All Forum Posts by: Russell Holmes

@Josh Page, @Bernadeau C. started one here in Orlando about two years ago. He may have some pointers to share.  I think he basically did what Dawn mentioned, built it and they came! There are typically 25-40 people in attendance at each. Many more stay in touch on a group message app and FB page as well, sharing success stories, sharing vendor referrals, asking for advice, and supporting each other. 

  With a humble start as a couple folks in a diner, it has grown into an incredible monthly meetup at a local office with guest speakers every month, partnerships formed, deals done, and several new investors gaining confidence to do their first deals. At first we'd all vote in the GroupMe app on which Saturday worked best.  There were often conflicts of schedules which limited the numbers in attendance and made planning tough.  In time, it was decided to make it the first Saturday of every month in order to allow folks to plan ahead to be there and it has grown steadily. A set day every month is helpful for all in order to plan on being there.

One thing that was discovered by trial and error: I don't believe you can title your meetup with "BP" or "Bigger Pockets" in the name for liability reasons. Bigger Pockets is very supportive of the idea of local meetups and lets you post those meetups for others to find, you just can't use their name since they can't possibly track what's talked about at all of the meetups.  Our local one was at first something like "Orlando BP Meetup" until Mindy kindly reached out to ask them to change the name.  We are now the Central Florida Real Estate Investment Hub.....but it's all people who have met or found the meetup on BP that are involved. 

Good luck!

Conventional doesn't have the 'automatic' limitation of intended owner occupancy for 1 year like FHA and VA always do, but depending on the lender and docs you signed, you may have agreed to a period of occupancy. I agree with Nathan, read the documents (you should have a copy of everything from closing) to see what they say, don't be surprised if it says 1 year. It could even just be that you had to plan to occupy and if you've moved into it as your primary already that could satisfy the requirement. But nobody online can know for sure without seeing your docs. If after reading your mortgage, it doesn't seem clear, call up the lender and ask for clarity. They'll gladly provide the info needed.

I guess I should have prefaced my initial reply with the question "Are you passionate about Real Estate". I take that as a given on these forums but it isn't always the case and there's nothing wrong with that. Not every Real Estate investor is actually passionate about the industry to enjoy transacting real estate, just like not everyone with a stock portfolio is passionate enough to be a stock broker. I happen to love Real Estate and plan to build a sizable portfolio in the coming years.  The two are related but don't have to be. I was sick of what I did for a career and it wasn't producing the income I needed to invest.  I wanted to learn more and earn more, so it was a natural step to dive into this industry.

If you aren't passionate about completely involving yourself in this industry and making connections, it is not a very fun or rewarding 'job' in a job context. I never wish to be the 'bus bench Realtor' sponsoring the little league games and wearing a branded name tag around town. I want to be in the trenches doing deals with other people's capital. At first I figured I'd have years of not being involved at all other than commission as I build capital to invest, simply learning and growing through each transaction.... but then I found a partner to become involved in an equity position on his deals. I'm running with that partnership, closing more deals with non-partner clients, and keeping my eyes open for other partnerships that come about as well. Investing and being a Realtor are two separate things. One does not exclude the other, either can exist independently, but to me they are mutually beneficial to do together.

The next few replies after my initial one reference the fact that a Real Estate license is not a path, in and of itself, to financial freedom. This is absolutely true. There are no guarantees, there is no set paycheck, there are no company benefits. I often forget many people grow accustomed to those perks. I haven't had a boss in 13+ years (and I'm only 34), so that's all pretty foreign to me anyways. Like many have or will point out:

-it costs money every year to be a Realtor

-most who 'try' it fail

-looking to get financially free on sale commissions will drive you nuts and will become a job. You won't get rich on commissions unless you build a team, which itself becomes a job also.

I graduated high school in the top 5% of my class with two years of college credits from AP classes in High School and a full ride scholarship to University of Florida. I dove head first into an engineering degree. THAT felt like a rat race to me and I dropped out to start a pickup-truck-based service business for $8000. My college-educated family was mortified, but it was the best decision of my entrepreneurial adult life. I bought a house when my peers were searching for careers and loaded down with student loan debt. That one purchase helped me survive a nasty divorce and keep my business running without worrying about increasing rents and moving around.  I made more in my own business than the vast majority of my college peers did by the time they graduated with 4-yr degrees in fields flooded with other 'degree holders'. I grew my business to an extremely stable income, I made nearly a million dollars in 12 years with very low overhead and no boss. No benefits, no paid time off, no 401k.... Then I got sick of it and quit that business to be a Realtor, another 'business'. I like this one far better than my service business. It is not tied to my hourly input directly like my service business was and has far more directions I can take it in.

Most small businesses fail just like most Realtors fail. Jobs are hard to fail at when bosses tell you what to do, but I'm not a big fan of bosses and I like deciding where to devote my time.  I succeeded at a service business most fail at and will do the same as a Realtor. It never really phased me to hear about the failure statistics, I knew it was a state of mind.

As Will said of the industry, being a Realtor has opened so many doors for me. I've met so many professionals that will benefit my future investing, even though I don't yet have the capital to do my own solo deals. Having a license is not THE answer to financial freedom, but it was a vital step in my path toward that goal. Sure you could network, go to meetings, meet other investors after your day job. Many people love their day job and enjoy networking with investors after work. I have a lot of fun doing that during my 'day job' and spending time with my family after the day.  I'm actually transacting business with these folks I network with, not just swapping business cards and rubbing shoulders. 

Contractors I've 'worked with' pick up the phone when I call because I've had clients that pay them for work and they would be happy to take on more referrals.  I might be a 'newbie' in the investor world, but when the phone rings they pick up because I've earned credibility through other people's money and deals.   I have contacts at title companies that have closed deals with me and will answer obscure title questions they likely wouldn't be quick to if they were just contacts in my phone from a meeting. Lenders who have funded my buyers will answer questions about obscure strategies I'm researching because they've closed loans for my buyers.  If they were just a contact in my phone from a meeting they likely wouldn't take the time to respond. I'm building a team before I'm building a portfolio, which will make building a portfolio that much easier.

 The things I learn in closing deals with others will help me be more proficient in closing my own deals. Almost every property I've sold has involved an investor on one side of the deal or the other whether my client or the other side, it is all interrelated if you choose to look at it that way and seek out investor focused business. I don't think I will be earning the majority of my income from commission sales in another decade as I build more partnerships, build my portfolio, and do more deals of my own. Someday I may decide not to use my license at all for anyone but myself and partners, but for now I'm having a blast as a Realtor building momentum.  I was hungry to jump in feet first to Real Estate before I had the capital to do my own solo deals, and I did just that.

No, being licensed isn't for every investor. It's not necessary to have a license to invest and certainly most Realtors are not investors.  A license is not get rich quick. It is not a sure path to financial freedom.  But if you feel that it is something you are passionate about pursuing, you'll be glad you did.  

@Jason Davis you're welcome.  That C-/D line is sometimes very hard to differentiate. I hate to stereotype or 'draw lines' but it is often distinguished by crossing over a highway or major road, 'block by block' in other words. 

There were some listings in my area on the outskirts of a D-class area headed towards a C class area I showed recently, they were only a few blocks on the 'wrong side' of a highway where I generally don't look at homes, the other side of the highway is solid C class and low crime.  I really wanted to believe it was C class and would be OK, rehabs looked nice and maybe the streets were improving. Some new light industrial/warehouse developments have sprouted up, a few homes being rehabbed.   The buyers I showed got the "D class vibe" and we moved on, a colleague showed the same homes to his buyers and got a similar feeling. BB holes in a window, dudes blasting by on ATVs in the street, hard stares driving by.  Last night, a 40 year old man was shot and killed in front of his family member's place a few houses down the street from those listings. A few days before that another man was found shot and killed about 10 blocks away toward the more central part of the area and in the more obviously D class area.  My B class neighborhood is only about 5-10 minutes away and in 10 years I've lived in my house, nobody has been shot and killed in or around my neighborhood, it always happens in that area of D class neighborhoods that as realtors we aren't allowed to 'draw lines' around for sake of fair housing.  It's sad to say, but most of the good people in D class areas move out of them when they can afford to rather than sticking around to try to improve them, and I can't blame them. Part of fair housing is to protect racial bias, which I understand, but nobody in my racially-diverse B class neighborhood or the racially-diverse C class areas around would choose to live in that D class area unless they absolutely have to had to.  The sad truth is, for what some of those D class neighborhood folks pay in rent (typically month-to-month), they could rent a mobile home or a small apartment in a safer location, so it is often history of violent crime or evictions that prevent them from doing so, keeping the area rougher than it should be. 

@Teah Schoenle that sounds like a great problem to have in that both solutions likely have pros and cons.  One thing to consider is that selling a house is quite costly.  If that $70k you mention is your equity figured by the market value minus what you owe, you'd leave the sale with a net proceeds check significantly below that.  All states are different both in process and what are standard seller-paid items, but here in Florida I tell my sellers to figure on a 8-9% cost of sale including 6% commission.  That commission is negotiable depending on agent, but most buyer's agents would expect to be paid at least 2.5% in my market, so 5% is typically about as low as a standard sale commission would go.  You've then got property tax prorated amounts, owner's title insurance, recording and doc stamp fees, title company closing fees, etc.  Outside of Realtor Commissions you're looking at about 2-3% (again, in FL...your mileage may vary).  That could vary widely since I'm not familiar with selling Real Estate in MI, but 8-9% of the total value of the house is very likely double or triple what you'd pay in closing costs on a refi (again, just a guess).  If you owner occupy your current home and have for two years, you won't pay capital gains, but you also won't pay them if you sell in three years and have lived there the last two since the rule is "two out of the last five".  If you can buy the next and rent the current out, even for up to three years before selling, you could have the best of both and still avoid capital gains.....or continue to hold long term.

203k and Homestyle Renovation loans are great products that do take some time and extra paperwork. 203k has a limit on how much rehab can be done while I don't believe Homestyle does.  However, needing to sell your home first before having the money to put down, and then start the 203k loan process might mean you're without a place to live for several months between longer escrow period and rehab before move in on top of burning some of that equity in the cost of sale. Sure you could rent in between, but that's more money leaving your 'pocket' in cost.

What I'd suggest before doing anything permanent is to talk with a local lender or mortgage broker to compare your closing costs and funds available between doing a HELOC on your current primary or a cash out refi and then talk with a local Realtor or Title company to find out what a ballpark cost of sale will be. With those numbers in hand, see if you can swing the new purchase borrowing against your current home instead of selling it. Your time line will be much more flexible since you can simply hold off on putting yours up for rent until the new one is ready to move into. Trying to time the sale of one and purchase of another is tough. Obviously if you must sell to free up enough for the next you can, but keeping both will keep more equity in your side of the balance sheet.

@Malcom Ballard welcome to the BP forums! You've taken the first step of posting, and you'll find a literal gold mine of information and helpful support here.  I joined BP almost 3 years ago (3/2017) with an interest in Real Estate and no idea which way I'd go.  I already owned my house, but did not have enough capital to invest. I had run a service business since 2007 which was paying the bills but wasn't a passion of mine nor was it pouring off the cash flow I'd need to save and invest. After devouring knowledge, asking a bunch of (sometimes silly) questions that the seasoned veterans on these boards graciously answered for me, reading suggested books, and digging in further, I, too came to the decision to get my Real Estate License. Your state licensing laws likely vary from FL where I'm at, so you'll have to research requirements.  In FL, there is a required 63 hour pre-license course and then a 45-hour post license course that must be taken before the first renewal.

Late November of 2017 I started online Pre-licensing coursework through RealEstateExpress.com which I highly recommend.  I found the self-paced course to be exactly what I needed to learn it while still running my other business.  I finished and passed the course exam by early January and then worked through about 1500 exam-prep questions broken out into multiple mock exams.  I'd go back and study what I wasn't familiar with. After I felt confident with those, I scheduled and took the state exam, passing and becoming a licensed Realtor in February 2018.

That is the first step.... but what is more important is to decide how you want to work it around your job.  What is your work schedule like?  Do you enjoy your job? Do you want to eventually become a full-time Realtor?  I joined EXP for the flexibility the training and cloud based brokerage provided.  Other brick and mortar brokerages like Keller Williams offer intensive on-site training that can likely get you up and running quickly if you jump into full time right away.  Their in-office training did not work for me with my service business and I've been really happy with EXP. Into the coming year I'll be able to get my broker's license and go independent if I choose (in FL you have to be a sales agent for 2 years). My wife also got her real estate license and currently has it hung with a referral brokerage.  If I get my broker's license she can hang it with me, or she can join me in a husband/wife team at EXP as well.  If you plan to stay part time, and/or your job won't allow you to check voicemail/email throughout the day, you may consider joining a team at whatever brokerage you decide.  On a team, you can play a valuable role and learn all aspects while not having any one transaction or client rest fully on yourself since they'll have transaction coordinators, lead gen, and office staff to help out.  

I was 12 years into a 50-60 hour per week service business (mobile car detailing) that I was burned out on by year 10.  I was ready to make the leap, but financially not quite able to until I had built some momentum.  Being my own business, I could take calls and emails whenever they came in.  I referred to my service business schedule as having 'meetings' or 'appointments' so that my early Real Estate Clients didn't get the impression I wasn't full time. A few figured it out in time and were impressed that they hadn't known before. I never once treated a Real Estate Client like they were a 'side hustle' but have dealt with Realtors who do and it doesn't work well. 

 I'd sweat all morning, rush home for a shower and change, and show houses in the afternoon like I had been doing so all day.  Mentally I was a full time Realtor, but physically it took me from Feb. 2018 to June of 2019 to fully taper that service business off to shutting the doors for good.  From about January 2019 on, I was part time in my service business and easily 40+ hours into Real Estate each week. Since June I've lived and breathed being a full time Realtor and I absolutely love it.    Early on in my real estate career, however, I was working full days and then staying up until 2-3am to read, learn, analyze property, network, etc. Up at 7am the next morning to get the kids up for school.  I showed a lot of property and made a lot of offers, but didn't close on my first sale for 9 months (11/2018).  That investor client was with me since day one, looking for his first flip and had found me right here on BP.  We unknowingly were building a relationship that shortly into that flip would result in him bringing me in as a partner to help manage the contractor and make decisions after delays mounted.  That flip is done and on the market and we're talking about building single and multi-family properties for rent next.  

However, back in Nov. 2018, it was 'just' my first sale. A small commission but proof of concept, I did it, I sold a house! I had another in escrow at that point that closed in early December. Then another a few months later in April that paid more than I made in a month detailing cars and it was on. I closed 8 more in the next 8 months, listings and buyer sides about 50/50....would have been 9 as of writing this but a closing scheduled for this past Tuesday got bumped to this Friday. 12 sales in 13 months (after this Friday's) with two active listings isn't breaking any records, but my momentum is growing steadily and I've got a more clear path of where I'm headed. Several times in late 2019 I had 2-3 in escrow at a time which was a great feeling. I've got a JV partnership with a cash partner and more connections with PMs, contractors, attorneys, title companies, and other Realtors than I ever imagined I would have a year ago. My goal for this year is to double what I've done the previous 13 months: close 24 properties with at least 2 of them being new projects with my JV partner vs 12 & 1. Some guys jump right out of the gates with 20 sales their first year, but everyone starts somewhere.

I've got a long way to grow, a lot to learn, but looking back I'm quite impressed with what I've learned and accomplished in the previous year. It all started with jumping on Bigger Pockets in March of 2017, buying a pre-license course in November 2017, and diving into being a Realtor in February 2018.  My only regret is not doing it sooner.  I started the pre-license course in 2014 but stopped to focus on growing my service business.  Looking back, I should have stuck with Real Estate then.

 It's been a fun ride so far and I'm really looking forward to the coming year!

It is quite a subjective measure and can vary in every market. I'll give you my thoughts on these as I've had several investors ask me how I classify. Being in Central Florida, my opinions of the classes may vary wildly from someone in San Francisco. I'll mention median price near me so hopefully you can adjust my descriptions for your markets. For clarity sake, I'll talk about single family, but the same types of things go into multi family classes.  There are A/B/C/D class multis too, but sometimes you have more control in bumping up the class when buying a large multi, where single family homes are sort of stuck in their neighborhood class so to speak.  Maybe someone else will have more objective measures, but here's how I see it:

In my opinion, A class properties are the highest end homes in a market. Often gated communities with a staffed guardhouse at the gate plus other amenities (pools, clubhouse, tennis courts, golf courses, etc). They have staff to attend to residents needs, extremely strict HOAs, luxury homes. These will often be well above median priced homes. If median price is $250k like it is where I'm at, A-class homes/neighborhoods likely start about $450k and up. The only real investment play in A class neighborhoods would be high-end flips or buying to park money for appreciation. It would be tough to cash flow at all with leverage.

B class homes, in general, start somewhere around median price and go up to just below A class. In the example of my market's approx. $250k median price, B class may be from about $240-450k homes, but it really is more neighborhood dependent than price since some neighborhoods have a broad range of home sizes. B class neighborhoods (in my area at least) are often still HOA communities with lighter amenities (playgrounds, parks, basketball courts). They may have an automatic gated entrance, but no guard on duty or staff on site. Often no clubhouse, golf course, etc., just passive amenities and an off-site management company. This class of homes won't cash flow like C class rentals, but the tenants are often the best tenants around because they could be homeowners if they chose to. They could afford to buy a house, but don't by choice (or by credit issues, job that moves around, etc). They will often care for the house as if it is their own. They'll call a plumber when their kid flushes legos down the toilet or fix a lightbulb when it burns out without nagging you or your PM to do so. Instead of evicting, you'll likely lose more tenants to those who buy houses of their own. Many investors swear by B class properties for the fewer headaches they bring and higher appreciation gains in strong markets.

C class homes are where most rental property investors are looking to buy since they are a nice balance of cash flow and somewhat financially stable tenants. These are the 'working class' neighborhoods with what most would call 'starter homes' that don't have as much 'fancy' to them. Often no HOA, no gated entrance. Homes would almost always be below median price. If median is $250k, C class homes may be $150-240k homes. These neighborhoods are typically somewhere that is relatively safe and quiet still, maybe nearby to some nicer B class neighborhoods. No major gang/drug/assault issues. No awfully dilapidated buildings. Just good solid affordable neighborhoods of smaller homes. These folks are most often gainfully employed with jobs, lives, and families. Drive through a C class neighborhood during the weekdays and most people are at work. They often drive decent used cars or cheap newer cars and do their own repairs of them in their driveways. Treat them right and there's a good chance they will be long time tenants and can care for the homes very well. They don't make quite enough to buy a home or maybe they do but choose not to.

D class homes, also known as 'war zones' are best to be avoided unless you really know what you're doing. Sometimes C/D is a fine line and really goes block by block in certain areas.  D class properties often pencil out very well on paper so some new investors get suckered in to buying awful deals. Homes are dirt cheap, so the rent to price ratio may be great....on paper. However, tenants in these type areas are more likely to stop paying rent, force you to evict, and tear up everything in the house on their way out. Not saying they all do, but many stable people who live in D class neighborhoods own their homes. Renters in these neighborhoods are notoriously a pain in the ***. Typically as soon as they get on their feet financially, they'll choose to rent in a C class neighborhood nearby instead.  If you drive through a D-class neighborhood on a weekday, it seems everyone has nowhere better to be than chilling in their front yards or thumping music from their cars. Get a few of those rough evictions a year and it kills any profit you may have 'made' on paper when running the numbers. Many homes in the community are run down or vacant. Higher rates of property crime, violent crime, etc. In a D class neighborhood, you'll often see customized cars on huge wheels that might cost more than what your B-class tenants drive and definitely more than your C class tenants....their priorities are often not focused on long term financial stability or paying their landlord in a timely manner....  

Long story short, it is very very subjective from market to market, but there are some things you can look for in making that call on what 'class' it is in. Every investor's idea of the fine line between each will be different, but hopefully this gave you somewhat of an idea of what's being discussed when you see A/B/C/D tossed around.  There are investors who make money in D class markets, and if you buy and rehab enough homes in an area you can be a force of positive change.  But that is not a move to make as a beginner unless you've got money to burn.

@Said Manar to piggyback on what some others have said, "Greater Orlando" is an excellent market, but that phrase encompasses many towns and cities that are not technically Orlando. It is at the outskirts of the growth that you'll find the best deals.  Currently there are a handful of potential rental homes on the market in Longwood, Apopka, and Mount Dora that are 'in the path of progress' so to speak and priced below $180k.  For that price it'll be smaller 900-1100sf 2/2, 3/1, 3/1.5, and 3/2 homes.  They often won't have garages or be built within the last 40 years, but with recent updates and maintenance they can still be very solid low-maintenance homes.  

What I'm seeing currently is an approximate 0.8%  monthly rent to purchase price ratio ($170k house with $1300-1350/mo market rents).  While it isn't quite the 1% many are looking for, these homes are often in areas with brand new infrastructure, new commercial projects, and relatively stable future outlooks for growth that will continue the strong renter demand.  Paired with low availability of homes to rent and buy, these prices keep climbing.  Even if values flatten out or dip in coming years, if you plan to hold long term that won't be an issue.  I can almost guarantee we won't see another crash like we did in 2008. Housing is more stable, average equity is higher, and appreciation has slowed to more reasonable levels in the last 2-3 years. Unemployment is very low and prices have just recently climbed above 2007 levels in many areas, meaning wages have had 13 years to catch up to what folks were paying for homes at the height of the bubble.  That's not to say it may not 'correct' or 'level off' for a short period of time sometime in the next few years, but I don't believe there is a major recession in housing prices on the horizon for Florida.  With 300k+ people per year moving to Florida, while several Northern states are seeing population decline, buying to hold anywhere around Orlando or Tampa is bound to be a strong long term move as long as the numbers work at purchase time.  Rents have been climbing for years, inventory is at all time lows, and people keep coming to our area.  I don't ever advise buying a deal that is ONLY good when factoring future appreciation, but something that is a decent or good deal now will get significantly better in years to come.

If you're looking for a 1500sf 3/2 home with a two car garage for $170k, you won't find that anywhere near Orlando, but smaller entry-level homes are still available in that price range within a 30-40 min drive of Orlando in all directions.  Not everyone works in "Orlando proper" either. Sure there are lots of jobs in Downtown Orlando, but there are plenty of blue-collar and white-collar jobs in Lake Mary, Maitland, Altamonte Springs, Longwood, St. Cloud, Sanford, Clermont, etc.  I notice lots of out of state investors assume that all workers must commute to Orlando so they are opposed to buy something 45 minutes from downtown, but as prices have risen, many businesses have moved out of Orlando to newer commercial development years ago.  Renters are likely instead looking at commute times to locations that are not downtown Orlando.  Part of the reason I'm very focused on areas Northwest of Orlando is due to this new toll road that is nearing completion: http://www.wekivaparkway.com/. It puts a huge quadrant of NW Orange County and Northern Lake County into play for lots of folks who would have considered it too far away for them before toll roads made for easy commutes.  My own home in Apopka has appreciated nearly 60% since 2009 while homes in more established areas of Altamonte Springs and Longwood have only appreciated maybe 40-45% since they were only recovering from the recession, not developing along at the same time.  Progress and development happens too slow to make a big difference in short term flips, but if you plan to hold your properties 5-10 years or more, 'path of progress' becomes a huge point to pay attention to.

 I believe I read the original....didn't realize there was a second.  I recall there being some things that were taken with a grain of salt due to the bubble and burst, so the second edition likely is more relevant.  It's not so much a 'how to' book as it is one to show the long term power of investments that may not be life changing from day one.  Excellent read though.  This was actually a book I read before finding bigger pockets, I was hungry for some knowledge and I believe I saw a Facebook post about investing where someone mentioned that book.  After I read it, I believe I came across mention of "How to invest with no and low money down" where I kept seeing reference to this weird 'Bigger Pockets' thing.... decided to look into it (March '17) and I've been sticking around learning, reading, and doing ever since!  

@Clint Shelley that is the other side of the coin too. Words like "certificate" and "title" can have multiple meanings when referring to what once was a legal "vehicle" and now is considered a "property". Legally certified or structurally certified.... "Your mileage may vary" is very fitting in this one..haha. I'm curious to see where this goes.