All Forum Posts by: Jason Eyerly

 Haha this is where it depends on the investment. My target renter base wasn't looking for a $2,500 fridge, they were looking for a new fridge that was functional, which meant that I was spending about $700 for nice, new stainless fridge and $650 for the stoves. All in all it was a little under $9,000 for completely new appliances in the building. 

We spent the rest of our money on the following:

- $2,000 to put new flooring in 2 of the units.

- $1,000 on exterior paint, landscaping, and trash clean up (I did the work myself).

- $2,000 on siding repair.

- $2,000 Kitchen counter top/sink for one unit.

- $1,000 on plumbing/new toilets in multiple units

- $1,000 on security/exterior lighting

I've found it to be a good practice to go through and make a list of all items that COULD be upgraded and then go through that list and mark items as "must have" or "nice to have". We then start with the must haves and if we have funding left over at the end of the project we tackle some of the nice to haves. 

 It all depends on the individual deal, but you can turn a nice profit from a deal requiring minor work. I have found luck in this department in both single-family and multi-family, here are my examples:

Single-family success: Bought for $66K, put in $10K of work, held for 4+ years and now have it listed to sell at $175,000. I will say that this is largely due to the overall real estate market rising, so this individual experience will be harder to duplicate. 

Multi-family Success: Bought a 6-unit that was 50% vacant (with the other 50% below market rents). Purchased for $138,000. Put in under $20,000 of work, filled vacant units and raised rents. Sold 18 months later for ~$250,000. This was the result of finding a property that was mismanaged and "looked" bad, but it really just needed surface level modifications to look good again (appliances, paint, some exterior work, etc.)

These deals will pop up if you analyze properties consistently. The best advice I have is to be patient, be realistic in your analysis, and be consistent!

Here is the general pattern I follow: 

- Purchase a property with as little money down

- Renovate & Stabilize the Asset

- Refinance or sell the stabilized assets

- Use the cash from sale/refinance to purchase bigger properties

I've managed to do this with a few of my smaller properties. Turning a 1 unit into a 22 unit and a 6 unit into a 16 unit. It's not perfect, but its the main strategy I utilize to grow my portfolio without having to wait until I save enough cash.

Other options are: loans from friends/family, Hard-money lender (can lend up to 100% on great deals), and seller-financing (may be willing to carry most of the debt or a secondary position).

@Jason Eyerly

It's a good question. At this point, I personally will only buy on BRRRR or seller finance. That way I don't have to put a large down payment down that I can't get back.

A couple thoughts on the other hand though.

-Some folks do have ways of generating income.  Maybe you have a business, for example, and you put the proceeds into real estate.  So if that works for them, great.

-Large multifamily is a totally different ballgame.  Typically those aren't purchased by individual investors but by a fund that has raised the money.  So could an individual investor buy a $5M property and use $1M of their own cash for the down payment?  Sure, it's just way less common in that asset class.

Hello Randall! Welcome to the investing world. I am not in your markets, I am in the Milwaukee WI area. But where you are at in your investing career it sounds like general help would still be useful.

My suggestion is to first pick how you want to start and what is the best way to start. This is all going to depend on your risk tolerance, your income, credit, and general knowledge and skills. But almost always the safest and easiest way to get started is a house hack. You have to live somewhere and saving money while learning how to landlord is just a great way to get your feet wet without diving in head first. 

Second is to look into doing a BRRRR. If you can find a decent property that just needs some repairs or better yet can have a bedroom or bathroom added, you can quickly scale up your portfolio and not get into the common trap of buying one investment and then sitting and waiting for your capital to build back up.

If you can swing doing a combination of both a house hack that you BRRRR, even better!

Outside of that general advice, what else can you share about your own plans to help us better direct you? 

What interests you about real estate/what are your goals? 

How much do you have saved up so far? 

What kind of credit do you have? 

Are you working with an agent yet? 

Are you preapproved yet? 

All of these will help us give you better and more relevant guidance. 

Best of luck! 

@Jason Eyerly, flipping is not a "remote" job in my experience.  If I were you, I would try to find a partner where you are the money (or part of the money) and they are the local project manager (hopefully also with some money).  Maybe you put in 2/3 of the money, project manager puts in 1/3, and profits are split 50/50, since PM is doing all the oversight, touring properties, etc.

Specific to design costs: given the price points you reference in your examples, you don't have budget for any designer.  A cheap finish selection designer will likely cost you $5-7k.  They will give you cabinet, paint color, tile, light fixtures, and maybe some floor planning services.  But they are not going to go into detail about which walls are load bearing or not, which have electical and duct work in them, all of which will greatly impact the cost to implement their design.

And if you want full service design to actually account for all the issues that will actually arise, you are likely looking at 20k+ for design work + 5-10% of total rehab cost.  This would be on top of any GC costs, and is to make on the fly changes when demo uncovers issues that were not known, and need to be accounted for.

Isn't that the purpose of wives and girlfriends to be interior designers for your real estate 

Hey Jason, I'm in the same situation as you. I have listened to tons of podcast, watch youtube vidoes, and read books. Every time I hear other poeple's story how they started in REI, I get excited. Especially how much money they make in passive income. I want to start doing long term rentals and house hacks, but every time I see a property I like and crunch some numbers, I get overcomed by doom, gloom, and feel defeated before I even start.

However, these things take time you just got to keep you nose to the grindstone and keep working at it. Keep looking. Eventually you will find a good deal.