All Forum Posts by: Marco Padilla

Hey there Marcus,

Thank you for sharing your personal journey and insights with the community. Your story provides a valuable perspective for those considering real estate investing and offers a refreshing take on the necessity of expensive guru courses.

It's unfortunate that many seminars and programs often present themselves as the only path to success in real estate, pressuring attendees to spend significant amounts of money on courses that may not be essential. Your experience demonstrates that while such courses may offer comprehensive education, they are not always necessary and can be a detour on one's journey.

Your advice to new investors is both practical and empowering. Emphasizing that buying rental properties at its core is not complicated is crucial information. Reading informative books, seeking guidance from experienced investors, and focusing on purchasing quality properties are invaluable strategies for success. The reminder that the majority of failed investments are often due to purchasing in less desirable areas serves as an important lesson.

Your words are encouraging and reassuring, noting that mistakes made early in the journey tend to fade in significance over time. The importance of embracing continuous learning and seeking support from resources like the BP community and local REIA is highlighted as well. This not only fosters growth but also provides a platform for networking and learning from seasoned investors.

Your message of perseverance and long-term thinking is essential. Real estate investing is indeed a journey that requires effort, patience, and adapting to market conditions. It's worth noting that while the landscape may change, opportunities continue to present themselves for those who are properly prepared and committed.

Your final point about not needing additional guru courses before getting started is empowering. It reaffirms that by taking action, continuously learning, and being willing to adapt, investors can achieve their goals without the excessive financial burden of costly courses.

Thank you for sharing your wisdom and encouraging fellow investors to take the leap and begin their own real estate journeys. Your story serves as an inspiration and a reminder that the most important thing is to take action and learn through experience.

Best wishes for continued success and growth in your real estate endeavors!

Sincerely, Marco

Quote from @Quiana Berry:

As a newbie I am facing analysis paralysis on where to start my midterm investing journey. In NYC starting a midterm rental business is super expensive unless it's done upstate hence why Albany came on my radar. Also according to Furnished Finder its 5th in the state and there are 133k+ searches in the last 12 months and only 365 homes available. This seems like a lower competition market to start in, anyone have success they cna speka on? Also I saw a turnkey property selling for 459k and it is already on Furnished Finder. Wondering if that's a good deal. Any tips appreciated

Hey Quiana you can consider:

1. Research the
   market: Start by identifying cities or regions known for having
   significant hospitals or healthcare facilities. You can use online
   resources, such as hospital directories or real estate websites, to
   gather information about the location of hospitals and the surrounding
   area.
2. Analyze the demand: Look into the demand for rental
   properties in those areas. You can research the occupancy rates,
   rental rates, and average length of stay for properties near hospitals.
   Online platforms like Furnished Finder can provide insights into the
   demand for furnished rentals.
3. Evaluate the competition:
   Assess the level of competition in the market. You can examine the
   number of available properties, search trends, and the ratio of demand
   to supply. Lower competition markets may present better opportunities
   for initial success.
4. Seek success stories: Reach out to
   fellow investors who have experience investing in similar markets.
   Online real estate forums, local investor networks, or social media
   groups can be great resources for finding success stories and
   experiences from investors who have achieved positive outcomes in lower
   competition markets.
5. Analyze the property: When
   evaluating an available property, you should conduct a thorough
   analysis. Consider factors such as the purchase price, condition of the
   property, rental income potential, expenses, and potential return on
   investment. It's important to review any existing rental listings, like
   the ones on Furnished Finder, AirBnb & VRBO and assess the property's performance and
   potential profitability.
6. Consult professionals: It may be
   beneficial to consult with real estate agents, property
   managers, or financial advisors who are familiar with the target market.
   They can provide local insights, advice on market conditions, rental
   regulations, and help analyze the investment potential.

Remember,
making informed investment decisions requires your careful analysis and due
diligence. And should consider your own financial goals, risk
tolerance, and conduct thorough research specific to the target market
before making any decisions. Good luck!

Hello,

It's great to see that you've been on a real estate investing journey for a few years now, learning from both the ups and downs along the way. As you plan to reset and pursue your goal of attaining $5,000/month in positive cash flow with decent liquidity, partnering with other investors could be a valuable option to consider.

There's a famous quote that says, "If you want to travel fast, travel alone; however, if you want to travel far, travel in a group." By partnering with other investors, you can leverage their knowledge, resources, and experiences to help you achieve your financial goals more efficiently.

Here are a few potential benefits of partnering with others:

1. Increased Capital: Partnering allows you to pool financial resources, giving you a stronger position to pursue larger investments and potentially increase your positive cash flow.
2. Shared Expertise: Collaborating with experienced investors who have achieved similar goals can provide valuable guidance and insights. They can help navigate challenges, identify market opportunities, and offer sound advice based on their own successes and failures.
3. Risk Mitigation: Sharing the risk with other investors can reduce your exposure and help protect your assets. By spreading the risk across multiple parties, you can minimize the impact of any individual investment setbacks.
4. Expanded Network: Partnering provides access to a broader network of contacts, which can lead to new opportunities and potential deals. The connections of your partners, combined with your own network, can open doors to beneficial collaborations and increased deal flow.

When considering partnership opportunities, look for investors who share your goals, values, and investment strategies. Networking within real estate investment clubs, attending industry conferences, and engaging with online forums can help you connect with like-minded individuals.

Apart from partnerships, continue focusing on education and self-improvement. Learn from your past experiences and adapt your strategies accordingly. Consider exploring opportunities in markets that align with your investment goals and offer decent potential for positive cash flow. Researching and understanding market trends, rental demand, and economic indicators can inform your investment decisions.

Keep refining your business operations and systems as you scale your portfolio. Strive to build a strong team of professionals, including property managers, contractors, and advisers, to help support and streamline your investment efforts.

Remember, achieving financial freedom takes time, dedication, and smart decision-making. Leveraging the expertise and resources of others in a partnership can help you achieve your goals more efficiently and maximize your chances of success.

Best regards,

Yes, USDA loans can be used to purchase multifamily properties in rural areas under certain conditions. The USDA offers a loan program called the Multifamily Housing Direct Loan Program, which provides funding for the development of affordable rental housing in rural areas. This program is specifically designed to help finance the construction, acquisition, or rehabilitation of rental properties with multiple units.

To qualify for a USDA multifamily loan, the property must meet certain eligibility requirements. Some key criteria include:

1. Location: The property must be located in a rural area as defined by the USDA. Rural areas are typically defined as areas with populations of fewer than 35,000 people.
2. Use: The property must be used primarily for rental purposes and provide affordable housing options for low- to moderate-income tenants.
3. Developer/Owner Eligibility: The developer or owner must meet specific eligibility requirements set by the USDA, including financial stability and experience in property management.
4. Income Limits: The tenants who will be residing in the multifamily property must meet income eligibility limits set by the USDA. These limits vary depending on the location and the size of the household.

It's important to note that the USDA multifamily loan program is primarily intended for affordable housing purposes. The loan terms and conditions, including interest rates and loan-to-value ratios, may differ from traditional multifamily financing options. Additionally, the application and approval process for USDA multifamily loans can be complex, so it's advisable to work with a qualified lender experienced in USDA loans and the multifamily housing sector.

To determine if a specific multifamily property is eligible for a USDA loan, it's recommended to consult with a USDA-approved lender or reach out to the USDA Rural Development Office in your area. They can provide detailed guidance on the eligibility requirements and assist you with the application process.

Good luck

Quote from @Rick Pozos:

I have a property under contract and it's in a small town right outside of Corpus Christi. I am in San Antonio and I think I am going to just wholesale it. I think it's too far for me to keep it as a rental. What would you do??

Hello Rick,

It
sounds like you have an interesting opportunity with a property under
contract in a small town near Corpus Christi. While you are in San
Antonio and considering wholesaling the property, I wanted to share a
similar experience we had that might provide some insight.

We also
faced a situation where we bought properties in the early stages and
decided to keep them as rentals instead of selling. Initially, concerns
about the distance between our location and the rental properties arose.
However, we found that by leveraging a local property management
company and trusted professionals in the area, we were able to
successfully manage our properties and generate a steady stream of
income.

Keeping the property as a rental can have its advantages,
especially when the property is in an area experiencing significant
price appreciation. Even though it may seem far from your current
location, the potential for rental income and long-term appreciation can
make it a worthwhile investment.

In your case, if you are
concerned about managing the property from a distance, consider building
a network of reliable professionals in the Corpus Christi area who can
assist with property management tasks, such as property maintenance,
tenant screening, rent collection, and property inspections. This way,
you can still benefit from the rental income and property appreciation
while minimizing the challenges of managing the property on your own.

Wholesaling
can be a profitable strategy, but before deciding to wholesale the
property, evaluate the potential rental income and long-term prospects
in the small town near Corpus Christi. Conduct thorough market research,
assess the demand for rentals in that area, and analyze the potential
returns on investment.

If you determine that the property has
strong rental potential and you are willing to build a remote management
team, keeping it as a rental property could be a viable option.
However, if the numbers don't align with your investment goals or
managing the property from a distance proves to be too challenging,
wholesaling the property could be a reasonable decision.

Ultimately,
it's important to weigh the financial returns, your investment
strategy, and your comfort level with managing properties remotely.
Consulting with a local real estate professional or property management
company can provide further insights specific to the Corpus Christi area
and help you make an informed decision.

Best regards,

Quote from @Wesley Jensen:

Hey everyone! I have a strange situation and am curious what everyone’s thoughts are. I had a cold water line pex fitting fail in the wall at my duplex. Water came in through the cabinets for 10-15 minutes and it destroyed the microwave and the controller on the boiler. My tenant cleaned all the water up but it’s unclear any residual damage in the wall or under the floor etc. I have filed an insurance claim and they are sending a mitigation company out who says they will assess and may (if needed) pull up the floor, cabinets, drywall, whatever needs to be done. I told my tenant the plan and he said he thinks it’s dry enough and liveable and does not want the work done and himself potentially displaced. He said he will reach out to the state for his legal tenant rights in this situation. I asked the insurance company what happens to him if it’s unlivable and they said they will reimburse me for missed rent, but if he is displaced it’s on his renters insurance policy to pay for hotel or whatever he decides. If work needs to be done to mitigate long term damage, can he say no to it being done? He is on a month to month lease so potentially I could give him notice and wait until the end of March. Any/all thoughts are welcome. Thanks for the help!

Hi there Wesley,

It's certainly a unique situation you're facing. When
it comes to determining whether to remove the tenant temporarily or
proceed with the necessary repairs, there are a few factors to consider.

First,
it's important to assess the extent of the damage caused by the water
leak. While the tenant believes it's dry enough and livable, it's
crucial to have a professional mitigation company evaluate the situation
thoroughly. They will provide an unbiased assessment of any potential
hidden damage that could lead to long-term issues if left untreated.

If
the mitigation company deems repairs necessary, it's important to
communicate this to the tenant and explain the potential risks of not
addressing the issue promptly. It's possible that the tenant may be more
willing to cooperate once they understand the potential consequences of
not taking action.

However, if the tenant insists on not allowing
the repairs to be done, it may be necessary to consult with a legal
professional to understand the specific tenant rights and regulations in
your area. Depending on the severity of the situation and the
applicable laws, there may be options available to either compel the
tenant to cooperate or, if necessary, terminate the tenancy.

Given
that the tenant is on a month-to-month lease, you do have the option to
provide notice and terminate the tenancy if it becomes an unresolvable
issue. However, it's advisable to consult with a local attorney or
property management professional to ensure that you follow the
appropriate procedures and adhere to any legal requirements.

Ultimately,
the priority should be to protect your property from further damage and
address any potential safety concerns. Finding a solution that works
for both parties is ideal, but if that proves difficult, it may be
necessary to consider alternative steps to safeguard your investment.

Please
note that this is general advice, and consulting with a legal
professional who is familiar with the specific laws and regulations in
your area is recommended for a more accurate assessment of your
situation.

Best regards,

Quote from @KC Pake:

Hey BiggerPockets Colleagues,

Real estate investing is a journey filled with ups and downs, twists and turns, and, inevitably, some lessons learned the hard way. While we all aim for success, it's often our mistakes that offer the most valuable insights. This thread is dedicated to sharing those expensive lessons or mistakes we've encountered in the world of real estate investing.

The purpose here isn't to point fingers or bash each other for the decisions we've made. Instead, it's about creating a supportive environment where we can share and learn from each other's experiences. By discussing the obstacles we've faced, we can help new investors be more aware of potential pitfalls and navigate their investment journey with a bit more foresight.  I will share my "Most Expensive Lesson" in the comments.

To kick things off, here are ten examples of expensive lessons or mistakes in real estate investing:

Underestimated Repairs: The classic pitfall where the cost of repairs and renovations far exceeds initial estimates, impacting the overall budget and profitability.

Tax Liens: Failing to account for or being unaware of existing tax liens on a property can result in unexpected financial burdens.

Contractor Liens: Not settling payments or disputes with contractors can lead to liens against your property, complicating sales or refinancing.

HOA Fines: Overlooking or violating Homeowners Association (HOA) rules can lead to significant fines and headaches.

Bad Loan Products: Opting for loan products without fully understanding their terms can lead to unfavorable financial conditions, such as higher interest rates or unfavorable repayment terms.

Ignoring Zoning Laws: Investing in a property without a clear understanding of local zoning laws may restrict its use, affecting your investment strategy.

Overpaying for a Property: Lack of research or getting caught in a bidding war can result in paying much more than the property's worth.

Neglecting Due Diligence: Skipping thorough inspections and background checks can uncover unpleasant surprises after the purchase is finalized.

Poor Tenant Screening: Failing to properly screen tenants can lead to unpaid rent, property damage, and costly evictions.

Underestimating Market Risk: Not considering market fluctuations can lead to investments that don't pay off as expected, especially in volatile or declining markets.

We've all been there in one way or another, facing setbacks that seemed daunting at the time. But it's through these experiences that we grow and improve as investors. So, let's hear it—what has been your most expensive lesson or mistake in real estate investing? Share your stories and what you've learned from them. Remember, this thread is about learning and helping each other to avoid common traps and pitfalls.

Looking forward to hearing your insights and stories!

Best,
KC

Hey KC,

Real estate investing is a thrilling journey, but it's not without its challenges. Among the many lessons learned, one of our biggest hiccups in real estate investing was managing contractors and knowing when to let them go.

Contractors play a significant role in property renovations and repairs. However, we learned the hard way that not all contractors are reliable or suitable for our projects. We encountered situations where contractors exceeded their timelines, went over budget, or delivered subpar work.

Recognizing when to fire a contractor is crucial. We discovered that some warning signs include consistent delays, a lack of communication, poor craftsmanship, and failure to meet agreed-upon milestones. These issues can significantly impact the project's progress, budget, and overall profitability.

One of our costliest mistakes was hesitating to fire underperforming contractors. We fell into the trap of giving them multiple chances and hoping for improvement, but it usually resulted in further delays, additional costs, and compromised work quality. Ultimately, we had to bear the financial burden of fixing their mistakes and hiring new contractors to complete the job.

The key lesson we learned from this experience is the importance of thoroughly vetting contractors and establishing clear expectations from the start. We now prioritize conducting background checks, checking references, and reviewing their previous work. Effective communication, detailed contracts with specific timelines and payment terms, and regular progress updates are also vital.

Additionally, we now have a contingency plan in place, which includes having backup contractors in mind in case we need to make a change quickly. This ensures that our projects can continue smoothly without significant disruptions.

Managing contractors can be challenging, but it's crucial to act decisively when quality or performance issues arise. Learning from this expensive lesson has made us more cautious and proactive in selecting and managing contractors, ultimately leading to smoother and more successful projects.

We hope our experience serves as a valuable insight for all new investors navigating the world of real estate. Learning from each other's mistakes and sharing knowledge is what makes this community so special.

Best regards,

Quote from @AnnMarie Bacchus:

I am a newbie RE investor (currently getting approved for a HELOC to fund my first purchase). I read several post that some people recommend having a CPA before out while other say you can wait until you have a few properties under your belt? Any personal thoughts on this? No idea what to do? I'm struggling to find a RE CPA to work with me since I currently have no investment properties.

Quote from @Michael Smythe:

@Marco Padilla

We think the Midwest is a GREAT place for OOS investors to consider!

Check out some of things happening in Detroit in 2024:

https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/

Your first question shouldn't be WHERE to invest (that is #2 question), but HOW you will invest!

Many OOS investors set themselves up for failure because they don't invest the time to ACTUALLY understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

Let us know if we can help in any other way.😊

Wow Michael, you are a wealth of knowledge. Thank you for taking the time to share some insight into our venture. We truly appreciate it you bringing this to light as we had not looked at it this way. Thanks

Quote from @Eric Greenberg:

Quote from @Marco Padilla:

Thanks Eric much appreciated. What parts of the business do you specialize in?

Mostly a long term buy and hold investor on Philly who has recently started pivoting into the MTR space. 

Are you using Furnish Finder? That's what we were considering for one of our duplex units. Wanted to know your thoughts on it.