All Forum Posts by: John Barrett

@Mark Philibosian, I don't know if this is a unique idea but you can always approach the owner to find out if they are open to the possibility of owner financing.  If that is something they are willing to entertain, then it really would just come down to what you can negotiate with them.  

I have not used owner financing on but there are a lot of people on here who have an could likely provide you with more guidance.

Best of luck on your investment.

@Zach Simpson I would start by mapping out what you think the next few years are going to look like for you and your family.  Depending on what you think the future will hold (additional moves, job changes, family, etc.) will help you to determine what your next step should be.

While owning is most people's preferred option, it may not actually be the best choice for you if you think you might move in the next couple of years.  Renting provides you with the greatest level of flexibility.  I often think the best thing to do for people starting out is to first get your income up and start building up your savings.  Additionally, start networking with local agents, brokers & investors via meetups and other forums. Taking these actions will open up additional opportunities that may not be apparent or available to you at this time.

Best of luck with all your investments.

John

@Matt Darling we self manage all of our rentals currently. I feel managing a rental or being as involved as you can if the rental is not local is important. You don’t have to do everything but having the hands on experience has been very helpful for us.

First hand experience dealing with tenants and all the associated problems that arise accelerates your learning. Sometimes it can seem a little overwhelming but just remember there are likely very few problems that people on this forum or local investor groups have not already experienced / resolved.

As you grow your portfolio you will just need to factor in management expenses. This often means trading up from initial purchases into larger or more profitable properties.

John

@Matt Darling I completely agree with @Jay Hinrichs & @Jim K..  

My wife and I run a portfolio of multifamily properties in Snohomish County and it is very much a job. That said we find it quite rewarding. Having a specified investment criteria is a good place to start but I would suggest that you be somewhat flexible in your numbers. Generally, people's first investments are not the "home runs" that everyone likes to talk about. More often than not, the return from your first investment will be the education it provides you with more then any financial rewards. I'm not suggesting purchasing a bad deal but rather properly setting your expectations and accounting for risk. Earning a lower CoC return while learning the business could be a better way to manage overall risk.

When it comes to financial freedom, you can absolutely achieve this with cash flowing real estate.  That said, I would advise you to determine what financial freedom looks like for you and what headaches you are willing to deal with to have that freedom.  Managing rentals and tenants will always require work.  There are many different ways to earn passive income, rentals is simply one of the potential options.

Best of luck with your investing.

@Stacy Walker If you were willing to do a house hacking situation, you could find properties where you could put a lower down payment (less than $20K) and finance as your primary residence.  While this would likely not cash flow on a monthly basis, this could potentially reduce your living expenses to near zero per month.  This would also give you the benefit of being able to take any capital gains tax free up to the specified limit after 2 years.

Ultimately, there are many different strategies that can get you to your goal.  The determining factor is really what you challenges you are willing to take on (ie roommates or long distance).

Best of luck with your investment journey.

@Brennan Taberna I would also put your money in a money market account.  Use a site like bankrate.com to quickly compare the various banks rates and the minimum deposit amounts.  There are a number of banks that are all offer 2.3% on your deposit.  While these rates aren't the greatest they do provide you with the highest return and greatest flexibility.

If you have any concerns about being tempted to access your money, you could also do a bond or CD ladder.  These will offer slightly higher rates but far less flexibility.

Best of luck with all your investing.

@Dan Handford we did two 1031 exchanges to move from duplexes that had experienced a large amount of appreciation. We moved into a 4 unit and 10 unit buildings. Both were traditional value add plays (purchased at a discount with opportunity to increase NOI).

Nothing fancy with our strategy at this point. We are just focusing on running our existing portfolio and looking out for those opportunities that do pop up.

@Matta Nguyen I prefer multifamily properties for the reasons Erich mentioned.  Spreading the risk of vacancy among the 4 units will give you more wiggle room to figure out the normal headaches and hiccups that arise when you are starting out.  We have always self managed our properties and I do feel it's the best course of action just starting out.  I believe the experience you gain (sometimes painfully) will make you much better investor and you always can decide later to hire a PM.

My only caution on the condo is that you mentioned it has low HOA fees. If this is something you are going to purse I would look into this more. I would want to validate that the HOA is being sufficiently funded and there is not deferred maintenance or upcoming special assessments.

Regardless of which investment route you choose to go, tenant screening will be critical to your success.  Join a landlord association and use their forms (leases & walk through) for the city you choose to operate in and follow the lease.  There are also numerous meetups where you can meet other investors to network and ask questions.   

Best of luck with your investment.

@Gregory Washington it completely depends on what your willing to accept. ROI and cap rate are simply metrics that you, as the investor will use to allocate your funds according to your investment strategy. Your strategy will vary at different times depending on the goals you are trying to accomplish with your money. The returns that you are able to generate are dependent on your skills, drive, relationships and markets you invest in. General rules of thumb for return thresholds have the potential to be wildly inaccurate as a result.

My advice is to spend some time determining exactly what it is you want to achieve with your investment / investing.  The obvious answer is to have the highest returns possible but never forget that higher returns are normally associated with higher risk.  This will give you guidance on whether or not the return on any property is sufficient (moving you toward your goal & compensating you for the risk involved).   So highest return for the level of risk you are comfortable taking on.

Best of luck with all your investments.

@John Cumpton, I really like the Everett market.  It's getting harder to find deals in the area, but they can still be found.  

Let me know if you have any questions about the area.