All Forum Posts by: John Morgan

Quote from @Nicholas L.:

@John Morgan

you're probably a one in a million investor... even just having that many sets you apart.  would you agree that someone without your skill set is not likely to be successful?

Not really. I’ve helped mentor noobs recently to get started doing something similar to my strategy who are doing well. I think people over think this. Anyone can do this and self manage from afar. 

Quote from @Ivette Raygoza:

Quote from @John Morgan:

Good luck finding any cashflow these days in A or B class areas. lol. You'll be lucky to break even with 25% down. But you'll be fine with appreciation over time. If you have a good W2 and don't need any cashflow now, then you'll be fine. Just know that when the economy tanks every 8 years or so historically, class A and B rentals get hammered with higher vacancies. That's why I focus on working class C+ class hoods in areas with not so good school districts or crime a little higher etc, but close to downtowns and freeways. These rentals are always in highest demand in good times and bad. Times are good now, but you never know when the economy will fall out and people lose jobs etc. Make sure your rentals will be in high demand areas with a price point that will attract renters when the economy tanks. I'm investing in the Dallas area and Arkansas with 29 SFR. Appreciation in TX is good but low cashflow. And the cashflow in small towns in Arkansas is pretty good, but low appreciation.

 Thanks for the insight John. Have you had any issues with tenants in the C class neighborhoods? I have heard many mixed opinions.

Not really. These tenants seem to stay for many years so I rarely have vacancies. And when I do have a vacancy, I get them rented out right away due to a much higher demand for affordable rentals. 

@Becca F.

I found 9 out of 10 of these SFR in a small town in Arkansas from a wholesaler. They met the 2% rule with tenants in place so I thought I'd give it a try. lol. And I bought one off the MLS there for 75k with a tenant in place paying $1200/month for a 4-2. Some needed some work but expected them all needed some work. I'm lazy and buy almost all my properties with tenants in place. Then I slowly fix them up over time and raise rents. I have 18 properties In the Dallas area that have less cashflow but better appreciation. Most of them meet the 1% rule or better in TX bought I started buying them over the last 7 years so market rent has come up.

Quote from @Marcus Auerbach:

Quote from @John Morgan:

I'd put 3% down and get an FHA loan and live in it for a year while house hacking. Rent out rooms to others to make it affordable or profitable. Save up $ and repeat this every year and keep scaling.

I started with only 25k in savings exactly 10 years ago and now have 29 SFR with 3.2 million in equity cash flowing 19k/month profit. Give yourself a decade or so and you'll be set for life. Good luck!

John, while I agree with your advice to give yourself a decade, you are setting an unrealistic expectation for someone who wants to started in 2025. 

10 years ago was a VERY different market. We had 5 months of inventory, sellers were willing to negotiate, prices were just about half of where they are today (at least in Milwaukee). For me it was not about finding a deal, the biggest challenge was which one of the 17 deals I saw should I buy. The definition of a "deal" is very different today.

If I had to start over with 10k today I'd look for an easier path, probably online and find a way to make an AI make money for me. That's the frontier in 2025, not REI.

I disagree. People told me the same thing when I started investing in RE 10 years ago. Then again 3 or 4 years ago. Especially a year ago when I bought 10 houses over the last year out of state in an area I didn’t know anything about. The doomers told me that I wouldn’t be able to find deals in real estate in 2024 or it would crash. I’m still finding great deals today. I think someone can create generational wealth in 10-15 years in RE if they start today. And it’s definitely not rocket science. But most people don’t have 10 years to wait. Most people don’t have 3-5 years. They want to hit a grand slam today and to be driving a Lambo next month.  Maybe the impatient ones should try crypto or something that makes no sense but occasionally hits. lol. But I’m still finding deals all the time that cashflow and make sense.  

It all depends for me. I keep them all in below market rent if they are good tenants. Some are $200/month below market rent because they’ve been there for years and never bother me. I usually bump it up $50-$75 every year. My taxes and insurance go up at least that amount or more so I pass it onto them. And if I’ve had a lot of maintenance or cap ex at a rental, I pass that off to them with rent hikes to pay for it. We’re not running charities, so we need to keep raising the rent to cover our expenses. And sometimes I tell my tenants my expenses between insurance and taxes went up $100 this year so I need to raise your rent $75 or whatever.

@Alex Sanchez

I self manage 29 SFR and it's pretty easy. 10 of them are out of state. I do all my leases with apartments.com. I collect about half my rent with apartments.com too. It's all free and easy to do online. I accept rent payments other ways too. I hire out all the work and have a few handymen. The most challenging thing would be dealing with people who are always late on rent. I used to let people get 3 or 4 weeks behind in rent. That doesn't end well so I now start the eviction process much sooner. Once you give them a 3 day pay or quit notice, they seem to find the rent $. lol

@Ngozi Iwunze

I self manage 10 SFR out of state and it's easy. I list them for rent on Zillow and have a handyman or someone out there show them the house and change the locks when they move in. I use apartments.com for my leases and to collect rent. It's free and they DocuSign the leases over email. Ask around town for handymen and have them do it all. I cash app or zelle people to run over to my rentals to deal with things that break. I find it pretty easy to do. Don't over think it. Good luck!

If you’re not claiming your home as a rental for write offs then I wouldn’t 1099 anyone. Just keep the cash and keep quiet.

Good luck finding any cashflow these days in A or B class areas. lol. You'll be lucky to break even with 25% down. But you'll be fine with appreciation over time. If you have a good W2 and don't need any cashflow now, then you'll be fine. Just know that when the economy tanks every 8 years or so historically, class A and B rentals get hammered with higher vacancies. That's why I focus on working class C+ class hoods in areas with not so good school districts or crime a little higher etc, but close to downtowns and freeways. These rentals are always in highest demand in good times and bad. Times are good now, but you never know when the economy will fall out and people lose jobs etc. Make sure your rentals will be in high demand areas with a price point that will attract renters when the economy tanks. I'm investing in the Dallas area and Arkansas with 29 SFR. Appreciation in TX is good but low cashflow. And the cashflow in small towns in Arkansas is pretty good, but low appreciation.

I’ve gotten most of my loans in TX with 20% down. But I’ve been putting 25-30% down the last 4 or 5 years due to low cash flow with only 20% down. And most lenders give you a much better rate with an extra 5-10% down I’ve found.