All Forum Posts by: Heather H.

@Skye Anderson I highly recommend reading "The Book on Rental Property Investing" by @Brandon Turner before going any further. He goes through a lot of the expenses that are realities of buy & hold investing, which people might overlook or not consider fully in their initial estimates. Vacancy and turnover are big ones, and are a reality regardless of who manages your property. There are a lot more that can catch you out, and his book is a great resource on how to plan, prepare, and invest realistically, to avoid expensive surprises that were actually preventable.

I've held two SFRs from out of state for seven years, and in my experience, the yield is never quite as rosy as my initial spreadsheets would have led me to believe (even though I thought I was being so realistic at the time!).

I self-managed for the first two years, and I am very happy with my decision to hire a professional property manager. I actually had longer vacancy periods than I do with a PM because they have experience and systems in place to identify and place good tenants. My PM also knows local contractors and specialists, so when something does come up, he has more bargaining power than I would, and is able to recommend reputable suppliers. The headache factor is worth something too. When work needs to be done, it's hard to get contractors and tenants to coordinate their schedules, and if you're managing from out of state, you can't be there to make things happen. Inspections also become a lot more expensive if you have to fly across the country to do them yourself.

Property management and vacancy aren't the only expenses you'll face, so plan for contingencies. Sometimes things tick along for a while without incident, and sometimes the roof on your house needs to be replaced and wipes out the cash flow for the whole year. Being an investor is a lot of fun, and there is money to be made, even with just a couple properties, but you have to be realistic with your numbers. So put some doomsday scenarios in your spreadsheets, and if they cause your projected yield to go negative, I would suggest seriously rethinking those purchases. Good luck!

@Jake Harris Thanks for being so open and sharing such detailed information! I feel like this answers a lot of questions that many of us have been wondering about. Very best of luck, and I look forward to the future of this project! 

@Jake Harris Thanks for the update and for sharing that information about the railroad quiet zone. Just a question on that - what will happen if it doesn't go through - would the project still be viable without the housing side of things? And the article says that it will cost up to a couple million per crossing - is that still within budget? 

I realize that big development projects often face delays for good reason. But it is also not uncommon for them to become permanently stalled if they fall short on financing or face unanticipated additional cost or regulatory complexity.

Of course you are aware that Efraim Varga doesn't exactly have a reputation for finishing his projects, and this seems (according to the articles I've seen anyway) to be the biggest one he has tried, which is the source of a lot of people's caution, and why I asked the questions I did.

I think a lot of people here on BP would love to see Essex Modern City succeed. It will be exciting to see what happens to the site and the neighborhood throughout the process, and any updates you can provide along the way will be very helpful to all of us on this forum! And thanks for the invitation to come to one of the events - it will be great to check out sometime!

Hi @Ian Tan, @Phillip Dwyer (who has already replied to this thread) has been managing my SFRs in Las Vegas for the past five years or so, and I definitely recommend him. Check out the recommendation that I wrote on his profile page, and feel free to PM me if it would be helpful to chat about my experience.

Hi @Jake Harris, thanks for the shout out. I haven't seen any updates on the Essex Modern City development in a while - can you share its status? What are the main sources of the delays; do you expect to be able to resolve them, and do you have any idea of the new timeline?

I realize this is kind of a lot, and any information you can share would be appreciated (I am happy to chat on PM also, but asked publicly because I'm sure this info would interest others). Thanks!

This is an old news story (March 2017) but I just came across it, and it's pretty interesting. It seems that the "developer" behind the Essex Modern City project might actually be a flipper with grand ambitions but little if any development experience. I was optimistic on the project until I read this:

https://www.expressnews.com/real-estate/article/De...

Does anyone know if he has ever actually finished a development?

@Geoff Junt I'm not sure of the specifics, and they could have changed since then, so I'm not the best person to answer that. The auction I attended was about three years ago. There were probably 15-20 investors around the table, and I think about eight assets were up for auction. 

@David Clinton III Thanks for sharing the information on the big investors - I'm also curious about who they are.  I had no idea that was going on!

@Account Closed check out this post by @John Barr - he goes through zip by zip depending on your goals. It's an awesome starting point to build an understanding of the neighborhoods.

https://www.biggerpockets.com/forums/99/topics/513...

Hi @Geoff Junt, I have attended  and bid in one live Auction in Coeur d' Alene, and have bid on a couple properties on Auction.com's online auctions (in Las Vegas and Spokane).

For live auctions, @David Clinton III is right that you need cashier's checks, for the full sale price if I remember correctly. Check on this, but I think you can also bring cash. At least I expect so, judging by the cast of characters sitting around the table with briefcases! It was an experience.

Whether the auction is online or in person, you need to do your research on the specific properties before bidding, both in terms of the property itself (state of repair, etc) and the neighborhood. For the auction in CdA, there was a specific property that I wanted to buy, which I was already very familiar with (it was next door to my brother's house with the same floor plan, actually). It ended up going for just a couple thousand over our max (and far below its retail value), and we wanted to keep bidding, but we didn't have any more money, so that was it. It was tempting to bid on some other properties that looked good based on the pictures they put up, but we knew nothing about them, so we didn't.

When I bid on the online auctions in Spokane, I was in town at the time so I actually drove to the properties and took a look before the auction started. Most of them were such dumps (you could even tell from the street), that the prices they ended up selling for plus the repair bills would have put the investor in for more than their actual value. If you go to look at places on your own, be careful of trespassing, etc. One option to gain access with your realtor (but then there are considerations around commission, etc. - see below).

For the online auction in Las Vegas, I wasn't in town at the time, so I made a deal with my realtor that he would get a commission if my bid was successful, in exchange for going and checking it out for me, taking pictures, video, etc. One thing that is attractive about auctions is that you don't have to involve an agent, but I think it's worth it if you are not on the ground. Exterior pictures leave a lot to the imagination, and you might find that you actually overpaid when you thought you got a good deal, because of the rehab expenses.

All that said, though, I have never seen a property (that I am interested in) on an online auction go for a low enough price to make the uncertainty worth it. It seems like these days, the reserve always seems to be very close to the actual retail value of the property, which often isn't appropriate given their state of repair/ list of unknowns. So lots of properties just don't get sold, even if they have been bid up to a price that seems to make sense given the location and a rough estimate of the repair expenses. They usually end up on auction.com again a couple weeks later, with the same reserve price.

Happy investing!

@Todd Worrich Thanks so much - there's so much information here! And thanks for the offer to look at specific information - very kind of you. I don't have anything at the moment, but I'll keep your offer in mind and maybe we can talk more when I get a little further into the SA market.