All Forum Posts by: Mack Benson

For money that is being set aside for expenses you probably want it to be very liquid or else you may need to break out the credit cards to make emergency purchases. If you are in the club that plays the credit card points games that may be something you want to do but most people want their expense reserves at an arms length so it's easily accessible, either in a savings or checking account. You probably want to avoid cash under the mattress on this one.

For the cash you are saving for your next purchase that's a bit more complicated and depends on your timeline and risk tolerance. A savings or checking account is generally a safe bet but you won't get much as far as interest goes (I've heard some credit unions pay out decent rates on savings accounts but I don't have any firsthand experience). You could check money market accounts but that is probably still paying at or less than 1% right now. A long term play could involve an IRA, whole life, or solo 401(k), if you qualify.

Personally I plan on deploying capital as soon as possible so prefer the employer matched 401(k) and savings/checking.
 

I think this depends on your goals. It looks like the current PMI rate on conventional loans is between 0.19% and 1.86% annualized. Can you reasonably expect a higher return that 1.86% on your investment? If so it could be a good investment, if your return would be close to or less than 1.86% then I believe it would be best to use your extra capital on a higher down payment.

In general I'm not a huge fan of using capital to pay down debt when debt is as cheap as it is today. If you use capital to pay down cheap debt you limit your ability to use leverage to build your portfolio.

Have you checked with Renters Warehouse? I've also seen Verde Property Management and Wits Property Management recommended elsewhere.

Hi @Jaiden Finckler, if you learn best by doing hands on work, have you reached out to any local wholesalers?  There are quite a few in the area that you could reach out to. Some things to think about as you start reaching out are

1. What are your strengths
2. What are your goals, be very specific
3. What are your weaknesses
4. What value can you bring to others

Good luck on your journey 

A good way to find PM companies is to go to rental listing websites and search for similar properties in a close area to yours and call the manager that listed the property. I've had good luck making contacts by doing this on apartments.com for example. When you call them you can either inquire about their services as an investor or you can shop them as a potential tenant. Mystery shopping them will give you a good indication of how they treat your future tenants. 

Are you underwriting on actuals or pro forma? If the property is going through renovations that will negatively impact their NOI. The T12 income will be lower and the expenses will be higher. If you are looking at what the rent could possibly be with a pro forma versus what it has been then I could see your valuation being higher than the asking price. Another possibility is missing some expenses, what was the expense ratio? Does it seem in line with the average market expenses for similar properties you have analyzed? I recommend underwriting on the actual performance of the subject property, especially with the uncertainty of today's market.

Finding the right property is important but not as important as knowing your criteria. If you know your criteria and if it's written down and adhered to, it is far less likely that you are going to fall into the shiny object syndrome. Many new investors go to meetups and events and fall for the pitch being made and run to the back of the room and fork out gobs of cash for the newest shiny object they want to chase. Next month they are back at the same meeting chasing the next one and on and on. For me, knowing my why and where my strengths lie I knew I needed to look into multifamily, specifically apartments. My criteria is

1. Multifamily with 30-150 units. 30 is usually too large for your casual investor and 150 is generally too small for the institutional funds
2. Class C to B. The workforce housing typically has more value-add possibilities and has been undervalued for a long time
3. Value-add component. As a value add investor I'm looking to increase the value through operational improvements and physical upgrades/repairs so I can refinance or sell at a much higher price that it was purchased
4. Mom & pop. I am looking for properties with a mom & pop owner/operator. Somebody who has or is giving up or just getting tired of the operation. Maybe they have allowed to the property or rents to languish, maybe they have deferred maintenance or operational inefficiencies 
5. The property must cash flow from day 1. I'm not saying the returns need to be stellar at the day of closing but it cannot have negative cash flow

This criteria may not be right for everybody but it is what I underwrite to for the deals I look for. Some people are more interested in parking their cash in a property so their cash doesn't lose value, that is great for them. Others are interested in the D class asset and have the systems in place to excel, that isn't where I have my focus. Some people only look at the newest and best, the class A or AAA, again I know me and that is not what I want to work with or compete with.

A house hack doesn't necessarily break even or even turn a profit. I would calculate the difference of paying for a house yourself vs paying for the house hack with the renter in place to determine if the deal is good or not. I would also calculate the deal if I were not living there, does the property cashflow if it's 100% rented? Make sure you calculate all of you expenses and include a vacancy in your income. If it cashflow's without you living there and being rented and you save money while living there vs living in a non house hack you may have found a deal to move forward on.

The chances of finding wholesale deals on a website are somewhere between slim and none. The reason is that the wholesaler is going to want to control the flow and audience. You may find some wholesalers with a local google search or through your local REI organization but they likely won't have many deals out there for the world to see. They will want to hold the deals close to their vest. To work with wholesalers you will need to reach out to them. Network with them and get added to their e-mail list. They will start sending deals to your inbox and you can arrange to view the property or make offers.

ABN - Always Be Networking

 That's a tough one. Assuming you are thinking about being an agent I really can't speak to it, that may be a good path but it may not. It depends on your skill set and market. It could be worth doing an informational interview with a local agent to see if it's something that could work for you. Other options could be property management, working with someone on flips possibly as a runner or general helper, driving for dollars, maybe even a mobile notary. There's a lot of options out there and you'll likely come across even more than I came up with as you network in your area. 

ABN - Always Be Networking