All Forum Posts by: AJ Shepard

Kyle,

So many ways to locate properties.  There's probably whole forums dedicated to that subject.  My first suggested step is to get on a real estate agents list and have them start sending you properties that fit the criteria you are looking for.  Next, find the wholesalers in the market, network connect with them.  If you want to dig deeper (larger gains and more time invested) get a list of multifamily properties from an escrow company and start contacting the owners (either mail or phone).  Find a local meetups (most are virtual right now) and try to attend / network.  

The first step is so that you know what retail market is, make sure that they send you "sold" property along with "new" and "pending".  The next step is to find other people that are doing what you want to do and get established in the market.  The last step is to actually find the people that have the deals that you want to buy. 

Thanks,

@Brian Eastman

Sorry I guess I’m confused. You’re saying you can act as property manager but you can’t put in sweat equity. You also can’t pay yourself for property management? Do you think that managing a property should be free? If you, the manager of the property don’t charge anything (cause you can’t benefit) isn’t that putting in sweat equity by working and not charging for it?

Seems like a slippery slope you are suggesting and I’d definitely want to get the lawyers opinion in writing before going down this road.

In any scenario, it's fairly difficult as many lenders won't lend to an IRA so many times it needs to be in all cash.

@Ciarraghe G.

I’m assuming that if you are a CPA that you haven’t lived in the property in the last 5 years otherwise you’d use that tax exemption after selling and duck the taxes entirely.

Having your renters buy it is a great opportunity, you can have the property under contract and start searching for your purchase. Many buyers and sellers are familiar with 1031 in the commercial space and writing offer subject to a 1031 is very common.

I would make sure your tenants qualify to buy it, which sounds like they do. Last thing you want is to get into contract on another property and then have the tenants not perform....

Delaying the tenants closing allows for you to have extended period of time to identify your properties, which you can even get in contract on, but not close for a regular 1031.

@Steven O'Leary

I want to add that you aren't allowed to manage any investments either. Should you be able to purchase a property with your IRA, you would need to hire a 3rd party to manage that property even if it's next door....

Same would go for companies, with you as a manager or member. But I think that was explained above.

@Dante Terteryan

As a real estate agent you are already in the business and know a ton of knowledge!

Keep reading, podcasting and gaining knowledge of the idea of syndication. Introduce yourself to syndicators and find a way to help them. If you’re listening to podcasts I’m sure you’ve heard the saying that if you come to someone and ask them how you can help it’s just more work for them, find a way to help.

My suggestion once you get further down the line, is mock up a deal. Put together a PPM, do a webinar, get an operating agreement, go through all the motions. Pick some piece of real estate that sold already, but that way you have pieces of the puzzle to use to talk to future investors and while you are putting it together will solidify your understanding of the process. Yes, it’s a lot of work, and most likely an investment. But, if it’s what you want to do and you’re committed, will be a drop in the bucket when you look back in 20 years.

@Jeffrey Donis

This is a great place to get education. But read books, listen to podcasts. It takes time, but as long as you are making one small step towards your goal each day, sooner or later you will get there. Become committed and passionate.

If we had to do it over again, I would hire more people more quickly. And probably set our goals higher sooner. When we started out BP wasn’t around and we should have sought out more information on what we were doing and how to do it better while we were doing it.

@Garrett M.

Autocorrect on Portland, that was funny! It’s certainly a weird time. There has to be some pent up movement in all the markets. The pandemic has moved typical market cycles and many people are making different decisions than what was normally expected. I’m in Portland and maybe I have a rosier outlook than some. For sure better than this article:

https://www.wweek.com/news/city/2021/01/30/portland-is-the-new-pompeii-according-to-forbes/

I keep looking at the math though. California has 55m people. With a 1% attrition rate that’s 500k, right? If only 1/2 of those come to Portland. That’s more than a 10% increase in population for Portland..... I just see that there are a few other markets that have been much higher in cost driving people away (though still popular to move to) that we will keep picking up the pieces. Same may be for Philadelphia.....

@Thomas Willingham The 1% rule in real estate is a rule of thumb for a quick and dirty ration. In some markets, the 1% rule is not feasible at all, in other markets, you can easily find properties that will satisfy above the 1% rule. A lot of people add value and base the 1% rule on a proforma basis of a stabilized asset. Based on the market conditions in the area you want to invest in, you can adjust the rule to reflect a realistic rate of return. Understanding the monthly rental income in your area compared to the average is important when looking at deals. After finding the monthly income ratio, make sure to consider all expenses associated with the property to make sure the deal "pencils out" for your strategy.

@Cynthia Alexandra Sanchez I'd say go for Multifamily Syndication since it is one of the most passive ways to invest in Real Estate. Syndication has opened up the market to everyone, who set aside some money for investment. This way, you can diversify your investments and earn income passively. When you invest with multiple sponsors you gain a perspective that allows you to sniff out the good deals from the bad deals since you'll see so much more deal flow. Mortgage rates will likely stay low as corporate earnings and employment will continue to rebound post pandemic. Now is a good time to get into the market in my opinion.

@Brian Armstrong

First off, 30k in profit should be relative to how much money you have to expend in order to get that. If you are putting 100k down and maxing your credit cards out to get there probably not a good idea. Or if you’re taking out hard money and it leaves you with 4 months or less to sell, probably not a good idea.

It seems like you are intent on investing in Portland. I might ask why not get your real estate license? If you are going to flip a house, you could reduce your cost on the project by most likely 2.5% on the buy (300k x .025 = 7500) and on the sell (.025 x 400k = 10,000). This alone would save you a fair amount of your costs associated with flipping a house? Even if it was just on the sell side? Additionally a license requires you to gain valuable knowledge that you’ll probably have to learn anyway?

Just a thought if you want to save some money in the process, but you have to be confident and determined that this is your path. I think the actual cost of a license is 160 hrs in time and about 1k in fees and training.

As for margin on a flip, you’ll have to determine what you are comfortable with. I’m not sure I’d settle for anything less than 12-15% of sales price.