All Forum Posts by: Matthew Drouin

@Jeremy Cepress

There’s what you might be entitled to in terms of damages or relief due to neighbors tree roots and then there’s reality. You could ask them to help you with the cost of jetting the pipes or replacing the lines but if they say “take a hike”, what are you going to do? Sue them? That’s a good way for attorneys to get paid and for you to get no results.

The problem really isn’t the trees, its your pipes. Generally roots only get into clay tile pipe or old cast iron that’s leaking at the joints under ground.

Getting the pipes jetted on a yearly or biannual basis should buy you many years of no trouble!

@Alex Kosley

Btw congrats on what you and your wife have accomplished at such a young age!

The spot you are in is tough.

You could pay down higher interest debt but at the opportunity cost of a higher return you could get from buying another property.

I’m going to go a different direction here…

If your goal is financial freedom in 10 years, you can do it by scaling in the small single and multi space.

If your goal is financial freedom in less than 2 years, you should consider jumping right into larger commercial deals. I wish I would have done it a lot sooner.

Took me 11 years to earn my financial freedom doing smaller deals but it took me ONE commercial deal to replace my wife’s income.

@Lewis Sampson

@Carini Rochester is right.

There are lots of land mines in our area. So many out of town investors become enamored with Rochester because if it’s “cheap” properties.

“I can buy a whole house for $40k?! What could possibly go wrong?”

People call these properties in bad areas “risky.”

They aren’t risky. There’s no high or low risk. They are just assuredly a good way to set your money on fire.

What types of yearly returns are you expecting and how much capital do you have to invest? What are your goals?

I can probably point you in the right direction after I get some information there!

@Jenny Zhang

I am an active operator that raises capital from passive investors but I also passively invest in others deals to diversify.

To be honest I enjoy my passive investments more lol

But i think a good blend between fund and doing it yourself would be to JV with someone on a larger deal where you have an active part.

Or become a CO-General Partner on someone else’s deal where you play a part in the deal which could include the underwriting.

Incidentally, what types of deals have you done thus far in your real estate investing?

@Lewis Sampson

Just curious, Why Upper Falls?

It does have one of the highest delinquency and eviction rates in the city, that’s why I’m asking!

@Daniel Bryant

@Jared W Smith hit the nail on the head. You are thinking about this the wrong way. I’ve been there before “how much are they sweating to earn this?”

I have an architect who does the same for me. Their early predevelopment work is a loss leader for them because they know the project might not get approved and don’t want you to hesitate engaging with them when you are “rolling the dice”

Also, in regard to the auto mechanic analogy, you are paying for their results regardless of how much they are working on it.

Leveraging someone else’s experience is the greatest most powerful form of leverage in real estate or any other business for that matter.

The only part of the scope you might be able to negotiate is on the construction documents and MEPs. You could do a design build project with your sub contractors but I’ve often times shot myself in the foot and dealt with many design fails when doing it this way, especially on HVAC!

@Michele Bronner who is currently in your sphere that could help you with this?

I’m assuming you are going to say no one because you are posting here.

But I had to ask.

When you are starting out, you don’t know what you don’t know.

The most common mistake that I see newbie investors make is that it’s easy to think everything is a deal and everything has “so much potential”.

It’s exciting!

You can add a lot of value to another investor who has the experience that you need to help you figure out what’s what.

How do you find this experienced investor?

Check out your local meetup or REIA or local REI Facebook page. Contact the organizer or someone who is really involved and tell them your exact situation:

You are a newbie that wants to help a successful real estate investor find deals. Who do they know who is active in that space (whatever you want your focus to be)

Meet them one on one, tell them you want to help find them deals. You would be surprised that deal flow is one of the biggest problems in investors growing their portfolio and they are probably inconsistent on prospecting.

Ask them exactly what they are looking for. And EXACTLY what types of deals they like. What is their test of value, specifically? Maybe visit one of their active projects.

Don’t even talk about money or what you will earn in lieu of you bringing them great deals. Unless they offer it. I have newbie investors come to me all the time trying to negotiate how they’ll get paid for finding me a deal before they even have something on the line.

Getting paid is not the objective.

Learning and building a relationship is the objective… way more valuable.

@Anthony Angotti

Totally understandable, but what does $150k buy you in that market?

@Kevin Howard $200 a square foot?  Well, you are already ahead of the game!  We are running $250 to $300 a sqft in our market currently so therefore there is not much being built because the market can't support it without PILOTs (property tax breaks)

I've used mini splits on several projects where ducted solutions were not possible.  In regard to what you are going through right now, this is what happens when you do a design build project.  Architect puts plans together for building permit and then your contractor or subs design their leg of the project.  I always run into issues like this when I'm doing design build versus having a engineering firm put together full MEPs (Mechanical, Electrical, Plumbing designs)

Don't expect your contractor to know engineering.  Expect design on the fly.

Some alternative solutions to your room count issue would be ducted mini splits where the air handler box can be installed in an attic or more ideally a small mechanical closet and duct out from there.  If you have a bathroom that separates two bedrooms, you might be able to take some space from a bathroom or linen closet and duct directly into the areas that need conditioning and then use a standard wall mounted mini split in the third bedroom if you have space issues ducting though attic space.

You could also use package units or V-Tacs.  These are still ducted but need to be installed on an outside wall to circulate air in from outside.

If you do use a ducted system, make sure that the air handler is not installed in an attic.  This makes it very difficult to service and do routine filter replacements and cleanings.

The bottom line is this.  You need to think two to three steps in front of your contractor.  Contractors tend to think of what is directly in front of them.

Hope this helps!

@Mashal Choudhry

Don’t feel bad. I didn’t get it at first either!

I think a couple people here explained it quite well.

Essentially, if your property increases in cash flow and it appreciates in value, a bank will give you an even bigger loan on the property. Some times the property can appreciate enough where a new loan can pay off the old loan and be big enough to allow you to “pull cash” out of the property. So you are able to buy more property without having lack of cash being a burden. You can recycle your downpayment money over and over again.

When someone mentioned that BRRRR is getting tougher these days, you asked "well what should I do?"

Here's my suggestion. You don't need to worry about the refinance part of BRRRR until after you've bought a property.

So figure out how to Buy first.

The only rule you need to follow is that the property needs to be in a good location. Not a “meh” location. A good location where people with good incomes, good credit and long term stable employment want to live.

Once you’ve don’t that you’re going to have broken through the first barrier that most people who are just real estate wannabes never do!