All Forum Posts by: Joe P.

What's your monthly cash flow and what are you real estate goals?

Honestly if it weren't for the access to Trend MLS/similar programs (so I can see actual expenses, taxes, etc.) and access to the property, I could do most of the work on my own with a title company.

I would want an agent who can see something hit MLS (or not, maybe something pre-MLS) and run some rudimentary numbers to see if its worth bringing across my desk. I've yet to meet an agent who can do that or is willing to do it. But bringing deals and useful information to my front door would qualify as a great agent. Someone who responds to my inquiries and gets my information quickly would be a good agent. Someone who just has the access and escorts me from property to property, because you need to be an agent to do that, is just an agent.

Chris, sadly, I don't think I can answer all your questions, but I do think I might have some information that is helpful...and hoping other investors know.

If you plan on being your own GC, I believe you will need to be licensed and insured in the city not only to execute work above water, but also if you (or if you GC'd another investor's property) for any hard money loans. I could be wrong, but if someone went the HM route, the lender is going to want to see plans, licenses, insurances, etc., to protect their investment.

I don't know if that's entirely true or if its the case, but I think it might be. So something to consider if you are doing BRRRR or rehabs using hard money.

Ashley,

Welcome! My advice to you, and anyone starting out, involves two key aspects:

• Save like crazy and reduce/eliminate your debts
• Come up with your plan

Ultimately everyone on this board wants to be a successful real estate person. But a "real estate person" can mean a lot of different things to people. Some people flip homes, some people are purely angel investors, some people are a one-man/one-woman shop, some people are realtors/wholesalers, and some people are syndicators. The list goes on and on in terms of the potential avenues one could take.

I say this as it directly relates to my point #2, which is you should decide what you want to do and make it very clear. It's the single biggest failure point for so many investors, in my opinion, because  without it we're just dogs chasing our tail. There is action -- reading, board interaction, meetups, etc., yet there is no defined path and end goal.

One of my biggest revelations was taking a Saturday 2 years ago, and putting it all down on paper. All my plan was writing down my real estate goals, my personal goals, and seeing how they looked when thought out over the course of time. That Saturday propelled me to take significant action, including selling a property that did not cash flow, refining my criteria, creating new saving goals (which I am on target with over 2 years), and clearly outlining how I will proceed to the next deal and the next deal.

I personally have no mentor and yet nearly every person who is new on this board, its the first thing they ask for. Find out what you want to do, what you're good at, and run like hell to get there. If you found a mentor right now, what would you do with them? You're looking for direction, right? There it is...find out who you are and what you want to do. And then evaluate to see if you're on that plan or not.

Good luck!

I checked the calculator, and you've budgeted $65 for vacancy, CAPEX, and repairs? To the tune of $780 per month for each.

Here is why that is flawed in my extremely limited experience.

• Your monthly rent will be $650 or $700 per unit. That means you've budgeted for a little over one month of vacancy between both units for the year. Ouch. Based on what you've said you'll be hosed on that pretty quick.
• CAPEX and Maintenance are budgeted at $780, each. The deal I got in August was very similar to yours except my monthly rent is $1900 between both units. To date...6 months...I've used 120% of my CAPEX budget (originally was $2280) and 150% of my maintenance budget (originally was $1820).

Now I also budgeted $0 on entry for any repairs, so theoretically I could have set some money aside, perhaps $2000 to $3000 to make it look like my cash flow is better. But a roof on a townhome is going to be about the same cost (size depending) regardless of if the property is worth 30k or 300k. A stove or a refrigerator (both unexpectedly needing to be purchased) will run you $400 regardless of whether a property is worth 30k or 300k.

If you blow your budget on one purchase, how can you expect to ever make money on this deal? I understand you're putting money in up front for repairs and theoretically this should lower your need to tap into CAPEX and maintenance budgets. But over time? I think you're way under budget on those. It looks good now but it is tight.

I thought "man, almost $4,000 a year saved up for CAPEX and maintenance? I'm going to be rolling in it!" Yeah...no. Maybe next year, but even being at 150% on my maintenance budget 6 months into my fiscal year scares the hell out of me.

I have to assume that populated areas make for a better MF experience.

I've lived in this area my whole life and never once have I heard anyone ask about the borders to DE/MD as a viable living area. Down the 95 corridor you have Marcus Hook in PA and Claymont in DE; these are smaller blue-collar towns and I don't know if the options are as good.

Frankly I would focus on more populated areas closer to transportation and city hubs. The border to PA/DE/MD is pretty barren in my opinion.

I'm pretty sure in some states that would not only violate local/state ordinances on maximum collection of a deposit, but could also be considered a form of discrimination. Perhaps not, but if I owned a duplex and moved someone in on the top floor for a $3000 security deposit based on their previous history, and the bottom floor for $2000, and they speak to each other...why even take the risk? Either they're a good tenant or they aren't.

I don't know if this qualifies as bad advice because I think it would greatly depend on your local/state laws, but if you're planning on doing this you might want to consult with a lawyer first, too.

What's this coastal town? My wife and I would love to invest in a coastal town but can't find anything at that price.

Kudos to you if the numbers pan out, but as you start tearing things down assume a much larger rehab budget than that.

My advice would be, if you have the time and you are managing it yourself (sounds like you are), is to come up with your plan to list, show, prepare, and rent the property yourself.

Besides being incredibly informative to both processes and what you'll encounter, you'll also know the ins-and-outs should you ever turn it over to someone in the future.

Some thoughts below on listing; I have many more if you're interested but this is all sourced from my experience and using BP posts/articles to assist:

• List on Craigslist, and use Zillow (which propagates to Trulia and its partners).
• Get lots of good pictures of the unit, pick the 10-15 best.
• Be as professional as possible in how you describe the unit. This always amazes me how posts have very little info, spelling mistakes, no selling points, and a couple of crappy pictures.
• You will be INUNDATED with e-mails. In my estimation for every 100 e-mails you receive, 10 people will come out to visit, and only 2-3 put in an application.
• Have your basic requirements ready with a CANNED response. E.g.: "Thanks for your interest in 2000 Main Street, Unit A. We would like to get you in for a showing. The rent is $1000 per month, and our income requirement is 3x rent, and all applicants are required to have a 600 credit score. We will perform a background, credit, and eviction check for all applicants. (Also put in if you have an application fee). If you meet the minimum requirements for this property, lets schedule you for 6-7 PM on Wednesday." or something to that effect. And have it ready for everyone -- don't take the time to respond personally to every e-mail because most people are just sending 100 pings out, and many aren't even ready.
• Do not show the property any time someone asks -- set aside an hour a week and tell people you have a showing between 6 and 7 PM on Wednesday, for example. It's up to them to make it work.
• Track visits/applicants in excel. Doesn't need to be fancy, but once they've said they meet the requirements, basically you now have a potential fish on the hook. It's up to you to get them in, meet them, and see if they are rental-worthy. You want that list to be as large as possible, so it'll flip to you following up with them. If someone is rental-worthy, and ready to go, chances are they're looking at several properties and you'll want them gobbled up quick.

This is just a short list to help you get going, but organize your plan and prepare yourself for this path.

This probably qualifies as a non-issue for everyone, but my investment property is getting a TON of junk mail addressed to me, since I have a mortgage on the place. I'm talking about 2-3 pieces of mail PER DAY. And it's a little embarassing because if you look at the envelopes, they all say stupid things like "MORTGAGE PAYMENT - OPEN IMMEDIATELY". I get it -- its a non-issue, but my tenant sends me a note once a week telling me there is another stack waiting.

Clearly its all companies who want you to refinance, but its a little annoying for my tenant. Is there anyway I can redirect that mail to me before it gets to them? I was going to do the USPS Change of Address on their website, but that's not actually my home address, so I don't want to put a "move" notification and screw up something with my actual home mail.