All Forum Posts by: Matt Speer

@Jamie Kammers

This is such a great question! I invest in Indy and own a management company and have a similar situation with all of my units. It’s a great problem to have.

Here’s a few critical questions:

What’s your return on equity?

What would you do with the cash? Invest in another rental? Use a 1031 exchange?

What would your tax bill be? Does that effect your decision?

Without knowing these answers it’s impossible to make a recommendation either way.

I’ve decided to keep my rentals as long term holds because they all make $300+ a month in cash flow and with the market so hot it’s tough to find an alternative investment. Plus rents are going sky high and my cash flow will only go up from here.

If you ever want to chat and dive deeper don’t hesitate to send me a message and we can coordinate a call. Happy to help!

@Victor Gootee

I’d talk with Jynell Berkshire of Berkshire Law. She’s great. If someone can help you, she can.

Also, you should talk to @Kenny Hall . He’s a really good property manager who would have never let this happen.

Matt

@Damien Pulvino The most important thing I can recommend is finding a PM who understands and is aligned with YOUR goals. As an example, if you’re looking to add B class rentals at a $1250/mo average rent and your Pm mostly manages units across town for $750/mo average, it probably won’t be a good fit. I sent a connection request if you’d like to dive deeper.

@George Sprague The math on this is pretty telling if my assumptions are accurate.

If staging a unit can simply raise rent by 5% and reduce vacancy in year 1 by 50%, then the return would be as followed for a $750 staging/photos fee:

$1250 rent -

+$750 in rental income (break-even on costs)

+$368 in rent - 18 day vacancy down to 9 day vacancy (based on 5% vacancy assumption)

ROI: 49%

BONUS: how much do the great photos drive future rent value? 

Now what if rent was $2000/mo? Or $500/mo?

Well here’s where it gets interesting.

ROI at $2k/mo rent: 139% ROI

ROI at $500/mo rent: -40% ROI

I challenge everyone to run these numbers for themselves and adjust your assumptions based on your market (season, supply/demand, etc) and make

your own decisions.

Do you happen to have any before/after photos of the property with staging and without staging? 

@Jessica James

In my experience, if you’re having trouble finding cash buyers your deal isn’t good enough.

Go back to the basics and reevaluate how you define a wholesale deal. Make sure that aligns with what your investors are actively searching for. Set a few calls with buyers on your list and ask them why the deal you sent doesn’t work for them.

Take this feedback and build on it. Good luck!

@Devin Monroe

1. Find a zip code you want to target

2. Go to listsource.com and buy a list to market to

3. Buy a subscription to a texting service like FreedomSoft and start sending texts direct to owners

Do this until you find your first deal that meets that criteria. It’s a tough market to find a deal but they’re out there.

Worst case, I’ll help you find one in Indianapolis and my company could show you how you make money with a PM.

I’ve followed this same basic process and went firm -50k net worth and no assets to 13 units by age 27. Think with the “brick by brick” mindset and you’ll make it happen if you stay persistent.

Good luck!

@Nicole Heasley

That’s a great problem to have and one I faced myself. Here’s my 3 best points of advice.

1. Creat an LLC, and begin paying yourself a W2 right away if you can swing it. Even if it's just $2k to $3k a month to start out. This will start your 2 year clock and in 24 short months you'll be able to take down conventional loans.

2. Keep that going along with your job as long as you can possibly bear. I quit about a month after my W2 boss told me “I think you should stay in your lane, that’s a little bit above your pay grade”. I couldn’t take it anymore. The joke was on him because my side hustle was making more than he was in his sad, boring job.

3. Don’t listen to people like me. Do what you feel in your gut and go for it. Bet on yourself and I’d bet that drive will take you 10x further than you even thought possible.

You got this!

@Devin Monroe would you be able to find this same deal for $90k, put $30k of rehab in and it appraise for $160k. With the nice rehab would it rent for $1600-$1700?

Now you could cash out refinance and get all or most of your cash out with the following pro-forma.

$1700 - rent

$900 - mortgage

$200 - repairs and CapX

$170 - pm cost

$85 - vacancy (less vacancy with a nicer unit and a solid pm)

= $345/month cash flow

Equity = $40,000

Cash on cash ROI incalculable.

Now if you’re asking yourself, “how do I find a good value add deal for $90k?”, you’re asking yourself the right questions. Figure it out and then solve your next problem “how do I find a reliable contractor to do the work?” Each step you take, you’ll present yourself with better problems and if you stay persistent you’ll eventually build your empire of 50 units.

This example 50x would be $17k+ in cash flow each month and $2mm in equity!

You got this!

Andddd the moment you have been waiting for has arrived. You ran the deal analysis, checked the financial boxes, finally figured out the lock box code that contains the keys to your first rental, and are ready to make the offer. Boom! After some negotiating and paperwork, the house is all yours! All of the books and “How To’s” have prepared you for the next steps on converting the home to your first ever rental property. But… those books did not tell you to set up the gas/water before starting the rehab or how to properly list the property to generate leads on potential prospects. That is why we are here to give you tips- the small pieces of advice that matter during the after purchase process and the big keys that can make or break the success of your rental property.

Tip 1: Security Plan

Homes without a security system are 300 times more likely to get broken into. The first part of the property checklist is often overlooked.
It often isn’t the most exciting piece, but you must make sure to create that security plan. Turning on your porch light, installing a safety lock, Simplisafe, and smart lock code are all great places to start and helpful in deterring burglars. The last thing you want to do is open the door and see something missing. Added security benefits your contractors who are working there and also prospect tenants that might be worried about safety. Document the codes and the plan. If you want to turn one rental into a 50 door portfolio, you must have scalability, scalability, scalability….

Tip 2: Rehab Management

Do not let the end rehab date get extended by weeks or months because it often can without precise plans and timeline dates. Depending on the rehab, you may have three contractors working at different times and coordinating the finish dates, materials used, and billing is crucial. Connecting back to Tip 1, there is often a higher risk of theft if contractors are not there consistently working on the rehab. The importance of choosing quality contractors and vendors helps beef up the security and keep everyone accountable on timelines.

Listen to BiggerPockets Episode 399, “Solving the Investor/Contractor” Relationship for more insight on building strong relationships with contractors.

Tip 3: Staging

Homes that are staged prior to being placed on the market, lease, on average, around 73 percent faster than similar, un-staged homes. No prospect wants to walk into a home that has no vision for the space they could potentially be living in. Staging not only shows off the important features of the home, it can hide the flows of awkward spaces. If a prospect doesn’t have a creative eye, walking through a staged home helps them see the potential of what the space could offer them. Staging will help immensely with the way the house is photographed for listing. At the very least, a staged home will stir creativity in your future tenant.