All Forum Posts by: Dennis Schramer

The beauty of real estate is that there are so many opportunities, depending on the path you'd like to take.  Definitely start building your credit, it's very useful to have.

You could start by driving for dollars. Figure out neighborhoods with houses that you could afford payments on.  Look for properties that look like they need to be repainted, have long grass, clogged gutters, other deferred maintenance, and knock on the door.  If the owner answers(or get the tenant to give you the owner's info) ask him/her if they'd be willing to sell you their house. Get used to hearing no over and over again; overcoming failure is the difference between successful and unsuccessful investors. Do some analysis which you should have learned from the podcasts, agree on price, wholesale those properties to investors at investor networking groups in your area.

I'm sure you've seen some of the no-money-down strategies.  Get someone to do a no money down, no interest, seller financed loan as long as you can afford the payments, you don't need money right away.  Get your friends to rent the other rooms in the house from you.

Find a partner with good credit and/or money then buy a property together with them.

Think outside the box, there is no end to the strategies you can use.

A large portion of our management portfolio is in low-income neighborhoods where you're not going to see any appreciation, but the potential for cash flow is phenomenal. I get the opportunity to see the difference in returns between owners who want to use up a property with band-aid fixes then sell it when it's done all it can and those who care about their investments and make money over the long-term. You generally make more long-term, you aren't a drain on the housing market, and your property manager will be more likely to send you deals they come across.

My personal investment strategy is to be patient and wait for home-run deals.  I purchase under-performing 4+ unit buildings with equity.  Make all repairs and complete any deferred maintenance upfront, fill all of the vacancies, raise rents to market, and add coin laundry.  By doing this, you are able to force appreciation, making the asset more valuable via cash flow regardless of the area.  Forced appreciation is less applicable in smaller multifamily buildings(2-4) so it is a bit of a departure from your question, but the core idea is the same.

TLDR: A "deal" should be a deal. Be patient; buy when there is appreciation AND cash flow.

To clarify, you should definitely account for higher vacancy in low-income areas. When assessing low-income investment opportunities, I use 20% and sometimes greater as a more apt vacancy rate to account for the higher rate of non-payment and vacant units.  I recommend using more conservative numbers, so when/if you beat your expectation, you're ahead not behind.

Hey Stuart, I hope our conference call this morning was helpful in giving you a better sense of your investments; reviewing the applications we've received, feedback we've gotten, our leasing process, and my recommendations should have given you a better idea of what we've been doing to fill your vacancies.  As I mentioned, I'm always available to answer any questions you may have.