All Forum Posts by: Nathan A.

I would look at whether the city is investing in upgrading things like roads, parks and street lights. Is the mix of retail changing? Are the workers at the new city hall going to attract new shops and restaurants that in turn attract others? I wouldn't think a new city hall alone would do it.

If you buy the small town property, have you considered keeping it and continuing to rent it out after you move to the city?

I would encourage him to start out as if he was like most other people here and did not have a million dollars. Take a small portion of the money and invest in a down payment on a first property. Learn the process first. There will be mistakes along the way. By starting out with just a small portion of the money buying just a small property, he'd be learning by making $20,000 or $30,000 mistakes not million-dollar mistakes. Eventually, he'd reach a point of being ready for bigger deals or investing a greater portion of his total portfolio in real estate. But begin by protecting the downside.

Keep shopping around to other lenders. Don't take one no for the final word of all lenders.

In the meantime, keep doing what you can to use credit responsibly and build your credit!

I would consider the amount you need for repairs and emergency expenses to be mentally separate from the amount you are holding onto for discretionary renovations or buying opportunities, even if you hold the actual cash in the same account.

To add to what has been said about estimating the non-discretionary reserves, I would determine how much the "biggest ticket" items might cost you to get the idea. For example, how much would it cost to replace an HVAC system, replace an aging roof, replace a broken appliance, fix a sewer backup, cover the deductible on your insurance policy, turn over a unit and deal with an extended period of vacancy if you had to do them all in a single year? You'd obviously be very unlucky if all of those problems struck at the exact same time, but you will need to know where you'd get cash if multiple expensive problems strike in succession, before you have a chance to rebuild your reserves from the amount of gross rental income you're setting aside each month for capital expenditures, repairs and vacancy.

Here are some tips on estimating vacancy. Getting the expertise of someone like @Joel Case is tip #2!

Quote from @Amal Bhatnagar:

Do you know if BiggerPockets vets these property managers?

No, my understanding is anyone on BP can create a company profile for their own company in a self-service way.

This isn't DFW-specific, but here's a good guide on how to get a property ready to be rented out, determining how much you can charge, and going from there.

If the lease is currently up at the time you prefer, and you've historically experienced very low vacancy when advertising the property at that time, it sounds like your downside is limited if you offer them a renewal and they decide to vacate instead, so I would lean to that.

Another idea: A trick of Brandon and Heather Turner's, mentioned in "The Book on Managing Rental Properties," is to offer the tenant options. You could offer a one-year renewal at one price and a month-to-month lease at a higher price (one that makes it more worth your while given your concern about vacancy at the wrong time).

It will serve you very well to be as clear as you are on your goals (which I heard as cash flow, diversification and a greater return than you could achieve in stocks).

1) For choosing markets, it sounds like you already have a pretty good idea about what markets might cash flow well and allow you to get in at your desired price point per property so you can diversify. I would strongly encourage you to give heavy weight to a market that you know well, so you can be sure you aren't unknowingly buying Class D properties in an effort to chase the cash flow you're looking for. Beyond knowing the area, you could try to narrow down a market with a more detailed market analysis looking at factors like population growth, income growth, employment diversity and the like. It sounds like you're covering your bases with reading and learning, but if you haven't read it yet I'd definitely recommend David Greene's "Long-Distance Real Estate Investing" book for guidance on setting up your teams and systems for out-of-state investing.

2) If you're focused on cash flow, you might want to consider hopping on the short- or medium-term rental bandwagon as opposed to going long-term. There are pros and cons to it, of course, and the supply is likely oversaturated, but I would at least consider the tradeoff in your situation.

3) From what you've said it sounds like you're ready. As long as you feel financially ready with down payment savings, I would finish picking your market and then move forward with finding your team and start taking action!

4) Overall, you'll need to be choosy with the properties you buy to get the returns you're looking for, which will be difficult to do in this market. But don't stress about getting a home run ROI on your first property, just concentrate on getting in the game with something that is cash flow positive with enough margin for error and take it from there.