All Forum Posts by: Ryan Evans

I second what @Todd Dexheimer said. I've got the same mindset in that if you invest non-locally you force yourself to run your business like a business. Not that there is anything wrong with it, but all the little check ins and spending your time handling little issues that pop up ultimately are low wage activities. If you want to scale you need to focus on the bigger picture stuff. 

That said, I would certainly like to be able to drive down the street and check in on my properties, but if the numbers work better in a different market then that's where you should go. The learning curve is scary at first, but will ultimately make you better.

I recently met a guy who owns several hundred properties in his own market, but he's never been to almost any of them because it would detract from where his time is better spent. It's a matter of working ON the business, not IN it.

In your case, I don't think you have to take one approach or the other. You're close enough to check in for the major stuff, but far enough away to not waste your time checking in every other day. Find a reliable handyman and you can manage it yourself. 

I'm a big proponent of taking risks and learning while you're young. On my first deal, I paid 25k for a duplex out of state and learned an incredible amount. If I screwed it up and lost it all that's only 25k at the end of the day. Not much in the overall scheme of things. I'm guessing you paid much more in tuition. Not to mention you can lose $25k pretty easy in a market like Seattle (my local market) if you're off by only a few percent! 

In regards to SFR vs Multi and getting private funding, I'd think more investors would be keen on investing in multi. If you have a vacancy in a duplex, it's somewhat safe to assume you can at least keep one side filled that should hopefully at least cover your debt service.

If I could go back to being 20 I would be much more intentional with getting my credit score up quickly. If you're going to be looking at borrowing a good chunk of money in a couple years, it's going to be a big factor so keep it in mind.

You're on the right track with the way you're thinking by being conservative, but it sounds like what you're asking is whether you want to have $500k in 30 years, or do you want $750k in 30 years. Now, I think most of us would prefer the latter of the two. 

Why $750k you ask? Well, $300/month cash flow invested & compounded monthly at 5% over 30 years is $250k. That's my version of being conservative. 

Why invest in properties that cash flow when you could almost just as easily invest in ones that do. You're leaving money on the table. There are plenty of deals to be had that cash flow $300. The only reason to not cash flow, in my opinion, is if you're counting on appreciation. Nothing wrong with that, but you're doing neither. Sure, it's better than not investing at all, but you'd be leaving money on the table.

If you're worried about the hassles of going out of state, you're a few clicks away from hundreds of people doing it successfully. The only difference between you and them is a bit of knowledge. And fortunately, you can figure out everything you need to know right here!

@Garrett F Anderson I don't mind at all. I paid 24k cash plus the 10k in rehab/flights and my time. Although it was quite a mess when I got there, I got the place up and running to where it's now renting for $1300/month total. Plus $25 for the garage which I rent to the maintenance guy and pay straight back to him for lawn mowing.

I was willing to take the risk on that one because I knew I could get $900 in rent based on the current tenant. But it was a nice surprise when I found out the neighborhood was doing a bit better than I thought. Turns out I'm doing about $850 in cash flow.

I'd never expected to make 37% on a deal again, though. I consider myself lucky having survived the first deal. The next one I've got under contract is $75k + around 15k rehab over the next couple years (needs a roof soon). Will rent for $1500 pretty confidently and estimated cash flow is $600. It's financed 100%. That's a more reasonable set of numbers. 

I wouldn't consider a deal with less than $400 in cash flow out in that part of the country, but to each their own!

Here's my $.02 based on my experience with a total disaster $25k property out in Cleveland that hopefully, you can learn from, too. I'm so glad I had such an awful experience the first time because now I've got a much better idea of what to expect. I put about 10k into the property. About 8k materials and the rest labor. Though, I spent 6 weeks of rehabbing and don't count my own time. 

Capex - Ok this is a big one. 5% of a 3k/ month rental is much different than $700. You absolutely should not go off percentages at a pricetag of $35k. A new furnace more or less costs the same in a $500k house as a $35k house. Same goes for roofing, floors, fixtures, paint. I'm assuming it's an older house and $420 a year won't cut it. Combined with your misc cost you're doing better, but I'm just saying don't go by the %, go by the $$$.

Just to again reinforce the appraisal value issue. Just ignore it I say. Go off of comps and actually know the neighborhoods. If you have blighted streets in the area they can easily have a 20k impact on your price.

I won't comment on repair cost because that's such a major unknown. But that's what inspections/ estimates are for.

Your taxes will likely go up after the 3-year appraisal cycle. I'd budget $1500/year

Vacancy, probably safer to round up to about a month per year. You'll be in a lower class neighborhood and will probably have some rehab after each turnaround. -$700/year

Many companies have a minimum management fee. Assume $100/month unless you already have that lined up. 

I've heard the market is somewhat similar to Cleveland, so hopefully, that means you can see numbers in the same range. For 50k all in, I wouldn't touch anything less than $1200/month. That likely means a duplex. Most out of state investors are going to the midwest so they can see cash flows of $400+ per month. 

Ok, whew, that's all for now

One idea is to head to the county tax foreclosure auctions. I go just for the networking once in a while. You'll inevitably meet some interesting characters and very savvy investors. I've seen a guy in board shorts and flip flops walking his dog past the courthouse steps and just casually bought about 5 properties worth over a $1m bucks like it was a bar of candy! haha

All very good considerations guys! The input is much appreciated as I always am coming up with ideas of all sorts and sometimes need a bit of a reality check. The zoning/well/power are probably the biggest concerns. 

@Andrew Johnson the laundry is definitely a concern. Though, I wouldn't even be considering this if I had to buy/rent a piece of land. It's purely out of the luck & convenience that I happen to have parents (retired real estate investors) who own a cabin (with laundry), full-size mother-in-law/garage, and a couple lots next door. I could throw an extra laundry setup and all the maintenance supplies in the garage if needed. 

At the end of the day, I don't see it entirely being an attempt at a long-term STR. Since my folks will probably be building in the coming years it's not something I'm betting my future on. Absolute worst case scenario (aside from a major disaster) is I end up with a $35k toy I could live in. Not the best use of funds when trying to build wealth, but considering it's pretty easy to spend that on a car or run down RV, it could be worse.

@Michael Greenberg I think it can potentially be a great project to do something like that. I've seen a couple successful tiny house camps in Oregon (go figure). Doing it at scale would help for sure. 

@David Zheng thanks! I surely will if I go ahead. I'll send you a link when you can make a booking ;)

Welcome Joshua! time spent learning is never a waste, as long as you start taking some action sooner rather than later. Good luck!