All Forum Posts by: Corin Prendiville

Hi Kyu,

Welcome to the forums. There is a lot of good information here and in the podcasts to keep you busy. Good luck on your journey as an investor, its an exciting process! 

I personally don't think wholesaling is worth getting into as a business. Either become a real estate agent so you can serve more people in the community you live in, or do something else. If you have no money and are looking for a good way to make some cash look into getting into contracting of some kind, there is big money to be made in contracting and you build connections at the same time. You can easily get a job working for a contractor and learn any basic trade within a few months if you are driven and spend any amount of time watching youtube videos on how to do your trade. 

You could also look into being a mortgage broker, insurance agent, etc. Jobs that have no barrier to entry often also don't make you much money, the people who make money in the wholesaling business have dozens of people making phone calls for them and they take over when those minimum wage dialers get them a hot lead. Just become an agent if you want to be in that kind of business.

Any money you'd spend on a wholesaling course is better spent on getting a real estate license. If you can make calls for 4-8 hours a day wholesaling you can do it as a real estate agent and earn 10x what you would as a wholesaler (by virtue of the fact that you can assist all sellers not just distressed sellers) so why even bother wholesaling? An agent can sell a distressed property just as well as a retail property and look significantly more legitimate while doing so. Close to nobody is going to sell their non-distressed property with a wholesaler. 

Again mortgage broker is better, insurance agent is better, sub-contracting (pressure washing, tiling, drywall, flooring, painting, carpentry, etc). Any number of these options is going to provide better long-term outcomes than simply being a wholesaler. If this was 2013-2015 I would say go ahead and be a wholesaler, but not in this market. Contractors are the people making a killing right now, but if you aren't into hard labor it probably isn't for you (might be a good jumping off point though to get the capital necessary to do what you want to do). 

I think offering more than asking price is just part of the game right now. Its not more than the place is worth if everyone else is offering the same. For reference I paid $10k over asking on a property last August and the thing has appreciated 50k since then, am I worrying about the $10k? No, because I am holding onto this place for the next 30 years and by then it will likely be worth a million or more (no guarantees of course but that seems to be the trajectory of the DFW market). Also try to search properties that are sitting on market, they get forgotten by people due to bad marketing, bad photos, maybe some deferred maintenance. Some love will make some of those competitive in this market again and be great investments, I see tons of perfectly good properties sitting on the market for 30-60-90 days and being ignored while others that look just as bad when you walk them selling with multiple offers in one day. 

That same property had someone else outbid me by $5k but I won the offer based on better conditions for the previous owner. It never feels good buying in a sellers market but you either figure out a way to make it work or sit on the sidelines while everyone else makes money and expands their portfolio, if the alternative is money rotting away in a bank account or you not being leveraged at all its not even a question about which path is better. Just don't stretch yourself too thin, always look for the next deal and you'll be fine in the long-term.

If the entry price is too much for you I'd look at some ancillary markets that are a bit out from DFW, one town I was surprised by its quaint look was Sulphur Springs, and Greenville is another option. There are markets like that all around the outskirts of DFW that are going to feel ripple effects in appreciation and demand as the DFW market continues to grow and expand. I watched the same thing happen in the suburbs and rural areas around Seattle, WA over the last ten years where $80k properties are now worth $300k-$400k just due to population growth and the displacement of old Seattleites further out from the city. Money moves. 

I do second that College Station and San Antonio are good markets to get into, but there is plenty of opportunity still in the DFW market. The prices going up and the population growth are evidence that this is a market to be in not one to get out of. Its like not wanting to buy Tesla stock because it goes from $100 to $300 and then not being there when it went to $2k and split 5 ways and then went to $900 again because you felt it was too expensive. Just look at the fundamentals and make a decision based on that, don't make a decision based on sticker shock. 

*do your own due diligence on any and all investments. :)

Lastly I'd like to add the old quote from the stock world but it applies to real estate to. Bulls make money, Bears make money, but Pigs get slaughtered.

Just don't let the bears convince you that being a bull makes you a pig, and make sure you aren't a pig.

How to invest in real estate by brandon turner is a good starting book. Listen to a lot of podcasts esp. Early biggerpockets podcasts.

ABCs of Buying Rental Property by Ken McElroy is good to. 

Absorb what you can and then start looking at deals and math them out. Learn all the stuff that goes into making a house function and what they cost to repair and to replace and their lifespans. Pick an easy first deal dont buy a huge first project.

I would probably try seeing a few rentals in your target market and get a feel for what makes one 3 bed/2 bath rent for x and another rent for y. This might be remodel date, location, room size, etc. I think many renters are not as concerned about room size as you would be when purchasing a home, but layout, remodel date and location will play a bigger factor in the cost of rent. If you have a non-standard sized rental say a 600 sqft place in an area where most rentals are 1100 sqft you will have a much harder time renting the unit since your rental doesn't conform to the major demographic, on the flip side its not competing in the same space (but you'll likely get less for it overall) - vs a 600 sqft unit in San Fransisco is considered a spacious apartment and will be competitive in that market for rent since there are a lot of single people and younger couples renting in that area and housing is limited. 

Of course this is all still market dependent which is why its important to learn the market(s) you are buying in and what the average consumer is looking for. I don't think there is a one-size fits all answer like Michael Le has said. 

I think you would have to buy it as an investment property if you buy it out of state without disclosing you have plans to move to it, but depending on your current rent situation your DTI may be too high to qualify for that.

if i was you i would reach out to a mortgage broker and see what options you have, but probably the best thing is going to be to first line up a likekind job in Texas and then find a place. You might consider reaching out to some recruiters in the DFW area they could probably place you somewhere. This also protects you from buying somewhere and then finding employment 1 hour away which would be kind of miserable.

I would probably use a property management company if you are living out of state.

It sounds like you already plan to have your wife get the place rented then hand it off to the property management firm after, which is definitely worthwhile if its not a huge hassle for you and your wife knows how to select a tenant. 

Trying to manage out of state will probably just end up being more of a headache than its worth though, just make sure you pick a good firm and expect to have to manage the manager a little bit. 

It looks like you have gotten a few opinions on how to run the numbers so I won't bother contributing to that side but I will talk about CapEx strategy as that seems to be a point of contention amongst investors.

When you analyze a deal you need to know how to look at the actual property itself and determine what is going to go out when, this is something you can roughly estimate based on the life of the item and just having experience with looking at items to determine their age. Once you do your paper numbers and either after you put your initial offer in or just before (I understand a lot of people just put in a lowball offer and wait to see if it sticks, but I'd still check the property after the offer is accepted during the due diligence stage to verify its actually worth continuing). Do not rely on a sellers disclosure notice to tell you what is wrong with the house. Here are some quick examples:

Roof - 20-25 years tops (minus hail storms or weather damage, get insurance that covers it). If roof is already in need of replacing this will be an immediate upfront expense that insurance likely won't cover, make sure you know that - most homeowners will disclose age of roof but look at it as well to make sure. Gutters are another thing to check, see if the downspouts are broken or not, make sure to clean gutters once you buy the place, etc. Gutters aren't too expensive but you should account for them. Look at the soffit/facia as well and determine if there is any rot.
Carpet - 5-10 years, depends on the tenant, the worse the carpet the harder your place is to rent, I'd recommend replacing carpet with LVP on the next time it needs replacing. If you are up for it you can save money by doing the install yourself, but you are trading your time for money in your pocket.
Water Heater - 10-15 years, if you have a tenant turnover over the 10 year mark I'd probably just bite the bullet and replace it then, its not worth having the thing flood your rental with a tenant in there over saving a couple hundred bucks tops. Also electric water heaters are exceptionally easy to install yourself and you can save a boat load doing it, or find a handyman who can do it for you at a better rate, most plumbers will gut you on a water heater install. With gas I'd be more cautious (I personally have installed gas water heaters and gas appliances but I am not comfortable recommending you do it over the internet, and it may not be legal in your state so look into that).
Cabinets - make sure they are of a good material, they can last forever if they are and just need some fresh paint when they start getting beat up, if they are already decomposing when you buy the place though you better be prepared mentally for an expensive replace.
Counters - You can go cheap on replacing them but a lot of landlords are putting hard stone in now, they last longer, look better and don't cost that much more if you can get a remnant. Expect to replace these every 15-20 years, judge the current condition and age of the one that is there now. 
Siding - make sure its not currently rotting away or broken to pieces, a lot of rentals you buy will need a fresh coat of paint on the siding. Don't skip out on painting the exterior of your rentals, it protects your siding and keeps it lasting much longer.
Windows - these can last a long time but check if the frames are breaking or pulling away in corners, that means window frame replacement soon or now and that is expensive. Fogging glass or broken glass can usually be replaced pretty cheap by window glass installers. Don't upgrade/replace your window frames on a rental just because, its a rental not your personal home. 
Plumbing - depending on the age of the house you could be in for a very expensive fix, some insurance will cover this so its worth seeing what your insurance does cover once you own the property. Get a hydrostatic test done on any rental you buy during due diligence period, the $150 dollars is worth saving yourself from a potential $5,000-$10,000 headache. For reference I'm spending $15,000 right now just to fully replace cast iron piping under a house, this house is getting fully renovated but when you are new that probably is NOT in your budget. Plumbing is EXPENSIVE and you don't want to get caught holding the bag on sewer line replace or repair for that matter unless you know its coming on the buy. 
Furnace/AC - Check the age, is it R22? Is the furnace 10 years old and the outdoor unit 30? IF you find a rental with a brand new furnace or brand new roof, etc those are big ticket items that will alter the long-term profit of your rental, knowing this can help you uncover a deal that others overlook. 
Concrete driveway - usually last a very long time, but take note if the thing looks like its about to turn back into dirt. These are big ticket items. 
Fencing - Fencing that is falling down will need to be fixed or replaced.

Foundation may or may not be a concern in your area but if it is make sure to look for signs of foundation issues and get those inspected and an estimate or two if they appear to exist prior to being committed to buying the house. You can usually ask for an extension at this time if needed to determine that cost. 

Also check if the wiring is aluminum, I'm not saying don't buy an aluminum wired house but I don't like the idea of my rental properties burning down and if you can avoid it I would unless the deal is sweet enough. The breaker box will have an indication if its aluminum and the wires coming out will usually say ALM and also be silver not copper colored.

I am sure I have missed a few items, but this is most of the big ones. I would create a checklist that you can use and then reference it when making your offer on a property. A lot of times having 1 or 2 big ticket items that are about to go out makes a good deal on paper a bad deal in reality, and it works the other way as well a couple big ticket items you won't have to worry about for the life of the property can make a meh deal a good one in reality over 10 years. 

Welcome Todd! Getting a decent size MF property would be the dream, I'm kind of thinking about how I might make the plunge into something over 4 units sometime in the future as well. I hope you enjoy your stay here. If you ever need anything feel free to ask.

Hey Luis, welcome to BP and I hope you enjoy your new path to financial independence! 

My story is a bit long but the short of it was I hated working for the man, just knowing that most of my effort would not result in a direct benefit to myself demoralized me to the point that I had a hard time waking up in the morning. I grew up working construction with my father who always talked about buying and flipping houses but was never good with saving money so it never happened (he was a great earner though). I grew up reading Rich Dad, Poor Dad, The Richest Man in Babylon, etc. but I never connected the dots until my mid-20s. Then I met my now wife and she had a a book on running rental properties which got me thinking about all the books I read as a kid and how we could get out of the rat race by building a rental portfolio, that light bulb going on in my head led me to the BiggerPockets podcast and ultimately the forums which lit a fire under my butt. From that point on I was hooked on the idea, it took me longer than it should have to make the leap and get started but now I own several rental properties in the DFW market and my only regret is that I didn't take Robert Kiyosaki's advice when I was a teenager and do it then!

If you ever have any questions or want to meet up in the Dallas area and talk I'm always down to meeting. Good luck with your journey!