All Forum Posts by: Scott E.

This is a tough one in the beginning. Especially in Los Angeles. You should start with asking your realtor contacts if they have any referrals.

Once you get a couple of names, you will want to "interview" them, have them show you a couple of their job sites if possible, and call a few of their prior clients.

You can't look at it as how many months of reserves. X months of reserves will help you out in the event of a vacancy between tenants, but it's ignoring the potentially much larger ticket expenses that could come up.

As others have stated, you should more importantly look at the condition of the property, and anticipate the next couple years worth of repairs. 

If you're renting an old home built back in the 1960s with a 25 year old roof and a 60 year old cast iron sewer line, I'd recommend having ~$15,000 in reserves for that property. At least.

But if you're renting a 2010 built home with newer systems, it makes more sense to just keep a few months worth of reserves on hand for a vacancy and misc handyman bills.

Is this a question? What's the purpose of this post?

You need a local team of:

-Real Estate Agent

-General Contractor

-Interior Designer

-Architect

A good general contractor who thoroughly understands your renovation plan will be able to oversee the entire construction process, and execute on you/your designers vision.

Just be available for occasional FaceTime calls in the event there is anything that they need your input on at the site.

There are some budget contractors out there who require a bit more "hand holding" but they would not be a good fit for somebody investing from a long distance.

Is this a flip? LTR buy and hold? STR? New development? This detail matters. But a generic list of some things that you should have prepared are:

1. Property specs (bedrooms, baths, square footage, lot size, age)

2. Comparable properties recently sold in the area

3. Comparable properties for sale in the area

4. Comparable properties for rent in the area

5. As-is value and after-repair value (assuming repairs are needed)

6. Neighborhood demographics

7. Photos or video walk through of the property

8. Renovation plan with construction budget (if renovations are needed)

You just need to start looking at deals and running numbers.

Generally speaking, a 2-4 unit is going to be a better option, but that might not be realistic in your market. In my market if I were to buy a 2-4 unit in a neighborhood that I would want to live, I'd be paying minimum $300k per door. And the numbers just don't pencil out at $300k per door, especially with where interest rates are at.

Your sub market may be different.

Depends on how much time you have, your skillsets, and what you're willing to learn. But some things you can do "part time" would be:

1. Real estate agent

2. Wholesale

3. Bird Dog

4. Social media management for a developer/home builder

5. Notary

6. Handyman

Wespac is one of the bigger commercial builders in Phoenix and has a great reputation.  

Good topic Marty. Finding deals is a more valuable skill, and much more challenging. Of course there are plenty of "opportunities" out there. Around 20,000 homes in Maricopa County alone last time I checked. But the art of picking out the gems within those 20,000 homes and then negotiating the best price possible is the challenge. Even more challenging is ignoring that inventory of 20,000 homes on the market and sourcing off-market deals.

It's true that with a good deal, money will follow. This is especially true for more experienced investors who have a track record of performing. A beginner will have a harder time raising capital. But if they have a great property under contract with good margins and realistic underwriting, even a beginner will be able to find money to fund that deal.

A responsible investor will have money in both the stock market and real estate. Most of us around BP (myself included) are more real estate heavy, and it's for reasons already outlined in this thread.

1. You have more control over real estate compared to stocks (from the location to the finishes to the exit strategy)

2. Real estate is a physical asset that in theory will always hold some value, compared to a % of ownership in a company which, in theory, could go to zero (all companies can eventually go to zero)

3. With rental real estate, when you combine cash flow, appreciation, tax benefits, and principal pay down, the return should outweigh that of the S&P500.

4. Let's be real with ourselves. Real estate investing is simple, and much more practical for the average person with an average education to pull off. I've tried my hand at picking stocks. I don't have the brains for it (outside of investing in broad market index funds). Understanding balance sheets, market cap, price to earnings ratios, dividend yield, etc is quite complicated. Buying a house, doing some renovations, and throwing a tenant in there is a very digestible concept.