All Forum Posts by: Caleb Spillyards

@Caleb Spillyards In response to your question of what a good deal is, the truth is everyone has their own definition based on their situation.  If someone is paying cash, they'll have a higher overall return since they don't pay for debt servicing.  Others are happy to take a lower return in order to use the leveraging power of debt.  In today's interest rate environment, those using debt are seeing lower rates than they were 9+ months ago, so that adds another measure: expected returns are a moving target based on interest rates. 

It sounds like, for you, a "good deal" would be something where you're breaking even and all the house's costs are covered by the tenant.  I would add ensure that you are budgeting for repairs/maintenance and Cap Ex.  Honestly, if you're using a mortgage and a property manager if it's a LTR, then that's about what we're seeing for most rent ready in A or B class neighborhoods these days.

On a related note, I've seen people walk away from great deals because they're viewing it with too short of a time horizon.  For example, an investor may state they're planning on holding a house long term, and yet they walk away if, with conservative numbers, the house doesn't have double digit cash on cash returns in Year 1.  Rents will increase annually and many of your costs will be fixed, so returns will only get better over time.

@Caleb Spillyards

I was in a similar boat as you a few years ago. So many methods, each one cool in their own right. I was overwhelmed and didn't know where to turn. 

I turned to out of state investing because I could get significantly better COC returns and cash flow for my money. I've now gotten multiple properties for the price of 1 in my market.

@Zach Lemaster and his team is regularly putting these together and have helped me get my investing journey started. Check them out and see if they can help you. 

@Caleb Spillyards your energy for getting started is fabulous!  There's a lot of good advice on here.  To echo some of it, I'd say:

1- start with really zeroing in on what you want. Yes everyone wants passive income, wealth building, etc. You need to get more specific and personal. Is cashflow or appreciation more of your focus? Do you need to replace your income? STRs can be great for personal use and cashflow, realize they require more work, and learning about hospitality, tech tools, etc. Specific, personal goals will guide you to the correct REI path for you.

2- Get with a lender who knows REI to see what's possible. If you have 2 or more years of experience in your current field, being self-employed should be irrelevant. STR advantage could be using a second home loan and doing 10% down instead of more.

3-  Once you do 1 and 2 and get into the research, the BP spreadsheet is pretty good.  What return is "good" depends on the person.  

For your first, I recommend focusing on a "base hit".  People who will only jump on a home run, especially on their first, end up spending a lot of time out of the game entirely.  In my view, it's better to be in the game and learning then on the sidelines.  Also, when you run numbers conservatively, projected returns are often lower than actual returns.  You may find that base hit turns out to be double, triple, or maybe even a home run!

@Caleb Spillyards Have you been in any cool movies???

Hey , i will suggest you to talk to a lender and reverse engineer to figure out that budget you are working with. Then research on areas that allows your to find property within that price range at the same time saving more money! Good lock. Back couple yrs ago i was able to get property around 150K in Atlanta suburbs. Not sure if we can go back to those time but i think there’s always opportunities. Welcome to the community. 

@Caleb Spillyards I'd suggest first zeroing in on the strategy you're pursuing--you mentioned numerous strategies that are all quite different. You are right to be wary of STRs right now (there are plenty of articles/forum posts etc. describing the risks of STRs).

I would also say that BRRR'ing and flipping are very risky and difficult at the moment (even for experienced pros). Plus, BRRR'ing and flipping are relatively advanced strategies, and you mentioned that you're a beginner--so, they don't really match your experience level... I always make the analogy that trying to BRRR with no prior REI experience is a bit like trying to surf a 50 foot wave with no surfing experience--the chances of success are slim, and there are MUCH better, lower risk ways to learn to surf--similarly, there are much better ways to learn real estate investing.

In my opinion, house hacking (a single fam or small multifam) is the single best way for people to get started in real estate investing.

Why? Because, house hacking can produce great financial returns, it teaches you essential RE investing skills, but (compared to more advanced strategies like BRRR'ing or wholesaling), it is comparatively lower risk, simple and beginner-friendly (and therefore has the highest likelihood of success).

More specifically:

1. A HH can produce great financial returns. A HH can substantially lower your living expenses, while creating cashflow, appreciation, mortgage pay down, and tax benefits. A HH can also involve opportunities to force appreciation and/or rent (e.g.; by adding an extra bedroom in a previously under-utilized space). When executed correctly and repeatedly, house hacking can be very lucrative, and there are multi-millionaires who built their fortunes on repetitive house hacking! Although it's a strategy that's good for beginners, there are plenty of very experienced RE investors who continue to HH, because it's such a powerful strategy.

2. A house hack will teach you the essential skills you'll need to succeed in RE investing. With a HH, you can learn how to analyze properties & markets, how to find an investor-friendly agent, how to spot value-add opportunities at properties, how to engage in a strong due diligence process, how to screen tenants, how to manage the property, how to build a network of contractors, plumbers, electricians and other pros, how to manage the book keeping of the property, etc., etc., etc. If you want to succeed in RE investing, getting this experience will be critical! In my experience, a HH can provide incredibly valuable lessons that no mentor, real estate course, book or podcast could ever teach (though, I'd still highly recommend reading up on relevant RE resources, listening to podcasts, etc.).

Plus, if you decide to do one of the other strategies in the future (such as BRRR'ing or out of state investing), you'll be much more prepared to do it if you have a few HH's under your belt--a ton of the lessons you'll learn from a HH can be used to succeed in other areas of real estate ...in fact, I'd say that a HH should be a necessary prerequisite to the more advanced strategies (like flipping) for most folks!


3. Compared to other strategies (like flipping, wholesaling, etc.), HH is relatively simple and lower-risk, and therefore has a higher chance of success. I always use this analogy: would you tell a beginner skier who has zero experience to ski a double black diamond (the most advanced terrain) for their first run? (obviously, no; a beginner could easily get themselves killed on double black diamond terrain!). Beginners should start off on beginner terrain, where they actually have a chance to learn and succeed. A house hack is like that beginner run (but BRRR'ing, wholesaling, and out-of-state investing are more like double black diamonds).

The fact of the matter is: real estate is often a high-stakes endeavor, and the more advanced strategies (like BRRR'ing, wholesaling, flipping, out of state investing, etc.) can easily bankrupt a beginner when they're executed poorly.

Now, having said all that, house hacking is not necessarily easy (if it were, everyone would do it!)...it's just easier than the more advanced strategies...House hacking still takes significant due diligence, skill in analyzing the market and the property, time and effort to learn about tenant screening and property management, the ability to anticipate appreciation/depreciation trends, etc., etc., etc....and even with lots of skill and preparation, things will still go wrong (vacancy, plumbing leaks, bad tenants, etc.)--but that's the nature of the game. As James Brown sang: you gotta pay the cost to be the boss.

Good luck out there!

It's hard to say where to start without knowing your market. If you are in the film industry, you are probably in an expensive market and $60k won't get you very far. As Steve said, a fourplex may be the best option. Live in one unit, rent the other three out. If zoning/laws permit, you can rent the units out as short-term, allowing you to even rent out your unit when you aren't home. This would likely maximize your return.

You can do the same even with a single-family home. Get a five-bedroom home, rent out individual rooms, and you'll get a better return than if you were to rent the entire house to one family.

After one year, you can do the same on a different property.