Colton,
Sorry it took me awhile to get back to you, last week I was swamped with stuff! Yes the high prices are a bit intimidating...this is the biggest purchase of my life so far haha so its given me some anxiety too!
Below are my thoughts to your questions
-Seeking funding (brokers or creative) most likely FHA
I'm sure there are many creative ways to get funding, but if you have a full time W2 job, FHA or conventional loan is probably the easiest way to go. FHA only requires 3.5% down and right now conventional only requires 3%. Also if you are former military you can get a VA loan for 0% down or if you want to go rural you can get a USDA loan for 0% down too. Sometime the USDA loan covers areas that they consider rural but are actually up and coming areas you'd have to look at their maps of what areas they accept. Just google USDA loan maps and you can learn more. FHA and the USDA loan have permanent mortgage insurance which is an added cost that does nothing for you, whereas conventional removes the mortgage insurance once you have 20% equity in the property so if you can do conventional that is generally preferred but if you can make the numbers work FHA can be a good option too. FHA will accepts a wider range of credit scores which is nice. I did new construction which is generally considered a no no by investors but I chose this path so that I could have 6 months to save up for the down payment while still getting in on today's prices.
-Appraising and estimating repair costs alongside professionals to get an idea of the process
I currently don't know how to do this. This is why I decided to go newer with something that I could add a room too. I'm finishing a 4th bedroom and bath not just to get extra rent but to also be able to learn how to appraise and estimate costs in a controlled manner. I'm kind of baby stepping my way into real estate investing haha. I do know there is a book on amazon called the "Construction Cost Estimator" so that might help but I haven't read it. Also, I joined a RIA and I use that as a place to ask lots of questions.
-Building relationships with contractors, getting estimates on potential projects (also, reading to get a general sense of ARP)
I used my RIA and realtor to get referrals for contractors to work with. Contractors struggle to return phone calls so I was persistent ins asking my realtor for multiple contractors. I definitely value the contractor who returns my calls and emails, because that shows they are accountable. Have a sketch ready to go of a basic floor plan for your renovation, and a list of what's important to you. Contractors appreciate you giving them as much info as possible before they give you bids. Also, my dad does contractor sales at Lowes so I'm running everything by him on materials side to see if what I'm being quoted sounds reasonable. Go hang out at a hardware store at like 6 in the morning that is when the contractors come into by their stuff. The earlier the contractor comes into the hardware store, the better chance he gets work done in a timely manner because he is getting a good early start to his day.
-Learning and executing rehabs, by self and delegating to contractors.
I thought about adding my 4th bedroom solo, but I'm probably going to go with a general contractor for this one and watch him closely and ask lots of questions so I can learn from him as much as possible.
-Research local market and decide on potential rent capabilities.
I used realtor.com and Zillow along with craigslist to see what houses similar to the houses I were looking at were renting at. I also asked my realtor's opinion too. Find a realtor who is doing investment properties in the area!!! That is probably one of the most important things you can do!!! Find a realtor who is doing exactly what you want to be doing and model off of them. A lot of people say find a realtor who closes lots of deals and while that is good advice I think it is more valuable to find a realtor who has already done what you want to do. Let me give you an example. The first realtor I started with was very experienced, had closed a lot of deals, but she didn't live in the area I was looking in. While she was nice and informative we clashed and I felt some of the advice she gave me accidentally led me down the wrong path. It wasn't her fault she was leading me from her best judgement and if I wanted to do what she had done it would have been great advice, but I wanted to househack for as cheaply as possible in a good location and she didn't get that. I worked with another realtor who he also had a lot of experience but again we were in two different stages of life and I felt his advice was not relevant to what I was trying to do. I found another realtor accidentally who was younger and had much less experience than these two other realtors, but she was house hacking herself in the town that I wanted to buy in. She not just found me a great deal but she has given me great advice on where to set rents because she is doing exactly what I want to do in the location that I want to do it. Also, she saved me a lot of money by convincing me to go more inexpensive where as the other realtors were trying to get me to spend more money than what I felt comfortable doing. While she is still developing experience she gives me a bunch of attention and is very prompt. I then bounce her advice that she gives me off of other real estate investors I know to verify it. This system while unconventional has worked really well for me.
-Developing (or buying) comprehensive lease template, building relationship with Real Estate Attorney.
Haha I actually posted this same question on BP and was given a couple real estate attorney referrals out her in UT. BP pro members get access to lease templates for several states, but my realtor actually gave me her lease that she uses with her tenants, and since were both house hacking it appears relevant to what I'm doing. I will run this lease by another real estate investor though to make sure I'm not missing anything.
-Interviewing/screening tenants (interviews, background checks) and managing property.
From my RIA I learned there is software you can have your tenants submit their info to and it will run a background check. I don't remember the name of it but I can ask at my next monthly meeting. I'm thinking about doing Air BNB though because I am a bit hesitant about having someone on a year lease. I am still trying to figure this one out too. Brandon Turner put a book out on this topic I think it was called the Complete guide to rentals or something like that and I think it describes his screening process. That is still on my to do list. Also, he talks about managing property too. I am currently reading "Househacking" by Ben Leybovich which is about how to do a househack by using an Air BNB model. Once I finish that book I will read Brandon Turner's book on long term rentals and compare both books to my current market and my own personal preferences and make a decision on that one so the jury is still out on that one.
Hope this helps! I'm excited to hear about your progress and what hidden deals you can find in Colorado! If you have anymore follow up questions please don't hesitate to ask!
Sincerely,
Brandon Hunsaker
