All Forum Posts by: Michael Lee

Hello and welcome to this site Nick!   I rarely approve buying any single family home (1 to 4 units) because they are very risky, especially to first time buyers.  From looking at your math evaluation, it does not look very good.  On any rental property I would expect it to show a positive cash flow  on day one.  Having to "come out of pocket" at all makes it typical to justify it as a  good investment.

It looks like the only way to make this work would mean you would have to lower the price down substantially.  There sounds like there is much work to make repairs and upgrading.  It just sounds like there's too much work that has to be done for the first investment, especially if you have no construction experience.

Good luck to you!

Hello and welcome to this site Kyle!  First off, I would only count on local Agents or people with experience to tell me what this house is worth.  I would recommend that you to beware of the seller might not be telling you about any negative situations on that house.  If all your questions are answered positively, I would still have a contingency clause in the purchase agreement that would allow you to "walk away" without any penalty that is financial and before I closed I would hire a professional and experienced Inspector that would make you aware of any possible negative/unexpected things that he discovered.

I would not buy a single family house for rental unless it was used as a "house hacking" loan that I felt pretty good about qualifying for it.There is only a couple reasons that could make it OK to purchase.  Those couple of positive reasoning is the demand and/or it was preleased for a few years by someone I felt very good about.

If it is in a bad neighborhood, I would do everything I could do to minimize my visits there.  Unless you are very brave you might need to use a experienced and dependable handyman.  In order for that would work is if that place earned enough of a positive cash flow every month.  You do not want to come out of pocket with any money to help this survive.

Be able to make the exterior a good first impression to any possible Tenants.  When you do a cost evaluation figure the worst case scenario that will help you decide.  Include any costs that are needed to make it the best rental unit in that neighborhood but only do it a little above average.  Do not cut any corners or take any chances.

Nobody I know can tell you what the future holds and how it will not hurt you.  Many Private Lenders are offering the initial costs can add to your primary loan but it is usually for one year but might be a good solution.  Any vacancy may hurt you because the occupancy is either 0% or 100% with no in between.  I would try to lower my resell price since he is probably motivated as a seller and has earned two or three times his original price.

The age of the house and all of the weather it has been through does concern me as well as the basement condition.( I might be a little biased because I've been in Dallas,Texas all of my life (for 61 years).  Good luck to you!

Hello and welcome to this site Darlington!  I hate to be the one that tells you this but you are looking for information you should have before you make your first offer.  The only reason I  can think of not knowing that information that is you got an unexpected opportunity to make that offer before you were able to find out the information you needed to get before your offer was made.  You could get that information from from local Houston- based Agents.  They also could help on the Insurance reference information.  I would only ask local people that have that experience.  Good luck to you!

Hello and welcome to this site Brandon!  There is only a few reasons to buy single family houses as a rental, one reason is when you are "house hacking", if there is high demand for it as this time, if I was doing a "Lease Option, and it has a good location, several amenities there and close-by good schools nearby, good retail nearby, public transportation with a nearby bus stop, etc..  Otherwise, it's just too risky to keep it occupied.

Otherwise, I would definitely buy an apartment complex and try to take advantage of everything it has to offer like the "cap rate", it's upgrade that is available, and  less of a nightmare when you have any dis-occupancy.  Since you live in the northeast, you might want to consider an experienced Turnkey company that would keep your travel expense down while earning some money every month.

Unless you have friends or family in the subject area that will be willing to help you, that may be the way to go and not too risky.  Another way to own a non-Turnkey property , is to consider a Partner that lives in the subject area and is willing to help you physically.  You might have to give up part of any profit but it is better to have part of something than nothing.  Do the research completely in the area you are thinking about using. Do consider your travel expenses.

When doing your cost evaluation,  think of any investment as a long term one and figure the worst case scenario to determine your offer.  I wish you to have good luck!

Hello and welcome to this site Brendan!  You sound like you know very much but I will mention a few other things to consider when looking. One is that can the exterior of the buildings and landscaping done to make a good impression to people driving by?  

Another thing not mentioned is the importance of nearby amenities and schools? The closer to the highway is also essential.  Another consideration is the retail in that area.  Does it stand up to your requirements?  In other words does it match the rental rates you are planning to increase?

The parking might come into play.  Is it protected?  Is it on-site?  Is it easily accessible at high traffic times and lower traffic abundance?  Is there any Public Transportation , and if there are buses their where is the nearest stop to the subject site.  Do the school buses stop nearby?  What does it have as far as on-site amenities?   Are they well maintained and well lit.  Does the owner pay for utilities or is everything separated or can it be and for how much? 

How do the neighboring apartments look?  What is their rent on comparable units?  Your considerations look good but there is more to look at when you are buying.    Is the job rate increasing well?  Is there a way to have more income there for better storage or some other amenity that is profitable that you can provide? 

From what I have seen on-line there are plenty of other sources of loans, both long term and short term.  does the subject area have high or low end retail improvements?  You want positive cash flow on day one after closing.  Does it need any capital improvements that will require additional expenses?  What is its current occupancy percentage and can you increase it?  Good luck to you!

Hello and welcome Tyler!  The only ways I would buy out of town is to buy a minimum of 30 units in an apartment complex so you can have enough money to hire a property management company that will take care of the daily stuff.  My next choice would be a Turnkey  Property that is renovated and managed by some other group of people and your only duty, after your original inspection and an evaluation, is to get a check from them each month.  The only other way I would invest out of town is to research the area and have friend there that is willing to use to do whatever is necessary and call you on the phone daily to give you an update.

You know when a particular market is doing well to see if the population and jobs are increasing.  Is its economy well diversified?  It is well diversified like Chicago is revealed to be the most diversified city.  Hopefully, its market favors sellers over buyers in that area you are looking at investing in.  Just seeing a couple houses does not always mean favorable news.

I have also heard some good things about Memphis from a company named Memphis Investments that has been a Turnkey investment provider for quite a while.  They are currently in about 5 cities including Memphis.  They expect to close on about 900 homes this year.  There is another thing that would make me invest somewhere out of state.  That, is if you have to travel to those cities often and can get reimbursed for your travel expenses and make time to visit your investments.  Good luck to you!

Hello and welcome Sally!  Glad to hear from a DFW person.  I'm pretty knowledgeable about Owner Financing.  Being familiar with all of the options is essential.  By showing on paper what they can gain in income and possibly reduce the tax liability all typically done a year after the closing versus over the life of the loan.  It's a very negotiable loan and that depends on the flexibility of the Owner and the likability of the buyer.  The are several options with Owner financing that can be used.  To name a few there is a loan that is like a conventional loan, Subject To, and the Lease Option.

I am near you living in Coppell.  I was born and raised in Dallas, Texas.  I was a Texas real estate broker license for about 30 years.  I also have about 30 years of experience as a construction manager.  Let me know if you think I can help you in anyway through BiggerPockets.  I am there just about everyday.  Good luck to you!

Sorry about that.  My computer has a very sensitive and makes many actions assuming I wanted that.  I was not through with my message to you.  One of the most difficult things is to read the customer and know how they may react to finding out that you made some money.  To keep your profit quiet you may be forced to do two closings.  So, if you did that you need to add the cost of that second closing.  Whatever you choose takes patience and bravery.  Be consistent and never quit.  Not all deals are winners, you just hope the winner verse losers there is a higher percentage of winners over losers.

Just do what is average in that area.  I'm 61 years old and have been around the block or two.  I listen to a lady every week that is in Orange County.  It is amazing that BiggerPockets has so much to learn from.  I've been a member for about 4 years and I am still seeing new stuff. Confidence will start rising as you learn. Good luck to you!

Hello and welcome Kali!  I hope you get several answers that will drive you in the right direction.  There are so many options to choose from but I would advise you to is to Fix and Flip in a trio with Buy and Hold and 'house hacking".  I would hold on to some of my purchases for rent, and "house hack" some of them and then flip them when the minimum time is done (usually 12 months) and keep the same loan. When I have some experience to do more I would start doing some of them under the Fix and Flip scenario and do what is called a "quick flip" also (that involves a quick turn without doing any work or a little).

There is much to learn but I see most of it as simple but there is very much to learn.  I think Wholesaling is pretty difficult but you have to be a good salesperson to do that and it is not as easy as many salespeople tell you that  it is a good place to start because it does not require much money to do that.

Hello and welcome Angelo!  Probably the bast thing for you is to purchase apartment complexes and have the daily operation done by a good and experienced Property Management Company.  Whatever rules feel good to you are the ones to use and make sure the PMC understands them.  Have them sending you financial reports regularly so you can review them and tell them about any changes they should make.  Having at least 30 units will allow you to pay out of your apartment budget for the PMC.  While you are overseas your American business can still be run by those people and will contribute to your income.  Good luck to you!