All Forum Posts by: Andrew Johnson

Inga C. At a macro-level...these questions were plentiful in 2017, 2016, 2015, etc. I bet most people wish they bought all they could in 2015. I know I do 🤷🏻‍♂️ Will I feel the same way in 2019 or 2020? Hard to say. Nobody knows. Will a 2020 “correction” be a plateau? Will values drop down to 2018 prices or 2015 prices? Nobody knows. Just find a deal you’d want to own for 20 years. If it meets that threshold they just buy it and roll with any ebbs and flows. If you “need to be out of it in 5 years” that could be a different story. It’s not my method so I don’t really think that way. Others will be better to give thoughts on that.

Brandon Sexton Personal bias here: Small towns scare me but small suburbs don’t. Can you drive 20 minutes to a moderately sized metro area? Or is it 20 minutes to the suburb with good schools and 60 minutes to where your tenants will likely work? Buy the small suburb, not the small middle-of-nowhere town.

John Barkow Call local banks, odds are they’re going to be your best bet. At the very least, they’re the easiest starting point. Some are okay with 20% down and others want 50%. Rates could be 4.8% or 5.5%. Origination costs are all over the map but is it $1K or $5K? Fixed-rate terms could be for 5, 7, or 10 years. AM terms could be 15, 20, or 25. Maybe you care about a prepayment penalty and maybe you don’t. Maybe you’re okay with a full-recourse loan and maybe you aren’t. What makes it “attractive” largely depends on which of those variables you value the most. Odds are you won’t get the most attractive of *each* of those variables, so rank yours.

Robert Pole There are a ton represented here on BP. Some are extremely regular contributors on the forums. Trust me, it’s not...hard...at...all...to find turnkey operators. So what would I do in your shoes? 1.) Pick your market. 2.) Vet turnkey vendors in your chosen market (maybe top two markets). 3.) Juxtapose then against “yield play” style properties + management. 4.) Search forums for reviews. 5.) You can look on social media but it can be hard to differentiate investors from renters for “bad” reviews. 6.) Fly, like in a plane, to vet your options in person.

@Fradel Schaechter Well, I don’t know if it made it more “doable”.  But looking at homes is intellectually interesting to me, it’s almost a “reflex action.”  So I do think there’s some element of muscle-memory.  

However, there are two key advantages: 1.) I have someone with experience that tell me “your deal is dumb!”! and 2.) You (well, I) get an odd degree of comfort with “markets swing and that’s okay”.  

John Moon Ummmmm...well...the “I have criteria” issue exists in commercial multifamily, SFR, I’d guess mobile home parks, etc. If the price was extremely attractive, it would be sold. So all you have to focus on is what your price would be for a property. You can adjust for anything you want: rehab, vacancy, stabilization, etc. And if you’re correct about the price being crazy then you’ll be the *only* offer. Now if the owner isn’t motivated the conversation will go nowhere. If the owner is motivated you’ve at least opened the dialogue. Net result, don’t get hung up on the “ask”. I never have. Just focus on analyzing to create your number and don’t get frustrated with the “no” that will come 97% of the time 😊

Bryan S. I’d start with either an agent or a PM. A PM (if not an agent) likes knows more than a few. The agents all know 2-5 PMs. If they don’t know PMs then I’d hazard to guess they aren’t selling many multifamily properties. If you have zero connections, look at who is selling or managing properties that you think are similar to what you’d want to buy. You can just look at rental listings (see how professional the photos are, etc.) to find a PM or just look at recent sales from an agent that’s selling a “like property”. Have 5-10 conversations and you’ll hit it off with someone. I don’t think you need a CPA or lawyer before you hustle up your first deal.

Craig Oram When I look at deals it’s always with 25% down. Whether I would put down more or less the 25% keep it “even” when looking at the profitability as a deal. If you want to look at those “deals” where 100% debt would yield great positive cash-flow, well, they won’t be $200K properties. It will be the $50K property that rents for $800. But then you run into issues about funding, low dollar loans, etc. So the net result is that running numbers with “0% down” for a decent quality rental is just going to leave you frustrated. You could attempt the BRRRRRRRRR route but odds are you don’t want to take your eye off of your PhD job :)

Bab Adetiba Are you looking for a loan based on your projected ARV? Basically, a loan value based on work that hasn’t been done yet and is greater than the current value of the house? That wouldn’t make any sense... Additionally, most banks aren’t super stoked for the 30 year fixed for $25K or $12K properties. The loan amount is too low to make it worth their while. Odds are you should be talking to hard money lenders.

Michael Davila You’ll probably have to call around. Getting 70% LTV on a $70K property gives you a loan balance of $49K (ignoring anything you’d roll into it). Many (not all) banks will have loan minimums and it’s not uncommon for $49K to just plain not meet that threshold.