All Forum Posts by: Jared Smith

@Nathan Driscoll how much are you looking to be involved will help drive your decision. Based on your land purchase, I am guessing you are looking to be as passive as possible. If that is the case, I would look at an investment that has professional management and something that has also had the major CapEX renovations completed prior to purchase. The next step of passivity is purchasing a rental that has been renovated and also has a resident in place so all of the guess work is removed. 

With the amount of capital you have you could make a significant investment in SFR using some leverage you could purchase a life changing portfolio and also spread out your depreciation over multiple properties so that if you ever want to pull some of your capital out, you will be able to do that from one of the properties without having to sell an entire MF property.

Happy to chat if you have any questions on this strategy!

@Brooke Melton. Do you own this property outright? I think I would start there. I'm never comfortable with having other people responsible for a mortgage with my name on it if you think that the area and the homeowners association HOA are improving and want to continue to be tied to that property then maybe owners financing would be a good option. If you think that will continue to degrade, you may just want to be clear of the property altogether that's what my wife and I did with the property in Northern Virginia. It felt really nice to no longer be associated with that property.

Sounds like you have the opportunity for other investments already but what more could you do if you also had the capital from this deal. What type of future deals are you looking to do more similar with condos townhomes or single-family? I always caution against condos because the HOA we've been bitten twice by rising HOA fees that significantly into the cash flow and it turns out that most of their owners or maybe 50% or never is responsible as you are in paying assessments or improvements which further complicates the HOA. This tends to make single-family a good residential investment because you just have much more control and if there is an HOA, it's typically a small annual HOA on the neighborhood and not some huge monthly payment that can take on a mind of its own.

Let me know if you have any questions on there so if you've ever considered turn key options, I'd be happy to help where I can. Best of luck in your decision. 

@Cade Smith, you are in a fantastic position that most don't reach until their 40's! This just means you have such a long runway for your investments which is amazing.

Just because you purchase now doesn't mean you never need to sell, you will be able to use the tax system to your advantage and use a 1031 exchange to swap properties in the future. It is a common path to get started in residential real estate and then as you grow and gain experience and knowledge, expand into commercial real estate as well. The diversification is nice. 

Based on what you have said it sounds like a turnkey option may be a fantastic way for you to get started. There are solid options in your price range you mentioned, but also in the $175-250k range as well. Once you go below these values in today's market you need to be very careful on where you are purchasing those homes to stay out of trouble.

Let me know if you have any questions on that! Best of luck

@Melody Andrada you are in the right place to learn for sure. On top of learning about real estate you will ultimately need to figure out what you are comfortable with (risk tolerance) and have time for (active or passive investing)

Also, where you start on your real estate investing journey will evolve. Do some investors only do one type of investments? Absolutely. Some will utilize the equity gained over years to grow their investments through refinancing or 1031 exchanges and is often a point where investors may expand into another path of real estate investing, after they have firmly established themselves in their first investments.

I guess my advice is to pick a path and focus on it. There will be lots of shiny objects out there to distract you. You got this!
     

@James Ryan you should check out the Active Dury Passive Income (ADPI) podcast and Facebook page. Lots of folks like us out here that have started our journey while on active duty. Now I help folks like you find turnkey.

@Adam Hill If you are able to connect with a reputable company that has the capacity & quality inventory to fulfill a larger 1031 like yours, that would be step one. There are lots of midwest/midsouth markets that do not have rent control and are still seeing current and projected rent growth in the future. 

@Adam Hill, Congratulations on your deal and as you are probably seeing, things on the commercial side are a little cloudy currently with where rates are and the amortization period required. Sounds like you are looking for a safe place to park this money but also have some upside. Have you thought about breaking this up into smaller investments that are managed so that you can recover chunks of your capital over time with a fraction of the tax implications instead of having to sell an entire building and just keeping the 1031 process in perpetual motion?

@Zhansaya Sarmanova you are in good company, lots of investors choose the Dallas area to get started. There are some exciting things happening all around Dallas and one thing you can look for to position yourself is finding a home in the path of progress may just outside the city that in the next 3-5 years will be right in the mix of it. An example of this is finding homes that are between Dallas and the large 5,200 acre land development in South Creek Ranch (believe that is the right name for it) to the S/SE of the city. This area is going to be developed with Data Centers and homes, but my prediction is that it will bring up the values of the homes in the surrounding areas as it brings more and more businesses to the area. 

Happy to connect to discuss this or other factors we are looking at! 

Quote from @Valerie Peabody:

Quote from @Jared Smith:

@Valerie Peabody congrats on post # 1.  There are lots of ways in real estate to make passive income but it comes down to if you are willing to exchange up your money for someone else's time? If you find a home on your own and place it with a Property Management company you will need to determine how much to rent it for, how to get it rented, etc. You can have the company do this for you after you purchase but that introduces some additional risk into your investment.

Another way to do this is to find a partner/company that renovates and places the residents in the home before you purchase. Are you going to give up some portion of return for this service, potentially, but you also just took all of your major unknown variables out of the rental equation. If you go this path, I recommend you purchase in solid performing area with the median price point. Too low of price point looks great on paper but typically ends up being a headache and money pit. Too high of price point may be good for appreciation but there is an inflection point that rents no longer track linearly with home price. In my experience that is around $275-$300k. Over that price in the markets I work with your rent/price ratio starts dropping.

Hope that was helpful! Happy to chat anytime 

 Hi Jared,

Thanks for your response. We have homes in North Alabama, and I'd be interested to hear your take on Tennessee. We have relatives in AL, so we can figure out the renovation aspect if needed in that area. We also have management out there. If we go to a different area though, we would need someone to manage and work on any new properties. I am willing to look out of our area to find deals. 

I appreciate you reaching out. I felt very much like I was all on my own until I found BiggerPockets and you and so many others have reached out to guide me.

Thank you,

Valerie Peabody

I would love to share some perspective and you are exactly right that there are lots of folks here to help. I like all of the BP authored books that I have read as well. Hit me up on my link to connect. 

@Ryan Neuman make sure you find the right lender that can provide you with options for non-recourse loans within your SoloK, unless you will be purchasing cash. The turnkey company will likely help guide you through this process but also likely isn't specialized in actually handling the SoloK, that will be through another company/part of your team.

We have seen non-recourse rates as low as 7.5% recently from a lender we have worked with.