All Forum Posts by: Account Closed

@Derrik Jacobson

Cheers to you for pushing to get started! I think a property like this would be great in a lower market cycle because you could really bank on appreciation. I wouldn't move forward with this as a rental as a cash flow play by any means.

Couple things that stand out to me from your analysis:

1. You need to factor management in to your cost, even if you're self managing. If you don't it's really easy to get yourself into a situation where you just bought yourself a low paying job. Here's what I mean- by self managing and not factoring that into your pro-forma, you're achieving 1700/yr in cash flow, or "profit" as I would consider it here. Here's what you're doing in exchange for this profit: You're managing this property, you're performing repairs on this property, and you're tying up 50k of your cash to buy this profit annually.

2. Your ROI is very low. You can tack on a long term appreciation figure to that, but you won't see that appreciation unless you've owned it through several market cycles since you're buying it in a higher market. You'll get some debt paydown, but that's pretty insignificant, especially in the earlier years the way the amortization schedule works out.

I would definitely look for ways to get at leasttttt a 10% return on your dollar. That's not crazy hard either. And include a management "fee" in your pro-forma- consider it your payment for managing the property and separate from your desired return for investing that 50k. Sacramento is a pricey market, and I've seen people get 1% deals on 350k properties by getting a bit creative. Maybe shooting for a duplex instead (even if its small), or finding a university near a larger a multi-room SFR that you can rent to students on a room by room basis. Consult with buy and hold investors nearby and see what they're doing to get good values out of higher priced properties. I personally prefer to invest out of state, but if you don't, I wouldn't take the conventional route.

Hope this helped somehow some way!

Thanks @James Wise

You're killing it with the distribution emails. I feel like I've known you for years with how consistent your campaigns are, lol.

Saw a REALLY interesting presentation earlier this week from an experienced investor- long and short it was based on a large pool of data starting spanning from the 1970's today and considered many metrics: employment, home equity, interest rates, volatility, foreclosure rate, affordability index, etc.... 

The result the speaker had had interpreted from the data was that we are in line for another recession, but this recession would have a minimal impact on housing prices themselves. Very interesting take!

@Brian Burke came to Sacramento and spoke 2 years back (before I'd even done a single deal, wow) and the whole focus of his presentation was timing. I'm with the idea as well... if...

- Your property has generated substantial equity in the past few years

- You are an active investor looking to maximize your net worth aggressively

- You're willing to move those funds into assets that are less volatile (i.e. markets that don't go up or down as much) but with higher residual income until your next opportunity to invest in equity arises. 

Not the easy approach, but the equity in my silly Sacramento SFR that I bought at the bottom is a downpayment on 30-40 units (depending on how good the deal is) in some landlord friendly midwestern or southern secondary cities. EX: I actually just came upon a 34 unit deal @ just under 1M and a 15 cap with strong rental history and high occupancy, C property, seller is willing to carry back 150k on a 2nd mortgage. Hypothetically, the appreciation from one house would buy me this deal. Amazing.

@Casey Walker Take it from me, a pre-wired systems guy... screw the systems this early. 

1.Listen to podcasts and talk to other investors 4 hours/day min if you have a full time job. Find out what the HOTTEST segment of your mailing list is in your area. 

2.Talk to other marketers (in different markets. local wholesalers rarely share marketing tactics with competition, our bread and butter is stuff I've rarely encountered on BP) and find out what the hottest, most concentrated list of hotleads is in your market. I quit my job off 1000 postcards/mo after 5 months of mailing.

3. Get a vumber account and a podio account. When leads call your vumber stick them in podio with some notes and a follow up date. Get your script straight for callbacks. It's not hard.

4. Start building your buyers list before you even market. And have relationships with them. Aim for 500 in your first 90 days (preferably faster than that). Make a podio section for them too. Email blast them with mailchimp if you need to distribute info/properties/questions to them.

5. Figure out your mailing budget. See how many postcards that would get you total. Divide it by 6, and that's how many leads you can afford to mail every month for six months. Mail EVERY MONTH. Don't stop after 6 months.

6. Forget heavily tracking. You're not going to have that many leads early on. Just make sure they all call your vumber and you get them all into podio immediately. You can go back and collect info later. 

MY OPINION ON THE THREE MOST IMPORTANT THINGS FOR A NEW WHOLESALER: 

1. Have a concentrated (small but highly effective) mailing list including only the hottest leads in your market. Mail them EVERY MONTH with POSTCARDS and a PERSONAL MESSAGE THAT YOU DESIGN YOURSELF.

2. Learn to be a salesman. Don't tell yourself you're already good at it. Most of your competition will be horrible at connecting, demonstrating value, educating sellers, exuding credibility, and CLOSING. Be masterful at it- accept that you're probably not at the moment.

3. Your effort to build a buyers list needs to be on steroids. When you get new buyers talk to them, then hunt for deals for them, then follow up with them regularly. See principles from #2 above- they all apply to working with your buyers as well.

Go kill it. 

Hey Rob! A lot of investors I work with like investing right over the border in Indiana. Since it's about 45 minutes away I don't know if it would give you the full "out of state investor" experience lol. Step one is establish your purchase criteria. What kind of asset class, cash outlay, and ROI are you looking for. Make a list of markets that you think may fit this criteria then rank them. Once you've got the top market, go find a GREAT property manager in that market- this will be key. Then you'll be ready to dip your toe in the water. Good luck! Investing out of state is a lot of fun- it forces you to think like a real business owner.

Hey Tina! If you're buying and holding just try to invest in a market and an asset that is less volatile. Don't play the appreciation game right now, we're at the peak of a market. There are many markets in the midwest/south that are far less subject to the speculation we see here in California.

In these types of markets, rental property is not much more expensive now than it was in 2011. If we see another downturn, these markets won't suffer much either. 

Just make a list of secondary markets in the regions of the country I mentioned, then poke around online to see what blue collar properties in those markets each rent for. Make your selection based on rent:value ratio first- consider landlord tenant laws, taxes, demographics as an aside.

Just my 2 cents :)

@Tina Chen

Steve, you're right- if you have a manageable portfolio and want to learn the ins and outs of managing property then by all means self manage. For my strategy it makes no sense- my goal is to scale quickly, and my property manager already has a large business in place so she has full time maintenance staff and tenant waiting lists- things that cannot be easily had when you're a smaller rental property investor. 

Pros and cons and both ends for sure, just depends on your philosophy and your goals.

@Steve Vaughan

Hey Sowjanya- 780k or 3300..... take the equity and sell it. You're not really cash flowing long term, and you're at the top of a market. Go put that cash in a market that doesn't appreciate or depreciate. I just got a 5 unit in a working class neighborhood for 125k that rents for 3300/mo- that's the kind of asset you should seek to benefit from your appreciation, and buffer against a crash.

Ouch. I'm not sure how your state laws work, but I would tell your old tenant to stop disturbing the new tenant. Be clear that if they don't you will call the police to have them escorted from the property.

I always recommend a property manager for situations like this. I love that I don't have to even know when stuff like this happens to my properties, LOL.