All Forum Posts by: Collin Placke

@Kole Moore There is some great advice on this thread so I won't belabor the point... When it boils down to it, successfully investing in a syndication is 100% dependent on the character and experience of the sponsor team. At the end of the day, everyone says their underwriting is conservative, their markets are solid, and their business plans are proven. 

Don't be afraid if you've heard a few horror stories about syndication gone wrong. Fear is an EMOTION, and emotions should never have a place in sound investments...

Be relentless with your education. Know the numbers, they will not lead you astray. We are both engineers, the numbers should be the easy part! If you know and trust the numbers, you can keep emotions out of the equation, which leads to the next step...

Network with sponsor teams. Find one or two with solid track records. Vet them thoroughly. Talk to passive investors who have gone full cycle... did their returns add up to what was promised? Did they invest with the same team again?

If you follow these simple steps you can eliminate much of the risk. Yes there are horror stories out there, but passive multifamily investments are a rock solid way to build wealth when done properly. Especially considering your alternative choice, go blindly invest in the stock market and hope it appreciates... but betting on "appreciation" is a gamble and "hope" is not a strategy.

Collin

Go read “The Richest Man in Babylon”.

It covers this scenario in detail and a lot of other great personal finance insight as well.

Bottom line, you should pay yourself first by investing a certain percentage of your income toward your future. As you pay off debts, increase the amount you set aside. Don’t let “lifestyle creep” get in the way.

My first purchase was a single family BRRR in Fort Worth, TX. $90k purchase price, $30k rehab, appraised for $170k, rents for $1395/mo for a cash flow of $240/mo after expenses. Still own it, no reason to sell!

What I learned: Single family is great if time is on your side and you want 100% control of the deal. For me, the 2.5 months it took to purchase, rehab, refi, and place a tenant proved to be a little too much of a distraction from my full time W-2 job. Also, it didn't seem scalable enough to reach my cashflow goals within my timeline, so I switched to investing in large multifamily deals. 

Becoming a passive investor allowed me to not lose focus on my #1 income source (W-2) while still reaping all the benefits of real estate investing. Sure I had to give up a little control, but I found some experienced multifamily investing teams with proven track records who I trust to manage my investments properly. After making a few passive investments, I was able to bring value to the team and join the General Partnership on a few acquisitions without too much time or focus taken away from my W-2.  

My advice: Real estate investing is playing the long game, don't lose focus of your #1 income source because you are excited about real estate investing right now. If you make good money doing something you enjoy but still want the benefits of real estate investing, focus on 2x/3x/4x your main income source and investing that extra cash in passive real estate investments. 

I know I will get yelled at by some folks on here due to my views on passive vs active investing... but I'd rather see someone focus on becoming better at what they're already good at, increase their current income from that, and invest the extra income passively in professionally managed commercial real estate instead of taking focus away from their #1 income source in order to learn how to invest in real estate only to get burned on both fronts.  

If you can actively invest in real estate while not only maintaining, but growing your #1 income source, then more power to you and continue crushing it!!

 

 

Sounds like it could be an okay deal with an offer contingent on sewer scope and foundation eval. Thanks for the responses, I was mostly looking to see if my numbers were drastically off, or if I was on the right track for the most part. 

@George Blower thanks for the welcome, I have been roaming this site daily for months!

@Peter M. I would be using a GC, appreciate the slab tip. I grew up in north Texas and I definitely remember my childhood house having foundation repairs done.  

@Mike Freeman those numbers included property tax and an insurance estimate. 

@Bruce Lynn The plan would be all-in cash investment of $105k. If/when the home appraises for $150k, refinance 70% of that $150k thus pulling my initial $105k out and leaving $45k of forced equity still in the deal while still cash flowing $200/month. 

Offer would be contingent on sewer scope and I budgeted $5k for rewiring in the $25k rehab. 

Thanks for the feedback!

Seeking advice/criticism on the numbers I'm running for a certain property. I want to make sure I am looking at the right resources for projected rent, ARV/comps, and make sure my repair estimates are not completely off. The numbers seem to be very good on a certain MLS deal I've found which leads me to question: if the numbers look this good, how did this even make it to the MLS without being snapped up, much less sit on the MLS for 15 days!? This led me to question my rent estimate resources and ARV estimates... Hoping to find out from the community if my numbers are off, how can I improve where I get the numbers to refine my number crunching process in the future.

Okay enough prologue, here's the deal:

3003 Finley St, Fort Worth, TX, 76111 (United Riverside)

4 bed, 2 bath, 1570sf, built 1951

Asking $84,900

Estimating $25,000 in repairs (roof is 2 years old) needs: vinyl floors, new countertops, appliances, HVAC, possibly re-wiring, trim/doors, and paint.

Estimated ARV: $150,000 (I base this on 3 bed 2 bath comps ~1350sf only a few blocks away selling for $159k to $185k, roughly $100/sf to me seemed like a conservative estimate)

Estimated rent $1400/month (I based this on Fair Market Rent chart for 76111 from section 8 housing which lists 3 bed at $1350 and 4 bed at $1720, plus several 3 bed 2 bath rentals currently available a few blocks away at $1350/month)

Running BRRR numbers with $80k cash purchase, $25k rehab, refinance at $105k, %10 capex/repairs, 10% vacancy, 10% management fees led to a monthly net cash flow of about $200.

Is there something I am missing about this deal that I need to account for? Neighborhood doesn't seem like a war zone, is it? Is $1400/month rent way off? My ARV off?

Or are my numbers pretty solid and I just announced a deal to the entire BiggerPockets community that has somehow slipped through the cracks thus far?