.  I would not suggest it as you want to make sure your numbers work.

Doug, 

I like your general strategy but would suggest you start with a deal that it's more local.   What part of DC do you live in?   I invest in LA and Cincinnati. I bought a 22 unit apartment in pleasant ridge,  Cincinnati and did a huge rehab on it.   It was very hard finding people that we'd could trust to help us. I realize if I hadn't learned from my local investments I would not have been able to handle it.   Right now what you need most is knowledge,  your other business surely took a lot of study to perfect, this one does too.  

I agree that out of state investing is not the best way to start RE investing unless its turnkey. We had a few properties in LA before investing in an apartment complex in Cincinnati. It was a LOT of work and headache but has been profitable.

That said, if we did not have a background in RE and had learned a lot and overcome challenges in LA it would have been a disaster. It was very difficult to get honest trustworthy and affordable people to manage, rehab and do all those things for us.

However, the reasons we went to Cincinnati are still valid. We bought 22 units for less than the triplex that was selling across the street. In a toppy market Ohio is less volitile. Prices don't go up as much but they also don't drop as much in a down cycle. CAP rates at home are around 3 to 4%, maybe 6% in the outskirts of LA and 10% is common in Ohio.

My final thought is it's not worth going out of state for a small deal. My wife and I said we wanted at least $5000 a month cashflow or it wouldn't be worth the extra travel, work etc.

Love this post, I was just telling a friend the same thing yesterday. I'm just not interested in small deals anymore. Part of the reason is we bought a duplex in Cincinnati around the same time as a 22 unit apartment complex in the same area. The work and hassle involved in the two was almost the same but the reward was far superior from the apartment complex.

That said, it is very hard to start big due to the need for capital, and everything seems to cost more when your doing commercial property ($4000 appraisals!). The strategy I find best is keep improving, maybe start with 1 to 4 units to show investors/partners you can do this. Then scale up. Don't keep doing Single family just because it's easy.

I would like to do 100 unit+ on my next deal.

I am grateful for God, Jesus Christ, my beautiful wife and amazing kids, my home and properties, my educational opportunities (including BP), my knowledge of the restored gospel of Jesus Christ, my parents and siblings, my business, my Country and our freedoms, my ancestors upon whose shoulders I stand today. This is definitely the short list because God has been good to me :)