All Forum Posts by: Payton Haight

Hi Andy,

Congrats, those are good scenarios to be deciding on. I recently had a somewhat similar decision on a long-distance property. It was cash flowing well, but was becoming a bit of a headache to manage long distance (I self-manage). I decided to sell so I can focus on purchasing properties in my area, which I feel have better long-term growth potential as well as making my life a bit easier.

A couple of questions to help me better answer yours:

1) The cash flow on your original property is pretty good relative to the equity. Do you see above average appreciation and/or rent growth potential for this property? How would those compare to properties you would buy in the new area?

2) Do you expect you would be able to get better cash flow with the $100k on 4 properties in your new area than you are currently getting on the 'original property'?

If the scenarios are somewhat comparable, the best answer may be whatever your preference is. 

You are welcome. BP has a lot of great resources to start learning. It is extremely helpful to have an idea of the numbers if you want to start buying your own rentals and/or working with other investors. Good luck!

@Khaled Ghbeis - I do not trust Zestimates at all. They can be way off. You need to look at the subject property (the property you are considering buying) and compare it to recently sold properties in the area to come up with an estimated 'after repair value' (ARV). The properties you are comparing to should ideally be similar in design, square footage, and match the condition of the subject property after it has been fully renovated/updated. If you want to wholesale to flippers, you need to know the ARV and make sure you are getting a property under contract with a large enough spread (difference between your contract price and the ARV) that both you and the flipper can make money. You need to factor in repair costs, holding costs, closing costs, and loan costs for the flipper.

If we assume the ARV of the property you are looking at is $659k, no I do not think you have enough of a spread to make money on the property as a wholesale deal. Assuming the property needs no repairs and is worth $659k, you would probably need to be locking it up in contract around $550k or below (a lot of assumptions in that number but just giving you an idea of the amount of discount you need off ARV). I doubt the property is currently worth $659k and/or needs no repairs if it is listed on the market for $640k and has not sold.

Do you have other wholesalers or investors in your area that you can connect with? They may be willing to teach/mentor you if you can help them find deals.

Hi Christine, I would recommend discussing with an experienced real estate attorney to find a solution that fits your specific goals.

Depending on where you are located, different answers may make sense. For me when I was living in CA, I avoided creating many LLC's because there was an $800 fee/year. I just got a fairly sizeable liability insurance policy and an umbrella policy to cover myself. I was also able to get better rates and terms buying the properties in my personal name than under an LLC.

Now that I am in Ohio, it is much more affordable to have LLC's so I have been buying individual properties under their own LLC. I have not created a parent LLC yet.

Hi Khaled, what do the projected numbers look like for the deal? Purchase price, estimated rehab cost, and after repair value (ARV). $10k below market is likely not enough of a spread to wholesale to a flipper, but depends on what the numbers look like. You will want to have an idea of each of the numbers so you can negotiate a price with the seller and market the deal to buyers.

To find investors, I would join local investor Facebook groups and attend local meet ups. In a city like Boston, I am sure you can build up an investor list fairly quickly from those 2 sources. If you can find deals that are actually deals there will be buyers.

Good luck!

Hi Mariah, welcome to BP and congrats on becoming a realtor! That is exciting. Do you have any past experience with real estate or a specific area of real estate investing that you are interested in (single family rentals, small multifamily, commercial, etc.)? I got my investing start listening to the BP podcasts and forums a little over 5 years ago. For general investing information, I recommend the BP Real Estate, BP Real Estate Rookie, On the Market, The David Greene Show, BP Money (not necessarily real estate related), and occasionally the HousingWire Daily podcasts. If you have any specific areas of interest, there are likely books and/or podcasts on the topic.

Hi Kevin, starting out you can get hard money loans for flips with 10-20% down. With flipping experience or potentially a really good deal, some lenders will fund 100% of the deal. Are you able to save up enough money to cover a portion of the down payment to close? Perhaps you could start with wholesaling to save up money for a flip or if you can find a good deal, you could partner with an experienced flipper.

Hi @Nia Cayenne, you may get quicker feedback/recommendations posting in a few local investor Facebook groups

hey @Domnick Trani, 

Do you have a cash flow goal you are trying to hit in your 2-3 time frame? 

Based on what you laid out, I like the option of adding a mobile/ADU type structure on to your primary if it will rent for $2500/month. That should conservatively net you roughly $1,800/month (maybe more depending on how you handle utilities and vacancy levels) on a $150k investment, which is pretty solid and relatively low risk. I would use the other $100k for flipping if you are trying to build up your cash position in a relatively short time frame.

A 1031 exchange into a 4 unit is more tax efficient, but unless there is upside to quickly grow your cash flow or equity, I do not like $1k/month cash flow for $300k. If you can find something that would cash flow more for your equity or has room for forced appreciation, the 1031 exchange could be a good option.

The S&P 500 investments would be good long-term if you are not planning to need or use that money for the next 5-10 years. 

Based on the goal you mentioned, it sounds like flipping and adding some sort of mobile home (house hack) on to your property may be the most likely to get you there. Would you be able to finance the mobile home structure to reduce the out of pocket cost? May or may not make sense but could help you keep more cash for other deals.

@James Hodgson - Fortunately, I have only needed to use FurnishedFinder and Airbnb so far. I do a background check and lease for my guests that book through FurnishedFinder and have had a really good experience so far. 

I do not really like the experience with Airbnb in my area so far. The booking process is much easier than FurnishedFinder, but Airbnb takes a pretty good cut of the rent you could be getting. I have had issues with some guests through Airbnb and also seem to get a lot of scam/spam booking requests from fake accounts.