All Forum Posts by: Lee Nestlerode

I sold my duplex about 3 years ago but still follow the market in hopes of another slowdown. The land values can be crazy, make sure to understand what is driving prices in your micro-market. As stated above really is block by block. My area was completely driven by the price a developer could get for a single family house they would then back into what they could pay for a tear down or rehab which provided a floor on price. They would then go door to door with flyers to acquire houses, so many never hit the MLS. I would suggest looking for a 3 flat if you can find one.

1/watch out for taxes, they are increasing rapidly, so make sure you have the latest info And build increases into the model. This is posted on the county site.

2/ deferred maintenance can be costly, old boilers can go at any moment and flat roofs are expensive.  old windows can really drive up heating costs.  you will be dealing with houses that are 120+ years old.

3/be on the look out for asbestos, there’s a bunch of it used on pipes, fire proofing and tile floors.

I had a great agent and real estate attorney, happy to share there info if you are interested.

@Michael Lowe

My family is against it because my uncle had a duplex in an undesirable part of town (even though he lived in it too). Because of this he had the type of tenants you would expect, so my family thought people are going to skip out and not pay rent or mess with the furnace or burn the place down.

I went ahead with it anyways and showed them there is another side too. Having great tenants that helped me pay for my home.

As far as your friends, I think it’s time to find some new friends :) I have some friends that are 100% real estate, others who just have one property and others who that type of investment isn’t for them. I find that people are generally against things they don’t understand.

I recently shared with a family member and another friend that I was looking into apartment syndication as a passive investment, you would have though I had responded to some type of Nigerian prince scam. I actually appreciate it though, because if I can’t convince others this is a good idea with my money, maybe I should give it a second thought. It at least gives me an opportunity to understand risk through someone else’s eyes.

Thank you. Good to know.

Thank you.

@Hai Loc

Can you expand on what you mean by these are the left overs from costar?

HELOC -I was not suggesting you were over leveraging, don't have insight into your personal finances so not could begin to comment there. However, if you are borrowing money against equity that is still increasing your overall leverage, so is inherently riskier than 0 leverage. This is my approach, I have a good friend with 20 properties and uses the equity in his properties as collateral to purchase more properties, so will typically have 20% equity across his portfolio. He loves leverage, but it is riskier than no leverage. He also has 0 invested in other assets other than real estate, but feels he better as he has complete control.

Second on the selling it would depend on what I thought I could rent out the property for vs. the immediate cash for the sale. I sold my rentals when I left Chicago, as didn’t want to be a long distance landlord and wanted to use the equity to help purchase my permanent residence.

hope that help.

@Michael Lopez

I like to look at everything as part of a total portfolio, I do not want more than any 60% of assets in any one asset class (ie right now I am overweight US equity because of the 29% return last year).

1/The first question I ask myself is how much risk am I willing to take. Please remember that the level of leverage you use will amplify your returns but that also comes with additional risk. I would not “risk” my personal residence to fund investment but I am very conservative.

2/ what % to I want allocated to different asset classes. For me I decided, long term I would like 20-30% in real estate (excluding my primary residence). Currently I have 0% as sold my investment property.

3/Next what type of real estate do I want to hold and what level of involvement do I want. I have looked at everything from single family rental, duplexes, and short term beach rentals. I have decided to focus on investing as an LP in syndication as I ultimately want to be a passive investor and don’t want day to day headaches with managing my own rentals and am happy to trade the lack of liquidity for for potential higher yield.

This is my approach and specific to my own objectives. One thing to keep in mind there is tons of money out there looking for yield, so asset prices are likely inflated (in my opinion). be careful and make sure to fully understand the risks involved with any investment you make.

Good luck.

@Jay Garrison

What is the challenge?

I would not drop my standards and always take a deposit. A bad tenant is worse than no tenant. I would gladly take less rent than have a bad tenant.

Where are you having the problem in the rental funnel?

Are you getting no inquires at all, inquires but few showings, showings but no one filling out an application?

Try expanding marketing, perhaps using a real estate agent or the apartment listing services. My agent had professional photos taken, which made the place look great.

@Joe Krug

Would you please share or PM me the sites you used?

I am currently using a few but have been using them more as a research mechanism, I have not invested with one yet.

As was said above all are very different models ranging from no contact with the actual sponsor and an in house underwriting team to they just charge a fee to the sponsor to put the deal up and the investor is responsible for vetting.

Some of the deals look super risky. I am super interested to start investing once all my due diligence is complete (I find this to be the fun part).

@Jacob Rowland

I did a commercial lending internship (15+ years ago) and feel like the skills I picked up still benefit me today. It did not make me want to be a banker but gave me a good base skill set.

1/training and a very analytical approach

2/how a bank evaluates credit risk and underwrites loans

3/access to hundreds of loans to read through how they were structured and what covenants are in place

Good luck.