All Forum Posts by: Sam McCormack

Hi BiggerPockets Community!

Durham native here, though I'm currently based out-of-state in NYC. I'm taking my first steps into real estate investing and looking to invest back in my hometown, or the greater Triangle area. 

I'm seeking a well-maintained property that would be suitable for a first-time investor - turnkey, cash flow is a must.

I'm open to single family, multi-family, student housing, and more. 

I have ~300K in cash I've set aside to start my portfolio, and am interested in buying a property anytime from now - 6 months, with the intention of buying another/more shortly after. 

I'd love to connect with real estate agents, contractors, property managers, and lenders who have experience working with out of state investors and would be willing to show me the ropes from afar.

Looking forward to learning from this community and finding some great connections!

Best,
Mason

 I agree that its a good tool to figure out if something is worth digging into but definitely doesn't mean if something is a good investment or not. It is more of a time saver when evaluating properties. With some of these property taxes and expenses, it needs to be changed to the 1.2% rule:)

As a newbie, I've determined that my first steps are to establish an area in which to focus, for house flipping and/or renting. I live in Southern California, but properties are far too expensive here to get started in my current financial position. I've been looking in the Jackson, MS area where homes can be purchased at just =< $30K. However, I want to ascertain that y this area (or some other area), would be a great place for back to back, multiple projects (not simultaneously). I want to be certain that where ever I start, it will be an area where selling after reno won't be a big issue. 

Since I will be doing business out of state, establishing a team with a realtor, PM, GC & sub-contractors whom I can reuse on multiple projects is essential. So rather than spend a lot of time right now trying to figure out whether a single property is a good investment, my first step is to establish whether or not an (area) has strong potential for me to reuse the same team on at least 2-3 properties in a row. How best might I gain that information. Where can I look and who can I talk to?

 Sam, 

I have a lot of friends in the NKY/Cincy area, some are also in REI. I have heard mixed reviews on condos. In your experience, what are the pros and cons?

In my opinion, the 1% rule was never alive.  It is a really bad metric for determining the value of the investment.  It was always meant to just be a quick rule of thumb to see if the investment was worth digging into further, but was never intended to be the golden rule by which one should invest.  So many investors I see make this mistake and it costs them dearly down the road.  

Why the 1% rule is meaningless:

It does not tell you anything about the property itself, is the property in good condition or does it need significant repairs?  Is the neighborhood, town, submarket, and market appreciating or depreciating?  Is the rental market stagnant or growing?  Who are the tenants?  What do they do for work and what industries is the town dependent on?  What are the tax benefits if any in the area is it in an opportunity zone or anything like that?  What is the highest and best use of the property?  Is cashflow even the correct goal for you and your investing strategy based on your income, tax liability, and other factors?  

The 1% rule, in my opinion, made a lot of lazy investors who were unwilling to do the work to actually learn about what they were investing in and it cost them a lot.  I know there are a lot of people that will disagree with me, so I would implore them to answer any of the questions above based on the 1% rule.  

There is no single rule, no magic get rich quick option, no easy path in real estate investing and a lot of people are learning that the hard way in the current environment.

Just my 10 cents.

Hey All,

This is just a reminder post on the FHA rule on 3-4 unit buildings. I have seen this issue come up 2-3 times in the last couple months pertaining to FHA buyer wanting to house hack a 3-4 unit building here in Cincinnati. Since the 4 units are taxed commercially their tax rate is around 3%+, which can put a serious dent into the numbers.

FHA requires that the net rental income of a 3-4 unit property be equal to or greater than the monthly mortgage payment (PITI), ensuring the property can cover its expenses.

Ever since the massive reassessment across Hamilton county a little bit ago, this has become a serious problem for the 4 units priced $400k+ to hit this requirement. Make sure your lender knows about this up front because they could have been in the industry for 10+ years but only now come across this problem.

Jordan

Hey BP Community,

Looking for some advice and perspective from experienced investors.

I bought a property in Stockbridge, GA about a year ago for $225,000. It looked like a solid long-term investment at the time, but I’m starting to question if it was the right move.

Here's where I stand:

Purchase Price: $225,000

Current Value (After 1 Year): Still around $225,000 — no appreciation so far.

Total Investment So Far: Around $70,000 (including down payment, closing costs, agent fees, light renovations, etc.)

Cash Flow: Only about $200/month before expenses (not including reserves, maintenance, vacancy, etc.)

Tenants: I’ve already had 2 tenants in 1 year — both have moved out, which has added some headaches and turnover costs.

If I Sell Today: After agent commission and selling costs, I’d walk away with about $40,000, which means I’d be down ~$30,000 from what I’ve invested.

My original goal was long-term passive income, but at this point, I’m wondering if I should:

1. Hold and hope for appreciation + better tenant stability, or

2. Sell now, cut my losses, and re-deploy the cash into something with better returns or less friction.

This has been a bit discouraging, and I don’t want to make emotional decisions — just looking for input from others who’ve maybe been through something similar.

Any thoughts?

What would you do in my situation?

Thanks in advance!

Hello! My name is Brendan and I am starting my real estate investing journey. I currently live in the Nashville market and am learning as much as I can. I am interested in single family, multi family, and just learned about BRRRR. I have not looked hard into the Nashville market because it seems to have a higher cost to entry. I have looked at Cincinnati, Cleveland, and Chattanooga markets. Working on saving up cash for first investment. I look forward to interacting on here, as this seems like a big first step for me!

@Sam McCormack Do you suggest using a mortgage broker or comparing lenders ourselves? I was thinking broker since they know much more about loans than we do, but they could go to favorable lenders and not show me every option. It is worth the fee? I will research brokers around the area and their reviews but what do you suggest?

Hi Everyone, 

My name is Melody and I’m brand new to the world of real estate investing! A friend introduced me to the podcast, which has been eye opening!! I’m hoping to make my first purchase this year so am in my data collection/researching stage. Looking to learn the ropes from folks who have some valuable knowledge. Please share any thoughts, advice, resources you have for a noobie. Really appreciate it!

Thanks,

Melody