All Forum Posts by: Brenden Mitchum

@Troy Studer

That's why we're here! 

I would use a combination of whatever tools you have at your disposal. If you're working with an agent you can also ask them for a rental comp analysis.

@Troy Studer

Yes, your capex is fine. The problem is that you do not have a line for repairs and maintenance. This is different than capex and consists of smaller, less costly items. I totally agree with @Aaron Montague that you should include 10% for management even if you plan to manage yourself.

Yes, definitely double check with your credit union on the rate and points. I would also reach out to a lender or two for conventional debt to see how this compares to the credit union. That being said, if the credit union rates and points are just as good or even maybe a bit worse, I highly recommend going with your local bank if they keep all their loans in house and do commercial loans. Building a relationship and track record with a bank like this is huge. It will open up all sorts of financing doors in the future if you decide to move into commercial property. 

Hey @Troy Studer, welcome to the BP community!

Well, it definitely meets the 1% rule all day. But for a moment forget about all those rules. They just help you get a ballpark, back of the napkin, idea of whether or not the deal calls for a more in-depth analysis. Since you're already doing an in-depth analysis here, they are no longer necessary. 

So now let's talk returns. You should have your own idea of what you want from CoC and cash flow. Every one has their numbers and they're usually a combination of what they've heard more experience investors want and what they themselves want. That's what mine are, at least. So do a little research on this and ask yourself what kind of returns you want to get on your money.

Now, the numbers in the deal itself. My first concern is that I see no repairs and maintenance. Depending on the age and condition of the property this could be anywhere from 5-10%. I do not see anything in there for property management so I assume you are self-managing. If not, throw a 10% in here until you get a number from your PM. I don't see any lender points but it does appear you have spoken with a lender already so are they just not charging you any points at all? Lastly, will you be paying some of the property's utilities? If so, I'd just make sure to double check those numbers with what the current owner pays.

With a 15 yr loan, it will be tough for you to cash flow. Even at $14k off the purchase price its a bit narrow of a deal. However, if you can make it happen you're going to build equity much faster so this trade-off will be your call.

Hope this helped a bit. Please, feel free to message me anytime if you have questions or just want to chat!

Hey @Juan Alvarez

If you are looking for the current/past vacancy for the property, your best bet is to get this from the owner instead of having your agent try to figure it out. Determining vacancy rate is not as simple as running a rental comp analysis and they may not even know how to do this. If you're looking for market vacancy, your best bet is to get in touch with a few property managers in the area. The most ideal situation would be to build a relationship with whoever is currently managing the property. Then you could get current, past and market vacancy. 

Please, feel free to reach out to me anytime if you have questions or just want to chat!

Hey @Ben Clark

The short answer here would be to just look at the numbers on each and see which returns the most on that $20k. However, I'm sure you have already done that so I'll try to be a bit more helpful. Let's look at each option individually.

1. Buy a new multi unit. In your market will $20k get you a decent small MF? If you're house hacking, I think this could be your best option. However, it is also the most difficult. It sounds like you might have a relatively high DTI? So I'd say as long as your market allows you to get in on a decent deal for $20k (especially if you house hack) and you're able to qualify, this will likely be your best bet.

2. Fix up current 4 unit and raise rents. Not a bad option if number 1 does not work out. 100x4x12=$4800 additional annual profit. It will take over 4 years for you to make back what you put in if you put the full $20k in. However, if this significantly increases the value of the property, that's where the real magic happens. You could potentially force enough appreciation into the property to refi and pull at least that $20k back out to put into option 1 or 3. If that's the case, this clearly becomes your best option. This will depend on your market so make sure you do a comp analysis beforehand or have your agent do it for you.

3. Payoff debt. This is clearly the easiest option but unless you have very high interest debt you can probably make a better return on your $20k through option 1 or 2. 

But just thoroughly run the numbers on each option. Clearly some will be more difficult/time consuming than others but if one presents a significantly better opportunity after running the numbers, that's the one I would go with. Luckily, you can't really go wrong here unless you buy a bad deal or rehab the property above what the market calls for. I'd say you have a good problem here with some excellent solutions. 

Please feel free to message me anytime if you have other questions or just want to chat!

@Genesis Rodriguez

My pleasure! 

Yes, we have a specific line for due diligence on our Georgia Association of Realtors Purchase and Sale Agreement. It's common here for people to put anywhere from 5 to 14 days for DD.

I love the Atlanta area. I also really like Savannah but not for investing (at least not right now). The rest of GA I know very little about since I am not originally from here. But yeah I've been to and lived in a lot of cities and Atlanta is my favorite. On top of that, it's also a terrific place to invest. Yes, it's hot so competition is tough but this doesn't mean finding deals is impossible it just means you have to be prepared to work that much harder. It's a small price to pay to invest in such a growing market. 

But it sounds like you have the opportunity to invest where ever you want so keep doing research and pick whichever market suits you best. Keep in mind, what's more important than picking the "best" market is just picking 1 market and sticking with it. Become an expert on that market and keep grinding. But make sure you have a plan that continues to push you towards your goals. Without real goals or a plan, it won't matter what market you're in. 

@Haley Thornton

For BRRRR deals I'd check out South Cobb and Douglas Counties. I hear good things about Cherokee and Bartow too. Dekalb could work too but that area is super hyperlocal so while one neighborhood might be just fine, the next one over could be very rough. There is good opportunity in Gwinnett as well, especially further south where prices are not quite so high. So really you have plenty of options, but for now just focus on educating yourself and developing that plan.

Hey @Genesis Rodriguez

So first just a disclaimer that I definitely know nothing about contract law in TX so you'll want to do your homework to double check my advice.

I am not a wholesaler but being a REALTOR® I have a decent grasp on real estate contract law here in GA. So I will give you the advice I would give to a wholesaler here - chances are it will probably work fine for you too. First, start networking with wholesalers in your area, which should not be a problem (sooooo many wholesalers in DFW). Build a relationship with some of these guys and gals and ask the really experienced ones if they would mind sharing their contract with you. Then, take that contract to a local real estate attorney, explain what you are trying to do, and have them read it over to make sure it's what you need. For more $$ you can cutout the networking with other wholesalers step (don't recommend) and simply go to the attorney and ask them to draft you up a contract. DO NOT simply use someone else's contract without having an attorney look it over. 

In terms of giving yourself room to back out of a deal, I am not sure what TX does but here in GA our contracts have a due diligence period and you simply fill in the blank for the number of days you want to check out the deal and back out with your earnest money for any reason. The number of days will just depend on the deal and how much time you think you will need. You can also throw some kind of financing contingency in there too because your end buyer might want this. 

Please, feel free to reach out anytime if you have other questions or just want to chat!

@Ryan Taylor

Expensive property is actually a fairly good indicator of a market being hot. Now there is definitely such thing as "too hot." You'll find this is the case for most of the small MF in the Atlanta MSA. That being said, I still do see decent deals here and there and in a market where the small MFs seem to appreciate just as well as the SF, I'd be happy with $100/door. Of course, that was pre-corona. Now I would sit tight and see what happens. No sense in grabbing something that cash flows $100/door and then rents fall and there goes your cash flow. 

As @Evan Parker mentioned, you'll probably want to stay outside the perimeter if you want to grab something that is in a decent neighborhood at a decent price. This will likely be the case regardless of what happens in the next few years. Keep your eye on areas like Marietta, Norcross, Conyers and Lawrenceville. This is where I see the most duplexes and also the only areas I've seen some deals in the past few months.

Your best bet to find a real MF deal here in Atlanta is to start generating some off-market leads. I'd suggest beginning this process now if you want to find a great deal in the next 6-12 months. 

Anyways, feel free to message me anytime if you have questions or just want to chat about the Atlanta market!

Hey @Haley Thornton, welcome to the BP community!

Well the good news is that it already sounds like you have more hands-on experience than 99% of people who get started investing in real estate. That renovation experience will serve you well in single and small multifamily long-term investing. With this experience, I highly recommend you look into learning as much about the BRRRR strategy as possible. This is a great way to build a solid long-term rental portfolio much faster than most strategies. There is a book on the subject written by David Greene that you can get here on BP or on Amazon (probably cheaper).

Unless there is another awesome market that you already know better than Atlanta, I would advise you to stay close to home. Understanding the market you invest in is so important that it does not make sense to invest out of state unless you have to. Plus, even though Atlanta is hot and the market is competitive, it's still a fantastic market to be in, especially if you are playing the long game.

The best way to search for property depends on your strategy and stage of investing. Start with the "easy" stuff like browsing Zillow and getting yourself a great agent. This is essential while you're in the education phase because you will need to analyze a bunch of deals to understand the numbers and your market. Later on, you can start playing with off-market deal generation via wholesalers or actually contacting homeowners directly. 

Financing on SFR and small MF is relatively simple. The strategy you employ will determine the kind of financing you need. If you go with a relatively turnkey strategy then you just need a traditional lender to get a conventional or FHA loan (or VA if you are a veteran). If you go a more creative route, like BRRRR, then you will also need either cash, hard money or some other form of private money to get into the deal. Then you will need that traditional financing to refinance the property after it has been rehabbed and rented.

Operating the properties will take some trial and error but there are great books out there to help you mitigate this. The Book on Managing Rental Properties by Heather and Brandon Turner will serve you well here. Other operational stuff like book-keeping is relatively simple until you build a large portfolio and then you can always outsource. 

I love your plan. Too many people educate themselves a bit then skip the whole planning part and try to jump right into REI. You'll be saving yourself a ton of time and headache by building a solid plan. This doesn't have to be anything crazy but having a set of goals and a vision of how you are going to get there is a must. Without this you'll just wander around jumping from one strategy to the next without really committing. But don't get stuck in education and planning land - as soon as you think you might be ready, dive in!

I am happy to recommend more books and sources of education plus answer any questions you might have along the way. Please, feel free to message me anytime!