All Forum Posts by: Joseph R. Smith

Whats commonly done and appears to often work well is: I would have part ownership (Equity share) of the property. Simple example:your $ / friend's responsibility for all management and rehab aspects etc. All proceeds split say 50/50.  The other thing to consider is I would want some decision making power-not sure the legal terminology. Any real estate lawyer draw these up for around $1000 well worth it.  Of course when flipping (unless doing a 1031 exchange)-you'll both have to deal with the capital gains tax, which can be quite large when getting into higher tax brackets.

Upstate NY investor here. I go wherever the best deal is-likely scattered across many small towns all over the State. I haven't really ran into any tenancy/vacancy issues. 

From experience, this always goes real downhill real fast. Next their 'contractor' (or ie brother) will offer to make whatever upgrades they wish, at whatever costs they come up with amongnst themselves, at whatever they bring to your attn after the fact and argue they dont owe $xyz towards rent. Looks like answers are all in consensus here. :/ 

I totally agree with JHL's reply.  Moreover, IF real estate prices were to fall say even 30%, that has no Bering on severely distressed real estate which can continue to rise 50%/yr in some well selected places. Also looking into mobile home parks and RV parks if things overall continue to go south.  Short 1 other answer-Commodity Indexes (including energy and foods such as wheat continue to rise). And likely mineral indexes, things such as gold. The entire broad indexes as a hedge. 

Google, "average cost per square foot sold (your town)"      x square footage. ;)       Google, " average rent for (how many bedrooms) in (your town)"      x 100. Those #'s tend to be apx equal usually. 

Google, "real estate appreciation rate in (your town)" . ;) 

Property type class C and D experience here. I prefer Class C if I can help it, but not when exuberant appreciation via revitalization may dictate getting into D property type areas. I've actually had my eye on Detroit, MI and Toledo, Ohio. -Carefully. Depending on an area, the very 1st most important thing I always do is Secure That Property! -Quality security system, often surveillance, bars on windows if need be, and an 8' tall enough to be a real deterant not easy to set a 6' stepladder next to and look/climb over privacy Fence! 

Perhaps I have this picture incorrect based on my own experience. All, Respectfully, unless you have some real firsthand experience in some areas 90% of investors are afraid to touch and say those of us that do are crazy, you have little idea what we're even talking about here. Respectfully. Its a whole different game. Nothing is by the book. Evictions and turnover rates are dealt with on an individual case by case basis. Often, like if there is a warrant out for the tenant its one common eviction policy lol. Not sure how else to even better give this picture. There is little rationalizing with the neighbors, nor often the city with extreme budget problems themselves for that matter. Usually they are to be avoided at all costs lol. We dont want any more civil problems than already exist. But the ROI's are tremendous for dealing with the nonsense, often less than 1 year ROI for those that can handle it.

Original poster, you need to secure that property yourself at all costs! :) When we go in and try to really clean up high crime unsafe areas where people are pitching multiple tents in the yard and s**t lol, we must consider how good hard working tenants we want to make the area a place for families proud to call home once again-how much they will appreciate our efforts to get and keep them there. They need to feel safe first. It will drastically increase demand and choice of tenant selection for your particular unit. I really hope this helps. No brainer on that fence. 

OP, do you watch "The Shea Show"? He has a youtube channel. Is in Detroit. I learned a great deal from him. Perhaps your situation is quite different than I describe. :) 

In Dallas, the current average cost to build per square ft is $172 (including the land which your # is accurate on).    x2100=$361,000

In Dallas, the current average sale price per square foot sold is $240.    x2100=$504,000

You clearly spend some time and effort doing your own averaging. I prefer to just google a few reliable source averages, then adjustments from those. 

I think most all beginning real estate investors are Not in the business of New Home Construction, or Development. Because they know nothing about it, nor have experience in, that specific highly specialized area, a competitive area against very large developers with economies of scale and market positioning. Respectfully, crazy to face them head on.  

20-25%! Wow, and I thought 10% on LTR was steep, which can now push 15%. I'd just run a few quick #'s on just how it can Really cut into the cash flow, which can in turn really cut into valuations, which can really cut into BRRRefinanceR amounts, for reinvestment, etc.

I only understand/recommend outsourcing property management for investors who are very afraid of handling tenants or evictions etc themselves, like when its the stumbling block for entering real estate investing for them. 

Lets take just valuations for a quick sec. : Suppose a multi unit LTR property rents for $3000/month and has a valuation of $300,000. (1% rule, oversimplification). If one can raise rents just 10% by total $300/month to $3300/month-Supposing net operating expenses remain the same, Doesn't that new valuation increase by perhaps $30,000 when its time to refi or cash out! I view operating expenses this way and strive to cut them, to in source wherever at all possible. Now view 20-25%. Is my just another opinion. 

1 other thing. I am not extremely familiar with STRs. But I only wonder IF/When there is some sort of market correction, how many of properties that are making sense now-when one can easily afford to outsource various costs, and not have too stringent investing perimeters. -When if many of those deals would no longer make sense. Just another thing I'd consider when striving to cut operating costs now.   

My opinion is that we are way over analyzing this. Most any home built pre 1978 has lead based paint. Just assume it almost for sure does. Thats a lot of houses that do.Very typical. Routine is just the lead based paint disclosures upon sale or tenancy. In fact, it all seems like one of those "lawyer things" and a waste of 8 pages of paper constantly. I would rather disclose the issue as "unknown" than pay for an inspection to tell me the obvious and then open myself to liability of "knowing" but not fixing it all somehow. I cant imagine the costs to remedy, and actually never heard of anyone doing such. A common sense approach, such as not having pealing paint in the secondary bedrooms would seem sufficient. (I mean as kids if your age 40+, we played with lawn darts as kids, built bicycle ramps that resulted in a few stitches stitches at the ER a time or two, had diving boards at the community pools before they had to be removed. But ever thought to eat a lot of paint then sue somebody-No. "lawyer stuff") .  Ive invested in several states, not familiar if there's anything more complicated in MA. Actually, I'm looking at property in Adams, MA so fill me in if Im missing something otherwise very unusual about MA?   

About 60% leverage seems to be the optimal consensus of investors I confer with. This uses leverage a key benefit of real estate investing, while leaving room for any market downturn or unanticipated stumbling blocks. My own concern, not having self managed more than $1M or 15 units at a time in real estate; would be my own or another person's experience if they havent invested in real estate before, and scaling capabilities in things such as human resource management to consider going too big too fast.