All Forum Posts by: Cherie Orellana

@Miguel Lopez Are you trying to buy a cash flowing investment property,  Non owner occupied?

Hey Justin, 
How exciting to be diving in after all of the learning. I think Idaho Falls and Salt Lake City are such great areas to consider. BRRRR are a bit harder to find but definitely one of the best strategies in my opinion.

If you ever need help in the Salt Lake area let me know.  I am also always open to partnering on deals if you ever decide to go that route. 

I personally love working and having control. I would never step out of something 100%. 

You are right though. I guess the fact that I may take a check and drive it to the bank is not as passive as having it automatically deposited. 

The examples above like fixing a property, I do not mean personally doing the work. But you would have to find a property, hire the work out, secure financing, get it rented or hire a property management company and then start seeing cashflow as the end result of the actions or work. If you are repeating this consistently, you are always working. Until you got to point you were satisfied I guess.  

However beings  are always increasing. No matter how much money, health, fitness, success you achieve you will always strive for more.  

Owning the brokerage or several branches of the brokerage, you would have a broker managing each branch.  They would have agents under them.  Let’s say the agent gets 50%, the broker above them gets 10% and the brokerage 40%.  The brokerage could use that money to generate more leads, train agents, acquire new agents, advertising, office space, utilities etc.  The owner could also pay themselves a salary or 20% leaving the other 20% in the brokerage to expand and grow.  If you had a property management division, it’s the same concept.  You could even do a lot of things in house. Like handyman or cleaning services or using a secondary business you own.   

Or as a sole broker, that started their own brokerage, they could make the 40 or 50% split from the agents under them. Fairly passively. Overseeing the work of sales agents and keeping the brokerage trust account in order and filing of relevant documentation. 

That is just one concept though. You could use multiple strategies in real estate to get the same outcome, As opposed to just one.  This person could be making $5,000 a month passively from a combination of sources that add up to that number.   

You could Rehab/ flip properties that seller finance for 3 months but leave the property in their name and get paid as a contractor at closing for any amount above the agreed upon price 3 months prior.  Using that 60,000 (or whatever number) increase to the current purchase price as your down payment to buy it yourself from the seller you had an agreement with keeping it as a buy and hold once you finance it.  

Not sure that makes sense when I write it out.  I love real estate because there are so many ways you can be creative to make something work! 

I have a 19 year old under contract on his second investment property.  

My 17 year old is looking for a mixed use property in a commercial area to purchase once she turns 18. Her intention is to live in half of it and run a tattoo and piercing studio out of the storefront.  She will get booth rent or monetary splits of other tattoo artists that work in her shop. She could potentially live for free, have passive income, plus make a living doing her own work in the shop.  

@Jim K.

My husband and I were at $4500 Passive cashflow in rental properties in about 2.5 years. It was 2 of us though doing things separately in a sense so I guess for one person it would be more like $2,250. 

Anything is possible though.. Someone could hustle and acquire multiple seller finance properties with little or no money down, flip properties, wholesale, start another a business, invest in stocks. 
Even If the question was, Is it possible to take my $1,000 and create $5,000 a month income in 2 years? The answer is yes! Of course it’s possible.

You could even take $1,000 and get your real estate license and be making $5,000 a month income in 2 years , After the required experience, create your own brokerage and create $5,000 a month passive income through your business. Through agents commission splits, property management, handyman services, cleaning services. Possibilities are endless.  

I think buying an owner occupied home (househack) with 5% down each year is a great way to start building a portfolio towards your goal.  Focusing on homes that will cashflow as you move to the next each year. However this will take you more than 2 years to reach your goal of $5,000 a month. Knowing that, In addition, you could flip homes in the process. Saving proceeds each flip to put towards additional rental properties with 20-25% down. Most local hard money lenders require 10% down and you fund the project. They typically charge 2 discount points (each discount point is like 1% closing costs) and 12% interest a month.  In the past you pay the discount points and interest at the end when it sells.  However with the pandemic, some hard money lenders are asking for the interest to be paid monthly.  You could go out and try to generate your own deals and also get on as many wholesale lists you can find to start watching for potential flips.  

I would also study a particular area you are interested in and learn the market well to help you make informed decisions.  Have a good contractor to help you look at properties and give estimates on each project.  You would also need a great Realtor and I think having a good handyman is important. In flipping or if you just have buy and hold properties.  A traditional lender, wholesalers, hard money lender. 

That is the best strategy in my opinion here locally. If you lived or wanted to invest outside of Utah it might be different. 

I also saw someone mention stocks. Stocks are extremely low right now and I did throw some money that direction recently.  I used to day trade pretty frequently and did well.  However, I honestly think it's more of a gamble than real estate is. It is possible to generate $5,000 a month with your $60,000 in the stock market. But I would be extremely careful. My father in law lost $25,000 in the last month gambling the stock market. 

I think gaining knowledge is great advice as suggested above.  I feel like there is lots of general knowledge out there.  However gaining specific knowledge for your clientele or area will be most beneficial.  I think you gain this knowledge as questions from buyers and sellers arise over time.  It’s something that is continuous and always changing. 

Another bit of advice is to be hungry. This alone may set you apart from old timers. 
Try to always answer your phone, reply quickly, follow up often.

Real estate transactions are not always smooth and pretty. But give the absolute best service and experience possible and you will be referred over and over again. Your clients will be loyal to you. 

When you meet people in general ask questions.  Remember names and bits of info about everyone. Like where they work, Where they are from, how many kids, what pets they have or names of kids or pets.  Write things down and mention them when you follow up.  It makes people feel important. Which they are :)

Last I think specializing in a type of property or area can set you apart. Learn everything you can about it.  Stay current on local events, businesses, community projects, knowledge of Schools, school ratings etc. If you don’t know initially then research it every time you list or show a home.  

Be the resource of information that buyers and sellers need and Provide the service and support to help make the stress of buying and selling a little bit easier. 

It depends on the type of property. I would call around and get a few quotes. Bear river is typically lowest for single family in my experience. 1 stop shop seems to have decent rates on multi unit. Definitely get a few quotes.  Your lender might have a good referral as well. 

@Greg Troester

I do think people are pausing to see what happens. I personally believe it will all pass in 3-4 months. Maybe 6 months to feel normal. Previously homes would be listed based on comparable properties but with multiple offers driving up prices 10% as you expressed in your experience. I think homes will start selling for closer to listing price based on slightly lower demand. It may be an opportunity for those that have been struggling to secure a property without overpaying or overextending themselves.

As long as a property cashflows or makes sense in whatever investment strategy you are going after I would not let it stop me.

I compare it to refinancing for a better interest rate. Do you lock a great rate right now or chase something lower in the coming months only to end up higher?
I would regret it if interest went up a 1% in the coming months when I have the opportunity at 3.5%. However if I locked and refinanced now and it went down to 3.2% I would not regret that. I may have gotten a slightly better deal had I gambled but It’s not worth the risk of not refinancing earlier. I may be paying $30 more on my payment but that’s better than the alternative that could have been $100. In other words, what if values went down 10% in 6 months?  I would not regret having bought right now if it cashflows and makes sense. Utah has been so competitive a 10% correction would just stabilize it so there’s not so many offers driving homes above list price only to have an appraisal issue with no comparable properties.  A 20% correction would be more like 10% in Utah (the first 10% being what purchase prices are driven to with multiple offers)

Even then, I do not see that happening. But that’s typically worst case scenario , what if, I ask myself when I go through plan A, B, C, D when purchasing an investment. 

I have had a few tenants make comments Implying they may not be able to make rent. They have not said that directly though.  I have great tenants, not particularly worried. However I am considering offering a 10% discount for those that pay on time over the next couple of months during this.  It will be an incentive to make it happen. When being late has a 10% late fee would be a difference of 20% if they pay on time.  

If I were buying an investment right now, I would try to close the first week of any given month asking seller to pay closing costs.  Closing early in a month has increased costs because of extra days interest you have to pay. However that would make your first mortgage payment nearly 2 months after buying it. That would give you wiggle room to get tenants in before your first payment.  

I agree with @Erika Unhold

It has been weird. I personally have not seen much of a decrease in the real estate market. I only leave my house to show homes, listing appointments, inspections, closings.  Put 2 houses under contract in the last 2 weeks and both homes had multiple offers.  I feel like instead of 7 offers it’s more like 3 during all of this.  I believe that is only because more people are staying home.  

I have heard of a few instances of homes falling out of contract due to hair stylist, restaurant workers etc who are out of a job temporarily. 

That being said, I think a lot of people will use the current state of the nation as an excuse for handouts. That it may appear much worse than it actually is over the next couple of months.  

I am not worried about the real estate market in Utah. I am still consistently looking for deals and ready to buy.