All Forum Posts by: Shawn Ginder

@Summer Timms - those figures are properties that came with inherited tenants, so we had income from day one. This does not include closing costs, however we closed at the beginning of the month to gain the prorated rents for most of the new month, and security deposits transferred to cut down on the out of pocket costs for closings. The renovations, we didn't have much to do up front, we are doing renovations along the way with the cashflow coming in. When we have turnovers than we put some capex funds into the units and bring the rents up to market value. We also negotiated in each deal anywhere from $500 - 4k in a repair credit from the seller at closing for renovations on relevant needs based off the home inspection, you won't have unless you ask for repair credit. So for example the 50k unit got 2k repair credit, $925 security deposit, over $830 in prorated rents this all applied to the closing costs, what was remaining was $2,500. 

Personally I was on a journey for at least 6 months running actual numbers on 300+ deals before buying our first one. Once I connected with a mentor in the local market I wanted to invest, it was just a matter of a few months before we closed on our first deal set, did three properties in our first go, but nothing under estimates the investment of time in understanding the local market. I also researched other markets when my home town area didn't make sense price vs. rental income ratio. When I went 30minutes west, 45 minutes north west, 45min east, and as far as 2 hours south, than I stubbled on numbers that worked for us. 

Examples:

$37k 2unit deal - rents $950 month with below market rents, raised rents, having a tenant turn over this month, will raise rent on unit over $120+per month.

$50k single family - rents for $925 

$34k single family - rents for $850

And others, all purchased with 100% financing, producing cash flow from nothing down to positive cashflow.

Two of 5 total deals were on the MLS.

Time spent researching is never a waste! Being persistent and never giving up will get you to your dream!

We are buy and hold from out of country! Born and raised in south eastern PA, I was looking into the Baltimore market, around the same time 2 years ago during that research period was a time of unrest in the city that gave rise to some concerns. What really got me reconsidering this market was connecting with a friend and his brother who are partners in the city as RE investors. He shared that with the current events at that time they were considering getting out of the market, shared as well some of the local rules and compliance issues for the city can be a source of extra fees and fines. 

Grated in hind sight my friends have learned a lot of hard lessons over the years investing in Baltimore, and really would have gained a lot of knowledge through this website that would have saved them a lot of trouble. 

However, there approach was self manage, pay cash as they went, and rehab the properties themselves. So in this business model you can even see how they have gone the hard road of figuring things out as they go. 

For me, investing out of country from Europe, investing in somewhat local region from where I grew up, I have relied heavily on good property managers. This will make or break your investing business being out of state. I am learning what it means to manage the managers to stay on top of what is going on at the properties. The manager will be a tremendous resource for you in helping you locate better neighbourhoods that you will want to be in. If they are licensed agents, listed carefully to the choice of words as they can't legally tell you not to invest in a certain block as I understand it. Look for the key words more desirable, less desirable, rating areas of the city over other areas. Use tools like trulia to gain perspective on crime rates, but always get an on the ground perspective on the area. The numbers have to work cash flow wise, but than always run the address by a trusted property manager you may work with in the future for a perspective on the area. Run several addresses by them, and you learn where to look. 

We have a company and agent we are using in central PA Harrisburg area that is great at getting quotes back usually within 24hours, we switched all our properties over to him as the rates are competitive the best we have seen among at least 5 companies we have researched. He does deal with Philadelphia Contributionship as mentioned above, but has another company that provides coverage with options. He will find the best solution. If interested send me a private message and I will share his contact info.

One last comment, we shopped about 5 different companies before deciding who to work with, and you will find premiums vary greatly for the same coverage from company to company. Our broker provides us with lowest premiums, with strong coverage. Every dollar counts as an investor, as well you want to make sure you are covered sufficiently just the same.

We are working with a good insurance broker who has helped us with very competitive rates on single family and small multi's. Example with a two unit the previous owner was paying 1k annual premium from Liberty mutual, our broker insured the same property for $608 annual premium. He has saved us funds on all our policies from the first agent we began working with, and he is always looking for better companies to work with. Send me a private message if you'd like his info, happy to help, he works with a lot of investors across central PA. Office based out of York PA, but we have property in York and Harrisburg through him. 

If you want to invest in real estate, you don't need a license to do that. Go back to your goals, you can start investing build up cashflow, gain experience, learn as much as you can while you invest. Becoming an investor doesn't require a license. We have bought 5 properties and have no license, sellers in PA will normally pay the realtor fees, so you don't gain having a license vs. not as you buy investment properties. That's my thoughts.

That is $75 per door, at 8% I'd be looking at how much capital your would be putting out. I would think you can do better, I would simply ask how many properties have you run numbers on? When you do 100+ properties you will know what looks good for your area. Something to consider. 

@Max Demydovych

Max, 

My answers are following the questions:

Shawn, so I have two following questions.

1) I can use private money to cover 20% and 80% from a lender or a mortgage company did I understand you correctly? Essentially won't have to you my own money except for the repairs? 

You can only do this when you find the right portfolio lender, a good deal, and the right financing option that the banker will allow. This isn't an easy thing to put together but there is a way it can be done. Send me a private message would be happy to share more.

2) you have mentioned to include really into calculation, things like repair/ maintenance,etc. is that at the time of purchase of the property or for monthly cash flow? If monthly cash flow, what would the percentage be?how much do I need to include every month on top ?

I really appreciate your help!

This if for your accounting purposes on the deal, we are using 15% for repair, cap ex, and vacancy, in reality we may be closer to 20-25% in actual expenses, we are only now entering our second year so my hope is this will stabilise with time and that the 15% will become reality down the road. There are realities to taking on properties that we are learning in the real world. The reserves is so you have the cash to weather the realities of repairs or having access to cash to make it through. The key point as other investors have noted is you that you make money when you buy, meaning make sure you don't pay too much for a property that will loose you money each month.

@Chris K. Appreciate you spelling it out this way on this post! Agreed as we build our investing career using attorneys will be considered and utilised. For now we are leaning on property managers with tenant related issues, but having said that our manager has an attorney that works with investors they work with that we can hire when the need arrises, or as we continue to grow the business will start a relationship with at some point in our journey.