All Forum Posts by: Andres Murillo

I've worked for two of these types of companies over the past 5+ years. 

Reviews and client interviews aren't the best way to figure out how well they're going to work for you. 

1. Reviews are typically posted by the "extreme" scenario clients. They either hit the jackpot and worked with a great rep who found them a great property and they're overly ecstatic or (more commonly) they fee slighted after a terrible experience and want to share their pain. 

2. Client interviews are cherry-picked. No matter the company, they're going to ask their absolute best client to talk with you. They aren't going to have you connect with someone who's struggling. 

My honest advice is to do lots of research on your own in order to identify where in the process you feel you need the most support. Find someone who can provide that support but make sure you share qualitative, results-based goals with them. You don't want to tell a TKP or almost any other company "I need an SFH for $X price that'll net me $Y per month" or "I need PM support for less than Z%". Goals like this are easy to pitch to. You'll just give them the opportunity to create something with XYZ while they neglect every other component you didn't mention. Let them know you want "a rental that runs so smoothly I forget the name of my property manager" or "a property where I won't have to worry about expenses on a monthly basis and will be happy to pass down to my grandkids". This will generate better recommendations and a more clear client/provider interaction.

Hold for life. Someday your grandkids are going to own that home and tell their friends "can you believe grandpa built this for $570k!?!"

Set up a HELOC. Define an investment goal. Find something that works. Pull from the HELOC to close on in it cash. REFI that new purchase to pay your HELOC back. Repeat.

Some people get rich by convincing you that you can get rich too. 

"Financially free" is also so subjective. Their target audience is usually Males under 35. Why? Because there are a lot of Males Under 35 that are in entry or mid-level positions in their current career. Replacing $3-6k a month via REI is so easy to pencil out. They are likely completely burnt out from being subjugated to the bottom of the totem pole. So when they hear "This one four-plex should cash flow $4k per month!" they're hooked. This is very appealing to the guy sitting at his desk getting paid nearly that much at soulless corporation.

It's also an industry where lying is very easy. It would be PAINFULLY obvious when a fake doctor walks in to perform surgery that they aren't who they say they are. But analyzing fictional properties over IG while using 1 or 2 REI terms successfully? You can get middle school kids to do that well. The performance lasts 10-45 seconds but is so impactful that people bite.

 This one is from 6 months ago but you're right. I saw 3 on my first page from different times. 

I've worked with hundreds of out-of-state investors over the past 5 years. I've worked for multiple venture-backed start-ups in the space in a variety of capacities and 1-on-1 with investors as an independent consultant. 

It goes poorly when investors only focus on "the numbers" and ignore real estate basics. Investors naturally gravitate towards opportunities where they can be highly confident in "the numbers" because they can't grasp the other, more tangible real estate basics. Things like neighborhood quality, construction quality, tenant profiles, livability, etc are qualities remote investors struggle to grasp. The natural response by investors is to either 1) over-engineer their approach to these factors or 2) not dive deep enough into these. 1) Because you don't "truly" know the area investors will start hyper-fixating on the metrics without understanding the tradeoffs. This looks like "I want an SFH in a great neighborhood with perfect schools, excellent crime ratings, no HOA fees, and at least a 15% CoC return". This is impossible but opens up the opportunity for malicious actors to pitch directly to you. There are plenty of great turnkey providers out there but there are also lots of shady ones that understand you're looking for these factors. So they'll artificially create an investment that seems to work, only for you to end up with a poorly constructed home with finishes that don't attract the best tenants leading to higher vacancy and repair costs. On the opposite end, investors might go with plan 2) and just say to themselves "I don't care about the area, the numbers are amazing!". Again, you make it easy for yourself to be "sold" on poor investments. Providers in the market will sell you "this house is only $75k and rents for $1500 per month with over $1k cash flow per month" type investments. While great on paper, these are usually in markets with no growth, in neighborhoods with tons of available rentals, and/or have only been tenant occupied. These properties won't improve your equity, will make rent increases difficult, and can have tons of maintenance that has been kicked down the road.

Investors that do well approach the investment very holistically and are goal oriented. If the goal is "easy, truly passive cash flow" then your team is forced to consider these qualitative aspects of the investment before the quantitative. Regardless of your goal, make sure this is qualitative and investor experience based. The numbers may or may not look the same when analyzing properties, but now you can be much more confident about your purchase because you know your team is working towards how you'll do when owning the investment, rather than just what a spreadsheet says. 

The market the STR is located in would have a big impact on how well this could do. STRs in "weekend getaway" type locations are mostly drivable for guests. I've seen Palm Springs STRs have a golf cart on site you can use for an extra charge and I've seen Venice STRs with bikes for guests. A Turo combo could also be a nightmare from a client experience stand point. You'll have to make sure you're on your "A" game in terms of guest service on two different platforms, this can be difficult on just one.

Hey Charles! I have a better calculator you can use. I'll PM you. 

Vacancy shouldn't be a cash expense. This can help you come tax time but doesn't actually cost you dollars on a monthly basis. 

Are you using comps in order to generate revenue projections or actuals? My sheet will sort of force you to do some research and input competitors' revenues. This will help make your projections more realistic. 

Not sure where you're located but with a budget like that arbitrage might be a great starting point. You can commit much less capital than purchasing a home, test the business of STRs to see how you like it, gain experience and insight needed for higher dollar deals, and collect cash flow. If you decide that being an STR owner isn't for you there are plenty of channels where you can sell an existing STR business.

Hey @Jamial Clark ! I'm in LA and have been investing/consulting remote investors for over 5 years. Memphis is every out-of-state investor's first "seems like a great market" market. The low prices and higher rent/price ratios definitely help it stand out but like most "high cash flow" markets, the risk is in the longevity of the investment. I'd love to connect and share more about what I've learned. I have two offices (Covina and Beverly Hills). I'll PM you as well. 

@Ellie Ochoa 

Markets I love for growth right now - Atlanta GA, Charlotte NC, Raleigh-Durham NC, DFW TX, Houston TX, Tampa FL. 

Markets that are great for cash flow - Birmingham AL, STRs in GA mountains, STRs on NC coast, C/D neighborhoods of Houston, Jacksonville FL

Happy to connect and talk more about what's going on in these areas - sent you a PM.