All Forum Posts by: Jeff Roth

Hi Karla from Montreal, Canada-

You ask an interesting question.

Should your first real estate investment be new construction, since you and your partner have construction management experience, or flipping an existing home as you originally thought you would?

It goes to your preference, of course, but whichever can produce the greatest ROI should be considered.

There are many markets in Michigan, for example, where it is cheaper to buy an existing house and fix it up than it is to build new.

That may not be the case where you are at or through the construction suppliers and contractors you may have access to.

To Your Success!

Hi Robel-

Thank you for sharing you have been experiencing self-doubt and its is making you feel like you will fail in your real estate investing.

I appreciate your honesty and making yourself vulnerable with the question. I will try to do the same in my response. 

First, I think self-doubt and fear keep most people from trying something new or investing in real estate. They will rationalize it away but it keeps them and us from experiencing the richness of life and growing. I took many courses before actually taking action on my first investment and I still have self-doubt when attempting new strategies and I have failed.

Second, anyone who has not experienced self-doubt has not pushed themselves into the uncomfortable place of trying something new and potentially failing but learning a great lesson making them stronger.

You are capable Robel. We are all capable!

To Your Success!

Hi Sean from Long Island, New York-

You are 18 and wonder if you should buy a duplex on Long Island which is an expensive area and likely would negative cashflow for you if you lived in one side--at least at first.

You currently are still living at home and wonder if you should leverage your low cost of living to invest in a more affordable market.

Obviously, the choice is a personal one, but if you could continue to keep your cost of living low living at home you could buy a cash flowing property in several markets in Michigan or similar areas and the equity would build up quickly.

Then, you could use the equity to buy the next rental until you were ready to buy a house on Long Island or your priorities may change and you may decide to live somewhere else or work or school takes you other places.

To Your Success!

Hi Will in Chicago-

Congratulations on having a paid off rental with 500K in equity.

You are wondering what options may be available to put that equity to work and you are not interested in buying another traditional rental.

One suggestion I would offer is to put some of the equity to work by becoming a private money lender partnering with an investor that would split the profits with you on short-term projects.

You could turn that money over and over into the next project getting a higher return than the trapped equity and getting a lien position on the project property to protect your downside investing in a fairly passive way.

To Your Success!

Hi Adrian-

Through local networking events, deals I have been a part of and needed to bring in contractors, and asking for referrals from other active investors and investor friendly Realtors.

To your success!

Hi Adrian in Florida-

I haven't seen the sun in three months here in Michigan. :) Jealous!

You have been investing for about three years but are finding it more difficult to find deals that pencil.

I understand.

Here is what I find works for sourcing deals:

1. There are markets in Michigan where deals still pencil thankfully.

2. Property managers can be great sources for deals.

3. I network with other investor friendly Realtors in the markets I work in to help source deals.

4. Foundation repair salespeople are great sources to find deals. Offer them a bird dog fee for finding the deals.

5. Other potential bird dogs are handymen, people who clean out houses, and various house related contractors.

To Your Success!

Hi Sean from Upstate New York-

You have a full time career and have been studying real estate investing.

You are asking yourself if you should accumulate properties one by one or a bunch all at once from an investor selling their portfolio.

Personally, I would advise you to accumulate your properties one by one using the buying criteria you establish. I recommend you start with duplexes as you should always have a paying tenant. Section 8 tenants are also nice as the government will help pay the rent. Always use a property manager to keep your real estate investments as passive as possible and keep you compliant with Fair Housing laws.

This way you can learn to manage the property manager and learn from experience as you go.

If you buy a bunch of properties all at once, they may not all fit your buying criteria, there may be deferred maintenance that needs to be dealt with all at the same time, and you will not have accumulated the management experience building your portfolio one at a time.

To Your Success!

Hi Joel in Greenville, North Carolina-

You have a rental property held in an LLC and you are looking for a lender who will refinance it.

I would look into a Debt Service Coverage Ratio loan or DSCR loan that uses the rents to mostly qualify the refinance and less on you personally. These loans must close in an LLC which you already have.

To Your Success!

Hi Jon from Boyertown, PA-

You and your fiancé are interested in buying your first short-term rental and wonder profitable areas to purchase with a budget up to $500,000.

I would look at places along the west coast of Michigan, Grand Rapids, Kalamazoo, and near Ann Arbor, MI.

It is important to understand the local STR regulations in each community and partner with a property management company that can help your navigate that and manage it well for an excellent guest experience.

Don't forget to look into bonus depreciation and doing a cost segregation study to increase the tax benefits of ownership and if you "materially participate" in the management of the property per IRS guidelines it can offset active W-2 income which most real estate cannot.

To Your Success!

Hi David Oh-

You asked about a profit sharing bonus for property managers to give them an ownership mindset and incentivize them to align with your goals for quality property management.

I love this idea.

While I do not have a formal profit sharing plan, I always like to recognize the property management company with gift cards to the operators and the people within the property management company I have regular contact with that help keep the property running well and keeping costs down.

Related to this, a handwritten thank you card to the same people periodically goes a long way.

I also like to do the same for the tenants that have been paying rent on time.

To your success!