All Forum Posts by: Dillon Y.

@Chris Spespy if we’re talking turnkey, I would tend to agree with Eileen that it’ll be tough to find a property that cash flows. If you do, you’ll need to go further down the “Class” list to the C properties. I personally have one in Lindenwold that cash flowed decently when I bought it, and cash flows much better now that I’ve put *some* work into it. You can find some gems up and down the 30 (White Horse Pike) corridor.

I’d love to know more about why you’re aiming for turnkey - are you planning to househack? Are you Reno-averse?

Thanks!

Dillon

@Chris Spespy upvote for both of the previous posts.  I would add Rentometer.com and Craigslist.  Rentometer aggregates rental prices so it will give you information from many different sources .  Demand is a tougher one to gauge and has many variables involved - season, pricing, competition, etc.  The two areas you specifically mention will ALWAYS have interested renters - the real question is what are they willing to pay at the time you need to find a tenant.  That, in my experience, is more art than science.

What I'll typically do is reference Rentometer first and keep that in mind while I consider whether my unit is above, below, or right at average quality.  Then, I get the unit up on marketplaces as fast as possible and begin taking appointments to show it ASAP also.  I try to do two open houses per week for a unit.  If I am not receiving applications within that first 7-10 days (and mind you, I follow up aggressively with the folks who attend), I'll begin dropping the price, driving larger numbers of folks to the unit, until I meet the price folks are comfortable with.

Bear in mind, all of this is done with a number in mind that I am not willing to go below.  I do not waiver from that number, and I do not waiver from my criteria (credit score, income reqs, etc.).

EDIT: I realize now that your question is more centered around how to know you're getting a "fair price," and that's based solely on comparables.  Get with an agent well-versed in the market in question, and they will lead you to the promised land.  Fair warning: none of the areas you mention are going to come close to cash flowing when buying turnkey property.

@Jake Davis working 50 hours a week is no problem.  As @Cameron Tope mentioned, many of the folks you're working with will also have FT jobs and cannot view homes in the middle of a workday, so you'll be relegated to nights and weekends.  And to Cameron's point as well, much of the beginning of a Realtor's career is spent making connections, cold-calling (god forbid), and getting your name out there.  It's a trope, but real estate is a relationship business that compounds on itself as you generate more and more happy customers.

So keep your job and save up for that 6 months' savings that @Gregory Schwartz called out - that's a pretty standard figure for about how long it takes to see any sort of money coming in.  Consider how long it takes to get your first client, lock them into an agreement, find them a home (or find their home a buyer), and go through the closing process.  A side hustle is another great recommendation.

@Ehab Habib It may be beating a dead horse, but why do you want more units?  Is there an income goal in mind?. Or are you chasing the vanity of being able to say "I have X amount of units"?

Ultimately, and regardless of the above answer, you should make a decision based on your risk tolerance.  I know a lot of folks who are very successful with under 10 properties, but those 10 properties are totally paid off and cash flow very handsomely.  Others leverage to the hilt, with good fundamentals, in order to continue building unit count.. A lump sum can be deployed differently in both of those scenarios.

Knowing what your risk tolerance is, you can then decide how to make your money work best for you.  If you've got a mortgage at 4%, why pay it off with cash when you could deploy that cash elsewhere to make 10, 12, 20% returns?  Naturally, those higher returns come with a higher potential for risk.

Find out your why, your north star, your mission statement, and a lot of these questions will begin to answer themselves...

@Robert Abasolo

Well that escalated quickly...

At the end of the day, you can make any sort of agreement with the help of an attorney. In that agreement, the most critical wording is around being added to the deed once the milestone of your partners investment being paid has been met. And while you likely can’t be added to the mortgage directly, you’d have some options around either owing the partner a personal debt that is in lockstep with the mortgage (also attorney written) or you’ll need to refi out of the first mortgage and get another that you’re on (but will probably be mostly based on your partners’ credit histories)

At the end of the day, get in touch w an attorney and they’ll guide you through it all.

@Deonta Johnson Welcome to the party.

The general rule of thumb is if the deal is good enough, the money won’t be hard to find. Do you have people you know with money that you can partner with? Start networking, and you’ll be amazed at what opportunities arise.

Side note is to be VERY sure of your numbers on the subject property. No investor is going to risk their skin unless you know the deal inside out, upside down, and backwards.

@Jarod Castaneda Incredible story - once the deal goes through, I'd love to read a blog post by you that expounds on everything you said above.  Such a critical lesson to teach new folks about how to get out of your comfort zone to begin living your dream.

Best of luck!

@Theo Van Soest Welcome!

You mention agents - plural - why is it you haven't developed a relationship with a real estate agent who understands your goals and financial situation?  Doing so will go a long way to making this process easier for you.

On the flipside, at those low-level numbers, I imagine a lot of your offers should be direct to the owners of the properties you are interested in.  In which case, no agents need be involved - just get in touch with the sellers and have an attorney draw up a contract when you reach that stage.

Great attitude, @Jarod Castaneda, and a surefire way to get out there and see and be seen.  I know this is something @Brandon Turner espouses and tells the story of how just this tactic, at church no less, helped him snag a pretty good property (the 24 unit, I think).

And thinking back, it's wild that Brandon was the one to promote this considering how legendarily introverted he describes himself as.  Are you the same way?  Do you struggle with striking up these conversations?  I know I'm personally on the fence with it and have essentially concluded that it totally depends on the audience - I've got a lot of friends from my hometown who would call me a self-aggrandizing gloater if I talked about my properties, while the folks I speak to and run with the most these days would be very interested to learn more.

@Braxton Palmer

Yes.

...and I could leave it at that, but I'll expound.

Why wouldn't you use the same processes and safeguards?  Is the concern that your friends would find it insulting?  How long have you known them?  How much do you trust them?  Would you leave your kid with them unsupervised?  Your dog?  How about a 2-3 bedroom home in a market where that likely equates to an asset worth roughly $350,000?

I have a close friend who is 23 years old and about a year removed from the military who is renting two of the bedrooms in the home he owns to friends.  He is a disciplined man coming to grips with the fact that a lot of his friends do not have the same respect for others or the same values.  He has already had to void the lease renewal for one tenant/friend who could not maintain clean standards and has just renegotiated a significant price increase for the second tenant/friend who is falling into the same issue - can't clean up after his dog, clean his bathroom, etc.

The point is, without a lease to use as leverage, my buddy would be SOL and left to his own devices to negotiate with the neanderthals he got into bed with.  The point IS being friends with folks or spending a long weekend with folks is vastly different from (and you'll see a very different person when) living in close quarters with someone the next 6 months, year, or two years.

Unless those folks have ownership in your property, they will never be properly incentivized to care about the home in the way that you do.  The best incentive you can create is a lease.  Use one.