All Forum Posts by: Dillon Tinlin

@Michael Facchini That's more information I wasn't aware of, so thank you again! I have seen some properties asking 70-100k outside of our area, more rural areas again. And we can definitely come up with that down payment assuming we can find a good deal. It's the more suburb/city properties, when they get a bit more expensive, that we would have some issue putting down a down payment, leaving room for any rehab and so on. Thank you again for all of the information, it honestly helps a lot!

@Michael Facchini Firstly, I would like to thank you for taking the time to respond to my post, it means a lot to continue to get feedback from others on this site.

As the weeks have been going on, I have continued to research and talk with a friend who lives and invests down in Georgia. He brought up a few good points, one that I hadn't thought about was creating separate LLC's for each new set of properties I would purchase. As I continue to learn new things and gather as much information as I can, it just makes me want to invest more and more. I do know just getting in and investing into something we take the time to evaluate and crunch numbers would be a smart move and just get the ball rolling.

I have looked into house-hacking, but currently I don't need to move and although it could be a decent option, I don't know if suits what I am looking to do currently. It certainly is still on the table, but I have been looking at other approaches. Another option I have is actually a friend of mine is potentially looking to get involved with REI. He knows little to nothing but I've been going over some financial things that I know and some of the numbers and he seems pretty interested.

I have been looking around my area in Illinois and because I'm in the suburbs within an hour of Chicago, everything is VERY expensive for not a whole lot of real estate. So I have been looking to possibly go over the border to other states or within a few hours drive any direction. There are more rural areas about 2 hours from me in Illinois, that are very affordable units. I would have to talk to property managers for the area and see vacancy and comps in that area, but it seems like that might be my approach. Another question would be, if we have an LLC, and he has better credit score... who would the run the credit against for the mortgage?

@Jan Kerr I really do appreciate it, I'll be looking into the surrounding areas I may see that are doing that. Thank you for all the advice!

@Jenny Li The patent is for a device that has to do with locating underground (sonde technology). It's kind of niche in a broader market. Not only is it niche overall, but it's niche of a niche market haha. So it's a small subset of contractors/municipalities that need it. The other issue is, the margins are fine, not amazing, but fine. But one sale isn't like selling some of the big trucks or larger equipment that can yield thousands of dollars in profit per unit. It's much smaller.

As for the purchasing of a house, I don't mind that method, but our situation is actually ok for now. I think I'd like to move, but only when I find something a lot more enticing for me personally. But, however, to get the FHA loan, I know you have to have so much residency and that's what's kind of a drawback for me right now. My other thought was to possibly find a way to flip a few houses and get some extra cash to get a better down payment option. There are rental properties right down the road from me that are decently affordable and I've been intrigued to potentially go after one of those. Again, it's not about looking for deals and scouting the market, it's really the financing at the end of the day. The 5% strategy, could be an option here if I don't find another way to go about financing at a lower down payment option. Ultimately, I want to scale and purchase a few units within the next few years ideally. And with that method, it seems like a solid long-term thought process for acquiring property, but I would really like to get more properties in a 24-36 month time frame. So I'm not sure I can realistically do that without approaching a more seller finance strategy, or unfortunately get a new job and start accumulating a better income.

So if you were looking to get multiple properties in 24-36 months, without a lot of money down, do you have other suggestions? It's an unfortunate setback for me, but it's CURRENTLY what I have to work with. It may change down the road.

@Jan Kerr It's hard to leave and not help with this opportunity, but at the same time I can't just settle and help him when I need to get things moving in my life. Again, he isn't forcing me to do it, and I could step away if I needed, it's just a lot to consider. I have been trying to look a little more into seller financing, but my concern is that with no experience, I feel like someone won't be very interested in making a deal. I'll work incredibly hard and ultimately, the house is collateral practically, but I just don't know if they would be interested in going down that road with someone more inexperienced.

I do see what you're saying with the areas possibly getting upgraded, my only concern is that it's often low-income areas with higher crime rates and such. I feel like that is much more of a gamble, than a traditional just run down (or less than ideal) property. You have much more experience and knowledge compared to myself, so I'm sure you would have more insight to that. But just being from this area, I do know there are a handful of "dangerous" areas, and there are a LOT of properties to pick up in those areas for a more affordable price. I just get concerned about what comes of it after the work. I understand I will have to take a risk with ANY investment I make. 

I do appreciate your response, though, and I certainly didn't think of the idea of up and coming areas. I could at least go check out the area or do some research online, too.

Me and My interests in REI

Hey everyone, my name is Dillon (27). I have been interested in getting involved in some REI more focused on the rental property side of things. I really started researching and doing the homework not too long ago and I probably won't end up getting to the next steps until I feel I've really got a handle on the background of everything. I enjoy reading posts or watching videos of people's "what I did right and what I did wrong" to try and grasp what seems to be quite common factors, and more person to person hiccups. Currently I'm in the middle of The Book on Rental Property Investments by Brandon Turner. I watch a lot of different videos online and have been hit or miss with podcasts, but generally speaking, I have been doing a healthy amount of research.

Current issue

My main issue is that out of college my father had a patent on a product for the sewer industry but didn't have time to run a business dedicated to this product. He asked if I'd like to run a startup and I told him I would help and maybe we could get it to a decently profitable point that I'd be happy with it and we move on from there. Currently we are about to finish our second year, and because it's a startup company I am not getting nearly the pay I truly need (no not being greedy, it's just literally significantly lower than where I should/could be). I don't want to abandon ship on him, we still did decently well in sales in the past 2 years, but it's hard for me to continue this road without having a bit more money being generated for myself. 

He is by no means forcing me to stay and help with the project, but I know we have actually a few more products we're looking to get on board with, but there still isn't a guarantee that we start bringing in significant cash anytime soon. My girlfriend also teaches at a private middle school, and so she isn't making a ton of money either from that. I have been interested in finding some good deals and focusing on really getting a handle on financing to benefit a pretty solid rental property portfolio. I would like to start generating some passive income that I can look to increase over time by obtaining multiple properties and finding solid financial strategies. This way I can continue to help grow this current business while also not worrying about money moving forward.

Options/Suggestions

1.) I have a Master's Degree in Business Analytics with an Emphasis in Operations Management, and my undergrad is in Business Administration with a minor in Computer Information Systems. I could potentially find another job, make much better money (or we assume), and possibly return to REI after accumulating a better income and more money to invest with.

2.) Same as my first option, except immediately start the process for REI instead of waiting awhile.

3.) I could continue to do the same thing now for work, and try and get involved in REI sooner than later. (Finances are my biggest concern, as I stated)

4.) Continue to just slowly increase my bank account, see what happens in the coming years with this job, then invest in real estate down the road.

5.) Options/Suggestions you may have?

Concerns

1.) In all honesty I don't think I can afford a down payment on a decent property at the moment. (20% or more) I feel I would have to do an FHA loan, and I could probably swing that if my girlfriend and I wanted to do some house hacking. I'm just not sure I can really swing the finances right now, but I completely understand that.

2.) I'm here in Illinois where it seems like a tougher market to jump into currently, but being a newbie I could be completely wrong. Looking at other states pricing, I know we generally have higher prices on similar units from what I see. I don't know the areas outside of like 2 hours from me though, so another state clearly I wouldn't have much knowledge about.

3.) Backpacking off of point 2, many properties are QUITE expensive for what you're getting. If they aren't expensive, they're pretty run down and seem to be in kind of nasty neighborhoods. I have been reading a few things saying it's a harder time to get involved in REI right now, and I was reading a post about how Illinois/Chicago are even harder to find a good deal right now.

4.) Being concerned with not feeling like I know enough ( which I know I currently don't) but wondering when the initial "jump into the water" moment comes.

5.) There seems to be a plethora of information on the internet, but I haven't really seen a almost step-by-step initial purchase guide. I know there isn't a recipe or instructions on what to do, but it's almost like this idea of wanting to do more and more but not really having a starting point during the process.

6.) My initial knowledge in real estate is practically nothing, so I have to research everything without much of a starting point or assistance from people I know. I have great math skills and analytical skills, but when it comes to real estate, I don't have that expertise at all. (I know plenty of people don't or didn't, but real estate isn't even close to any work I've ever dealt with)

7.) Anything you're initially seeing a concern from your perspective?

Questions that I'd love answered (Be brutally honest)

1.) Is it worth trying to invest in real estate if you just really don't have enough income for some serious money upfront?

2.) Would looking out of state be an ok idea for a first rental property? (such a generic question, sorry)

3.) When looking to find partners/mentors, do people have less interest if you don't have somewhat deep pockets?

4.) Do you have any decent resources that you found to be significantly more helpful for a total newbie than others?

5.) Can you realistically do just about everything on your own? I hear about getting kind of a whole team on board, and when you're finding properties, finding tenants etc, that you want people to be helping you along the way. But it seems like since I'm looking to have less expenses overall, that seems to be more options that'll start adding up.

6.) Any questions you have for me?

Moving forward

I thought REI would be a great fit for me since I have more free time than I would with my other jobs, because I technically am my own boss. I might have some days I'm working literally all day getting things done, and other days that only require a few hours at most. I have enough extra time that I can be trying to get some property/deals going to start this process. I am insanely motivated in everything I do, when I do something, I like to be the best at it. It can certainly be a fault and cloud judgement from time to time, but I try hard to make sure I am doing the best I can do.

I know I could make better money for myself in general, but I do feel like this business is something special in its own sort of way. I prefer honesty over trying to avoid hurting my feelings or anything like that. I want to be told how it is, but I also want to be told WHY it is. I like explanation and am willing to hear anyone out, but I can't get behind a "don't do this". It has to be a "don't do this because ____ and ____". 

I truly would appreciate any insight any of you have in my situation. It doesn't have to be an exact scenario, but maybe you just didn't have a lot of money to invest with, but a strategy that you feel is appropriate. I feel like rental properties is my interest over other REI options because I want to think long-term. I would like to set up channels that will pay itself off, while generating cash flow, that will yield a higher profit down the road. I'm not a get rich quick kind of person.

Thank you for taking the time to read this, I'm excited to be apart of the community regardless of where I go from here.