All Forum Posts by: Rick Albert

This is a challenging one because it isn't like you are getting more rent once these renovations are done and depending on what you are doing, you would then have tenants that are fine with the way things are but start doing wear and tear.

Here is how I would prioritize the work:

1. Health and safety

2. What does your insurance require? At some point they are going to do an inspection. This will need to be addressed ASAP.

3. Preventative maintenance (things like gutters or removing/trimming trees).

4. Then as units become vacant, then do other renovations.

I don't know Lincoln, NE specifically but here are things I look for in areas:

1. Where are the desirable areas and I like to invest just outside of it. As the desirable areas get priced out, tenants and buyers have to go somewhere. That's where your property would come in.

2. What major job opportunities nearby? Universities, hospitals, etc. This would be your tenant pool.

3. Do drive bys and/or Google Street Scene to check out the area. It doesn't give you a full picture but something to start with.

4. Are you self managing or have a property manager? One of the best reasons to have a property manager is that they are starting to get picky on what properties they manage. If they won't manage there, then that is a sign that you should avoid it. 

I hope this helps!

On a high level, I would house hack a MFU. The challenge with moving to a new area is (1) you don't know if you will like it and (2) what is the job market like should you have to change jobs. For example I know someone in the fashion industry. She thought about applying to jobs like Nike but they are the only fashion company in the Portland area. If she loses her job, she's stuck. If she sticks with jobs in areas like LA, NY, and Miami there are plenty of job opportunities to stay there long term.

The student loans doesn't bother me as much as long as you can afford it. I bought my first house hack while having student loans it was the best decision. Otherwise I would have been chasing the market. Keep in mind focus on the monthly payments, not the total balance. Once the student loans are paid off, you are good to go. It's not like a credit card that can keep climbing. 

Keep in mind you make money in real estate four different ways:

1. Cash Flow

2. Appreciation

3. Loan Buy Down

4. Tax Benefits

With living with your parents you get none of these. Plus with House Hacks it is about reducing living expenses and getting into investing at a lower down payment and better interest rate.

With this said, what people are saying is correct. It doesn't hurt to have more than just the down payment to buy. There are almost always going to be repairs needed. I just bought a remodeled fourplex and there are issues. It happens and is part of it.

 Why wait on changing the locks? You need copies of the keys, so do it now. It's not like you aren't given them access. 

So I'm not going to go into how you had poor representation during escrow because that already happened.

As mentioned, you are 48 hours into this. Some tenants are busy.

When I recently took over a property, my business partner and I (1) called each of them to introduce ourselves, (2) sent a text message and (3) sent a letter. We basically set expectations with follow ups. When you inherit tenants, sometimes they are testing you to see how you are as an owner. This is especially true if the previous owner didn't manage it well.

My strong recommendation is to go ahead and change all locks and provide keys to them and for yourself. Then I would give ample notice that you are coming in to do the necessary work. They had an opportunity to communicate with you. They are your customer but that doesn't mean they can dictate how you run your business.

You can make it work anywhere. It just depends on your goals.

You also have to be careful with posts like these, this is where all the real estate agents come in and tell you that their market is best so that they can get your business.

If your goal is appreciation, I would focus on higher price point markets. Bigger loan buy downs and bigger numbers for appreciation. For example, a 3% appreciation on a $1M asset is better than a 3% appreciation on a $100K asset. Same principle for rents.

You posted this under land and new construction. Because the cost of new construction keeps rising, you have to work smarter, not harder. That's why in LA you only see new construction in the luxury markets. The cost of plumbing, drywall, electrical, roof, etc. is the same cost whether you build in Beverly Hills or in Pacoima. But your dollar will go farther in Beverly Hills. 

If you are thinking out of state, it really depends. If you are thinking Texas, the problem is so is everyone else, so your competition is much higher and unless your property is special, you can only compete on price.

I hope this helps.

You can make money anywhere, you just need to understand your market.

Austin has potential and challenges. I've personally talked to Jordan and he knows his stuff. 

In terms of strong markets, I tend to look at major industries in an area (hospitals, universities, military, etc.) because I want a large tenant pool. The challenge for Texas is you are competing against new and remodeled apartment complexes. Therefore your main competitive advantage is price. That's not ideal but if you can make the numbers work, then go for it.

You make money four different ways in real estate:

1. Cash Flow

2. Appreciation

3. Loan Buy Down

4. Tax Benefits

You are buying in an expensive market, which actually gives you a competitive advantage. Maybe instead of looking at this property as a long term rental, maybe look at this as a vessel to buy more properties. For example, I used my first condo house hack as a rental for a while, then sold it, got a HELOC on my second house hack, and through a business partner bought a four plex in Nashville and then my wife and I bought a triplex in Birmingham. I had used the condo initially with a HELOC to fund the second house hack.

In your case, if it is in a good potential appreciating market, maybe this first property is just a stepping stone to something bigger.

Something to consider.

There are books and podcasts that you can review that will help. I prefer podcasts because those are in real time. Many books from previous years were in a low interest rate and low price point market. The books are already outdated (that isn't to say there isn't any value).

The minor might be interesting if you want to get a corporate job in real estate. It can pay well and you learn from people with years of experience.

To be honest, a lot of this is just spreadsheets and gut feelings. It comes with experience. I would interview agents who have done exactly what you wanted. They are boots on the ground and know what's going on.