All Forum Posts by: Jeff Roth

Hi Keegan in Joliet, Illinois-

Great question! You asked what would be the best first time investment and how much would you need to have saved up.

Think about a value-add duplex that you can buy for around $130K in a market like Lansing, MI. You want to try to get two bedroom units so the tenants stay longer and a basement or garage would also help for storage. A duplex also helps to always, hopefully, have a rent check coming in. We have an excellent property manager parter there and you would want to have the same to reduce tenant turnover, maintain the property, and maximize ROI.

Plan to have 20% to put down plus reserves for vacancy and property improvement. After improving the property when the units become vacant, you can increase rents and do a cash-out refinance to buy the next duplex.

To Your Success!

Hi Glenn from Atlanta-

Great question. You ask whether it is better to rent or flip a house.

You will always be better off renting over flipping in the long run. You build value over time. You are taxed lower in the future if you sell than a short-term flip. Rents go up and debt goes down over time.

If you like to flip, then consider Buying, Rehabbing, Renting, Refinancing, and Repeating as you get the immediate value add benefit, tax free, and the long the term appreciation.

We help our clients do both in Michigan.

To Your Success!

Hi Nir-

You bought a property a year ago and it really hasn't appreciated in the last year. You have had two tenants in that time which is a lot of turnover and expense. You also say you only have about $200 a month cashflow (when you have a tenant) not including vacancy, maintenance, and reserves.

I am sorry you are in this position but feel there are other investors in cooling markets nationally in a similar situations.

You wonder if you should sell for a loss and cut your losses or hold on and wait for things to recover.

1. Real estate is forgiving if you have a long time horizon.

2. If you don't have the stomach to hold on and keep feeding it, you should look to increase rents by renting by the room, rent the garage separately if you have one, rent the driveway for storing something if allowed, turning it into a mid-term, or short-term rental, selling with a form of seller financing that gets you a higher price, or sell at a loss and move on.

I looked at your area with the tools that are available to me and population growth is 0% since 2020, list price the last 12 months is down 7.1%, shows the market is cooling to a more balanced market, days on market are up, inventory is up, and median sales price is down 4.82%. Please verify all data.

To Your Success!

Hi Jacob-

Congratulations on having a paid off investment property you just renovated and you wonder the best way to pull money to buy a multifamily property.

Great question!

I would look into doing a Debt Service Coverage Ratio or DSCR cash-out refinance which uses the income from the property to qualify the loan and not your personal finances other than your credit score.

To Your Success!

Hi Deepika-

You are looking to invest out-of-state and buy your first investment real estate property as you live in an unaffordable location that is not landlord friendly.

You are not alone looking to invest out-of-state in more affordable areas with a better investment climate.

We have found excellent local property managers in places where our investors are interested in investing in Michigan. They handle all property maintenance and are responsive to tenant needs reducing your turnover and increasing ROI.

In addition, we have a property inspector and related contractors that are very thorough so you know exactly what you are getting.

Happy to help!

To Your Success!

Hi Nate-

You are just starting out and wonder the value of a mentor, how to vet them, and what to pay them. Great question and congratulations on starting your real estate investing journey.

I have paid for mentorship in the past when I was starting out. There is value in finding quality mentors.

In retrospect and with what I know now, I think there is value in finding three types of mentors depending on your interests.

1. Investor friendly Realtor that is an investor themselves.

2. Commercial Broker with a teacher's heart.

3. Business broker with a teacher's heart.

These three mentors will help you buy residential investment real estate, commercial investment real estate, and businesses with or without real estate.

If you are fortunate, you will find one with an interest and experience in all three. They only charge when you do deals as a part of the transaction and sometimes mentors give us the perception we are doing something but we are just chasing the next shiny object and we spend money to do it without making progress and gaining experience.

We at Arbor Advising like all aspects of business and real estate.

To Your Success!

Hi Zach in Newark, New Jersey-

You are 21 and saving $2,000 a month and still live with your parents and in no rush to move out and ask what would be the smartest, first real estate move to build long-term wealth.

Great question and congratulations on starting your real estate investing journey.

First, let me say, I would stay at home as long as possible as long as everyone is good with the arrangement. (1) It helps you stack cash. (2) Hopefully it adds value to your family being there and helping out. (3) You want to launch into the world in as strong a position as possible and low overhead helps you do that.

That being said, I would invest in a cash flowing duplex, possibly in an area you could see yourself living, that way you always have a rent check coming in and the option to live in one part of the duplex and have a tenant help pay the expenses in the other unit. If you bought it to live in one side from the beginning, you could buy it with less down, refinance cash out, and go shopping for the next one the same way in a year or two and stack duplexes that way.

There are markets here in Michigan where you can do that and we partner with the best property managers locally and recommend you use a property manager.

To Your Success!

Hi Jackie from New York, New York.

You are starting out in real estate investing and looking to invest out-of-state.

Your investment criteria includes (1) Buy and hold property (2) Long term tenants (3) Single-family homes (4) Class B to A areas (5) Opportunity to add value (6) Cash flow as primary focus (7) Low risk of natural disaster and (8) Population growth and less than average crime.

I like your criteria but would encourage you to consider starting with duplexes as you should always have a rent check coming in and Class C areas for better cash flow if that is your primary focus.

Two areas I would encourage you to look is Lansing and Grand Rapids, MI.

We have excellent property manager partners in both locations that handle all maintenance, keep tenants happy which reduces turnover, and work to add value to the property and rents.

To Your Success!

Hi Damani in Metro Detroit-

You have single-family and small multifamily properties and have self-managed but wonder if technology or a property manager can help you manage your property.

Great question!

I started out self-managing but learned pretty quickly that was not a part of the business I enjoyed and my time could be spent doing other things.

A good property manager will not only manage and maintain your property well; they should also increase the value of the property with their management and maximizing ROI.

A quality property manager is probably one of the most important members of your real estate investment team.

Always recommend my clients use a property manager and factor that into their deal analysis and involve the property manager before buying the property and when analyzing the deal and how to increase property value and rents.

To Your Success!

Hi Ben from San Diego California-

You are a corporate and real estate lawyer and looking to get started in real estate investing but feel priced out of your local market with few cashflowing opportunities nearby.

There are many people living in high priced areas looking to invest in more reasonably priced out-of-state areas with cashflow, rent growth, and appreciation.

The most important person to add to your team out-of-state is an investor friendly Realtor. You find that person on Facebook groups for real estate investing in the areas you are interested in or forums like this.

We help many out-of-state investors build their portfolios with still relatively affordable Michigan real estate.

The best way to scale efficiently is to buy value-add duplexes, improve the property, increase rents, refinance, and go shopping again or the BRRRR Method which still works in Michigan.

You get market rents from your investor friendly Realtor who can pull that information and involve their preferred local property manger to analyze rents and the property before purchasing.

To Your Success!