All Forum Posts by: Becca F.

@Zeliang Zheng

Echoing what a few of the others have said, out-of-state BRRRR will be challenging. I did a local renovation which went over budget and I was on site at least once a week. It was a down to the studs kitchen and 3 bathrooms, all new electrical wiring. The contractor would call me and I'd leave work early, walk throughs with an electrician, give me options that are better and cost effective for renters, etc. It was a really good learning experience seeing all of this in person and buying some of the materials myself (kitchen cabinets, countertops, lights, bathroom vanities and fixtures, appliances).

I'm investing OOS, primarily in Indianapolis metro area right now. I also used to live in Indiana so I'm familiar with the most of the cities and suburbs and which are Class A, B, and C areas. I just closed on a SFH, move-in ready. There were a few minor repairs and it's ready to rent out now. I have a pretty good team with a realtor who works with investors, property manager, and contractor. I have a little more confidence since the local renovation that I may consider doing a BRRRR OOS in the near future.

I've heard a few investors pose the question do you have more time vs. money? If you have money but not much time, it might be better to buy a turnkey property, either on the MLS or turnkey company (some are good and some are not good). I did talk to turnkey company but I wound up getting in contact with a realtor in Indianapolis and found the house off the MLS. If you have more time, maybe a BRRRR would work better. Indianapolis has good rent to price ratios so I think it's a good market and it's landlord friendly. If you'd like to talk to my realtor, I can message you her contact info. Good luck!

Quote from @Alex Blackwood:

We are in the early innings of real estate investing becoming completely democratized. 

Similar to fundrise, there are platforms that give you all the benefits of real estate, including tax benefits. 

There is no one size fits all approach, so invest across a number of the platforms and find the one that works for you. 

Other competitors are roofstock, mogul.ooo, arrived homes and more!

I personally would recommend mogul.ooo, but then again, I might be a little biased.

The original post was from 9 years ago. I had never even heard of Fundrise or Roofstock back then but I wasn't a real estate investor then. I'm also considering buying from Fundrise. I'm buying a few REITs targeting different types of real estate, retail (Realty Income: O) and apartment communities (Avalon Bay: AVB) (my reasoning being that a lot of people are renting, especially California where home prices are very high) and maybe Public Storage.

 What other platforms give tax benefits like real estate?

@Kimberly C.

I have properties in the San Francisco Bay Area and out of state. I just closed on my 2nd property in the Indianapolis metro area. I don't have a lot of time with a W2 job so I bought the house from a flipper, $130,000 (negotiated an aggressive offer with some countering). The flipper got the equity which I'm okay with. If you don't have time, I would suggest not doing a renovation - I did a local renovation which took 5 months and went over budget and I was on site at least once a week and I purchased some of the materials (kitchen and bathroom cabinets and countertops and lights). The BRRRR method is super popular but I think it's difficult to do OOS unless you have a really good team in place.

With my first Indiana SFH which I've owned for 10 years, I've seen it appreciate about 70% (much of it from 2019 to 2021, like many homes across the country) in a Class A suburb with great school district. Midwest has affordable entry points and positive cash flow but I don't think it appreciates as much as other markets (Texas, Florida, Arizona). I was looking for turnkey from $120,000 to $180,000 in my recent search and I used a local realtor. I'm starting to re-evaluate my strategy of buying inexpensive homes in the Midwest to looking at other states where people are moving to like Tennessee (Nashville area), North Carolina, Florida (need to check insurance rates), Arizona and going for higher appreciation but home prices are higher in those areas. I do think the Midwest is steady and reliable and doesn't see the big price swings like the Bay Area (homes going 50% down in value during the 2008 recession and increasing dramatically in the last several years)

With $190k, you could buy a few SFHs in the Midwest. If you want to talk to my Indianapolis realtor who works a lot with OOS investors, I can give you her contact info - no pressure but just to help you gather information. I've also talked to a realtor in Cincinnati. Do a lot of research. Good luck!

@Sarah Jukes

You bring up a great question. I just purchased my 4th rental property and I've been considering paying down one of the mortgages vs. continuing to expand my portfolio. From my non-investor friends, they are horrified that I bought a 4th property - "you have so many mortgages and debt, you should have paid cash for that 4th property (I considered that but got a 6.99% interest rate conventional loan), stop buying property and put your money into a CD". 

 I'm trying to figure out how many more properties I would need to buy to replace my W2 income. I'm not at my financial freedom number yet to quit/retire early from W2 job (could work part-time or independent contract work, just don't want to have to work full time), which I like to do in about 3 to 5 years (3 years is very ambitious)

@Sam Yin

Sam, you were able to dig deep into REI and quit/retire early from your W2 in 2 years? Amazing. How many more properties did you wind up buying?

@Harry Dhaliwal

I'm in the San Francisco Bay Area. You don't mention what part of California, not sure what MCOL is. I have 2 properties here but I acquired them a while ago so I'm not paying the current high prices or interest rates. I looked in the Bay Area in the last year and the best I could find was a $649,000 3 bed/1 Bath SFH that needed lots of work. An investor bought it for $680,000 (bidding war with investors) and it rented out on Zillow for $3600 a month (after the rent was lowered from $3995). That's a terrible return but maybe they're hoping for appreciation and being able to raise the rent.

Other local investors and realtors have recommended in less desirable areas (Antioch, Pittsburg, or Stockton which is technically not the Bay Area). Or 2 hours out in the Central Valley, like Turlock. I'm still looking at high $300,000s to $500,000 on a SFH. Doing a brief Zillow Rent search, I wouldn't be able to get more than $2300 to $2500 and my mortgage payment would be much higher than that.

I have 2 SFHs in the Indianapolis metro area, one is in a Class A neighborhood with great school district and has appreciated 70% in the 10 years I've owned it (most of it from 2019 to 2021). Tenants are great and it's landlord friendly. I just closed on another SFH but it's Class C in a growing area (coffee shops, etc). I was looking in the $120,000 to $180,000 price range for turnkey. If I want to do a rehab I found SFHs for under $100,000. If I go up to $250,000 I'm in Class B maybe Class A area but price to rent ratio isn't as good. Midwest is very affordable and you can cash flow positive but the appreciation isn't as historically as high as other states (Nevada and Arizona come to mind). I've been going for inexpensive properties that cash flow since I have appreciation with the 2 California properties but now I'm re-thinking my strategy.

 I've read several articles saying people are moving to warmer weather states like Florida, the Sunbelt and Tennessee (Nashville is a hot market). I would have bought in Nashville if I was willing to spend $300 to $400k. I'm considering the Florida Panhandle area (Fort Walton Beach, Navarre Beach, Panama City Beach) but I need to find out about insurance rates. I would echo what Randall and Brad are saying. Good luck!

@Mike D'Arrigo

Thanks for the response. I feel like a lot of new investors are being pitched BRRRR strategy by many investors/real estate gurus on social media. "You don't need to use any of your own money. Use Other People's Money such as private lenders, hard money loans. I bought 20 homes doing BRRRR and quit my W2 job in 2 years, etc" The worst part is these gurus charge thousands of dollars for their mentorship programs - I won't name names lol but I almost signed up for one of these programs.

If someone is starting out and they aren't putting any of their own money, putting some skin in the game, I'm not seeing how they're approaching a private lender and asking someone to fund their deal. I'm apprehensive about asking a private lender and I have 4 properties. I think the BRRRR strategy is much harder than it looks. I may consider doing a BRRRR out of state in the future but it would have to be a well thought analysis with my team of my realtor, contractor, and my property manager looking at that property.

@Ivan Carrillo

It's great that you're getting started at 22 with real estate investing and are very motivated. You mentioned trying to own 20 rental properties and do 8 flips. This is very ambitious.

I consider myself a beginning investor and I have 4 properties now, just closed on the 4th one last week after being in analysis paralysis for a long time. I started with my first rental in 2019. You don't mention if you have a W2 job, are a student or earning income some other way. If you have a W2 job don't be too quick to quit. Many investors use DSCR loans but you get better rates with conventional loans. Fannie Mae/Freddie Mac allows up to 10 conventional loans if your DTI ratio falls within their guidelines. I thought I would need to do a DSCR loan with the last purchase but I was able to get a conventional loan. Lenders love people with reliable W2 jobs with steady income. I really wanted to quit my job and do freelance work but there's no way I could have gotten approved for 2 conventional loans (one a cash out refinance) in the last 6 months if I had done that. I haven't used private money or hard money loans. It's all my money or pulling equity out of existing properties.

Network, narrow down the areas you're looking to buy. I like working with realtors, don't really feel comfortable buying something on my own but you might be okay buying on your own. 

As Bob asked, how are you funding the 20 properties you want to buy? If we're being too nosey, you don't need to answer. Good luck with your journey! 

@Alon A.

I'm in the Bay Area. I don't know anything about the 3 markets you listed. I had a few local realtors and investors suggest the Antioch, Pittsburg, possibly Stockton and Sacramento and they said I would cash flow in Class C areas as Class A Midwest areas. My realtor recommended Turlock. With my brief search Turlock had homes in high $300,000s to $400,000s. I don't think people earning high Bay Area salaries are moving that far out to the Central Valley but I could be wrong. With all those areas, my mortgage payment would be much higher than the rent. 

I have 2 SFHs in Indianapolis area. The first one is in a Class A area, nice suburb with great schools but I bought it almost 10 years ago. The appreciation has been about 70% from most of it during the 2019 to 2021 seller's market. I just closed on a SFH a few days ago but it's in a Class C area. It's in a growing area with coffee shops, etc being built. I actually bought it from a flipper, negotiated an aggressive offer for $130,000. I didn't want to do an OOS rehab and I have a pretty good team in place - realtor, contractors, handyman, and property manager there. I did a local renovation which went over budget (down to the studs in kitchen and bathrooms), all new electrical wiring) and it was stressful - contractor would call me at least once a week and I'd go on site. As Luka and James said, doing OOS BRRRR would be challenging. I have all conventional loans.

If your price range is $150,000 to $250,000 you might be able to find $180,000 to $250,000 house in a Class A to Class B area nice part of Indianapolis, move in ready, maybe light reno (cosmetic work). I think Midwest, specifically Indianapolis, is a great place to invest and is landlord friendly. The appreciation, percentage wise, is lower than California but it's steady and reliable, which is what I want with my tenants - they can pay the rent and not be laid off from their high paying Google job, etc. If you have any questions feel free to message me :) Good luck. 

Hi! I'm looking for a CPA who works with real estate investors clients in S.F. or East Bay (Berkeley, Oakland, Lafayette, Walnut Creek, Concord, Dublin, San Ramon). I'm doing my own taxes for 2022 since it's a little late in the game to find someone before the April 17th deadline but may want someone to look it my return over. 

@Jarrid Weber

As Len P. said, it depends on your goal - getting cash flow or growing equity? I'm in the Bay Area and I tend to lean towards if you have a California property with a low interest mortgage or no mortgage (in the case of someone who has owned a property for a very long time) to keep it. I have a SFH with a low property tax basis and fairly low mortgage. I could have sold and taken the proceeds and bought many properties out-of-state. I chose to keep it and rent it out because I would never be able to be get a house like that again in the Bay Area. I'm keeping it because of the growing equity and also my kids could inherit the home and chose to live in it for the future (or continue renting it out).

The price points are really high in the Bay Area and surrounding Northern California area and the price to rent ratios aren't good so I'm a little more focused on getting cash flow now. I took some of that equity out (cash out refi when rates were lower) and am buying out-of-state. I'm closing tomorrow on another property in the Indianapolis metro area. Good luck!