All Forum Posts by: Scott E.

According to investopedia:

-The average annual stock market return from 1928 to today is 9.82%

-The average annual S&P return from the official S&P inception in 1957 to today is 10.15%

-The average rate of inflation since the 1950s is ~3.5%

So if you have a long enough horizon between now and retirement, I think it's safe to assume a return of around 9-10% and inflation around 3-4%.

To calculate ARV, you look at the recently sold homes, the pending homes, and the for sale homes in the immediate area.

In a market that is shifting like we are in today, it is even more important to look at "pending" and "for sale" listings.

A home in the neighborhood may have recently sold for $500k. But if similar homes in the neighborhood are now for sale for $465k, that shows you a downward trend that you need to be mindful of.

Calculating ARV is something that comes easier with time. Your best bet in the beginning is do what Paul suggested and ask a real estate agent to help you calculate your ARV.

I bought my first house in 2011 at the age of 25. I had around $10,000 in my bank account. I used an FHA loan and my realtor chipped in some money towards my closing costs. I ended up being around $7,000 out of pocket to do that first deal.

It was frightening to buy my first house with basically all of the savings I had to my name. Didn't help that I was also living paycheck to paycheck at the time. If 1 major expense came up I would have gone into credit card debt (which did end up happening lol, but that's another story).

Anyways all that being said I sold the house 5 years later and walked away with $130,000 tax-free profit in my pocket.

So would I do it all again? Yes. But would I recommend others to do the same? Not sure.

It's a tough time to buy. I have a few friends going through similar struggles. A year ago they weren't able to buy their first house because prices were too high and there were bidding wars on everything. Nowadays they can't buy their first house because interest rates are too high and inventory is still overpriced.

Stay patient. Don't rush into a deal. It might take you a year before you find a property that is a good fit, and that is ok. You've got a long life ahead of you.

Levi - You made it very clear in your original post that you don't need this property to cash flow and that you are looking to buy a home for your family to enjoy, where the short term rental income offsets some/all of the overhead.

You have a lot to learn about short term rental investing, but the other posters missed your point here.

A short term rental is a fantastic option for doing exactly what you are seeking to do.

I recommend you spend the next couple of months here on the forums to learn as much as you can. There is a section here dedicated to short term rentals that is LOADED with great information (look to the left of your browser, the section is titled "Short-Term & Vacation Rental Discussions"

You'll learn pretty quick that by getting into the STR game you are getting into the hospitality business. Very different than being a LTR landlord. But if you hire a property manager it can be pretty passive (never 100% passive, but close).

If you buy one of these homes, you should buy based on sales of similar homes in the area (and ideally pay less than what similar homes in the area are selling for).

When you sell one of these homes, you will be able to sell it for around what similar homes in the area are selling for.

Whether you are selling a modular home, a manufactured home, a single family home, a condo, a town home, or anything else, they trade based on the comps.

So on the surface, yes a modular home will be more challenging to sell than a single family home. And it should be easier to sell compared to a manufactured home. But it still always goes back to what the comps are saying.

Don't take this the wrong way but there is so much wrong with your analysis that my head is spinning.

Hats off to you for trying to get creative to make this deal work. But you cannot afford this. You can't afford a deal half this size based on the information you've provided. The biggest issues with your analysis:

-You're not going to get a 3% rate.

-No bank will lend you that $300k and go in 2nd position on this deal.

-Your commission might help you get a better price but it wont help with your financing.

The seller wants a 50% carry and wants $1.6M for this property. And you're proposing a 77% carry, at 3% interest, while paying about 20% less than they are asking? You can't have your cake and eat it too...

Wholesalers are always at local meetups around here. Look for some real estate meetups near you. You can find these here on biggerpockets, on the meetup website, or on Facebook.

As somebody who has been fortunate enough to have a couple of really good mentors over the past ~15 years of my adult life, I can say without a doubt that there is almost nothing more valuable.

With that being said, you can't really "force" finding a mentor. These are figures that you will cross paths with as you immerse yourself in the business. When you do inevitably cross paths and the chemistry is right, latch on.

For now I recommend spending a ton of time here on the forums, listening to the podcasts, and reading a few books. Dedicate the next 2-3 months to getting educated and soaking up as much info as you can.

Then from there, as others have suggested, go to some local meetups and start networking with like minded people.

At some point in life a mentor will come along. But you can be productive in the meantime.

I've also found a lot of value in this quiet "me" time lately. I make a point at least a few times per week to go on a long walk in the park with no headphones, no agenda. Just time to think about the business I have going on, think about my goals (in business and outside of business), plan my next couple of steps, etc. I've got a lot out of those walks. 

In the past any quiet time that came up I'd fill with music or podcasts. But that doesn't give you much opportunity to think about you and your goals.