All Forum Posts by: Jacob St. Martin

Hey Michael, congrats on getting started on analyzing deals! Analyzing as many deals as possible is the best way to get practice and move toward your first property. Here are my thoughts:

- Most of your analysis looks really good!

- You missed utilities in your holding costs

- For your first rehab you should plan on a little more than 6 months, just in case

- You might want to double check your tax number as taxes in NY can be pretty high

- The biggest area where mistakes are made for new investors when it comes to flips and BRRRRs are in the ARV and the rehab cost. On the rehab cost build in a margin of at least 10k but ideally more like 20k and verify with a contractor. For the rehab you will want to compile a list of comps and talk to an agent and get their opinion. An error in either of these numbers can put you under water really fast

Feel free to reach out if you want any more help! 

Hello Mast, 

It is great to see some people from outside the U.S. getting involved in BP! I will note that some of the information on here will be different for you especially when it comes to loan products and requirements so that is something to keep in mind. 

When it comes to deal analysis you can go to the tools tab and look at the calculators on the left side. Those are easy to use and can get you started. Often times you might want a more detailed analysis which I typically do in a spread sheet. For this you may want to learn more about the specifics of deal analysis and that is where I would probably recommend books like The Book on Rental Property Investment by Brandon Turner.

For raising capital there may be regulations in the UK that differ from the U.S. so it would probably be best to consult with a real estate attorney. In the U.S. the primary ways that you can raise money are by joint venturing with someone, syndicating, or starting a fund. They each have their own strengths and weaknesses and it will depend on the deal which will be right for you. 

If you would like to talk more in depth I would be happy to help, feel free to reach out to me via private message.  

Hello Cody, this seems like a great opportunity. It will probably not positively cash flow while you are living in it (unless you make some changes that I will get to in a sec) but it would still be a win because you would be paying down a mortgage rather than renting and I imagine your monthly housing cost might end up lower, AND you will now benefit from appreciation. House hacking is an amazing strategy and is how I got my start in real estate. 

Here are a couple strategies to increase the cashflow to maybe cover the whole payment:

1. House hack the main house too. Rent out the other bedrooms to friends or other people

2. Do short term or mid term rentals in the ADUs instead of month to month leases. You will need to furnish them and check with local regulations to see if this is legal but if you can you will make a lot more money this way. 

3. Live in one of the ADUs instead of the main house because the main house will rent for more (and then STR or MTR the main house).

If you want to discuss any of these details feel free to reach out to me in a private message!

Hello David, 

It sounds like you are in a great scenario where you have built a solid portfolio! I think by far the most important question here is what do you want to do/what are your goals?

Is $75,000 enough for you? If yes, does this still leave you room to save for new properties? If no, how much do you need?

Do you want real estate to be a job or do you want it to become more passive while you pursue other things in life? 

If you want it to be a job then what are your greatest skills in real estate and what is it that you enjoy about it? I would probably recommend that you pull some of your capital and use it in active investments that will grow your equity very quickly like flips, BRRRRs, value add multifamily, etc. 

If you don't then you might want to just coast or even convert your equity into even more passive investments like syndications or partnering with investors who want to put in the work but need capital partners (like me!).  

If you want to discuss these things in more detail I would be glad to work through them with you, feel free to message me. 

Hello Samantha, 

There is good news and bad news. The good news is that real estate can provide you with the lifestyle that you are describing: No 9-5, cars, travel, financial freedom, etc. 

The bad news is that many influencers make it look much easier and give some false promises to get you to buy a course. 

Let's just address the first lie, a couple of properties is not going to make you rich and let you quit your job. $500 a month cashflow from a single family home is really solid but it isn't going to drastically change your life. The reality is that cash flow can be very unreliable. Tenants sometimes don't pay, roofs need to be repaired etc. A couple of maintenance requests can knock out an entire year of cash flow for you. This means that in order to live off of cash flow you need to have A LOT of properties/cash flow so that if a couple of properties underperform or need repairs you still have something to live off of. 

The real benefit of getting started with these kind of properties is the equity you build. The way people quit their jobs is by hustling extremely hard, building a few million in sweat equity through flips/BRRRR/value add, and then dumping it in cash flowing assets that are lower maintenance.

If you are okay with your job, the best thing to do is keep it and use that hard earned money to start building equity. If you hate your job like I did then there is one way to quit your job faster, extreme defense. Offense is making money, defense is saving money. I was able to quit my job to focus on real estate full time but this is only because my wife and I have a strict budget and keep our expenses very low. I have house hacked so we have no housing expense, we cook most of our meals, hardly drink, bought our cars in cash, and have no debt. My wife makes less than $3,000 a month but we are able to live off of that and still be saving $1,000 of that a month (so keeping our combined expenses under $2,000 a month). Meanwhile I am working hard in value add deals, partnering with investors who have capital but not time/expertise. She pays the bills, I build us long term wealth. 

If you want to discuss these concepts in more depth feel free to reach out to me in a message. I would be glad to help you find some direction for how to start investing. 

Hello David, 

I am an investor based in Charlottesville VA. I would say that my advice will greatly depend on your goals and what resources you have to invest with (time, money, skills).

Do you have any prior experience with real estate investing? Do you have a lot of capital but not a lot of time, or a lor of time but not capital? What does your w-2 income look like? These are all things I would need to know to give you the best advice. 

However, generally I think that high cashflow/low appreciation markets only make sense when you are working with really large quantities of capital. If you are trying to build a portfolio, your growth will accelerate much faster if you can build and grow equity through highly appreciating markets and value add investing. Above and beyond the best first option would be to house hack, especially if you can do a house hack/STR in the DC area.

There are also options like investing in a syndication or partnering with investors like me who have deal flow but need capital partners, especially if you are busy or have not developed the skills for the types of deals you want to be doing. 

If you are interested in discussing in more detail I would love to meet up with you, feel free to message me. 

 There is already a line item for both your agent's commission and the selling agents commission on the right side of the page. This looks like an independent 3% credit. 

Hello Sabrina, 

With the things like this there are two things that should drive your decision: your goals, and the numbers. 

Let's talk about the numbers first. The metric that is going to be the most helpful here is return on equity. Take your monthly cash flow and rather then dividing it by your initial investment (which gives you ROI), divide it by your current equity. If your return on equity is lower than the return on investment you could get by redeploying that equity into other properties or other investment vehicles then it is probably time to sell. If your return on equity is still higher than what you would get in other properties you should hold on to it until that changes. Another important factor here is your deal flow. How confident are you that you could get deals to put your money into? In a 1031 you are time constrained and a lot of people have low deal flow right now because inventory is very low in most places. If you are not confident that you can find decent deals maybe hold onto your property. Lastly, when you are running your ROI calculations be sure to also consider market appreciation. One benefit of redeploying your capital into more or larger assets is that normally your appreciation will now be calculated off of a much larger total home value. For instance if you have one $500,000 property with % equity and the market goes up 3% you have gained $15,000 in equity. If you sell and use that $250,000 to buy $1,000,000 of real estate you now get $30,000 in equity when the market goes up 3%. This is especially important in highly appreciating markets.

You should also be considering what your goals are. Do you want more properties and the increased time spent managing that comes with that? Great, go for it. Are you busy and looking to get better returns more passively? Maybe you sell and invest in a syndication or partner with someone like me on some deals. Really think through what you want in life and what you can do with your current and future real estate to move you toward that. 

If you want to discuss in more detail feel free to reach out. 

Hello Cheza, 

I am sorry to hear that your first rental property didn't go well. Unfortunately these companies offering turn key rentals often over promise and do so in markets weak markets that are unlikely to see appreciation. Now to answer your question:

Based on what you sent it looks like your actual closing costs are $8,361. Everything looks correct here for me except for potentially one thing. On the right side under other costs I see the 3% commission for you agent which is fine, but then I see another 3% "seller credit" on the left side. Did you agree to pay a 3% credit to the buyer? If not then your agents commission may have been added in here twice by accident. 

If you need to talk through this in more detail feel free to reach out. I feel bad when people get sucked into sub-par turn key deals when there are much better options for investing in real estate more passively like investing in syndications or being a financial partner on smaller scale deals with another investor who wants to put in the work but needs the capital (I partner with people like this). 

He should not be required to have a contractor license so long as the work that you do is permitted and inspected properly. The benefit here of hiring someone with a contracting license vs hiring an unlicensed contractor would be that a licensed contractor is liable for the work being done properly, so if something is not done up to code they would be required to fix it. If you are doing it yourself this isn't a bit issue. 

Good luck on your real estate journey! I am based out of Charlottesville and am just starting to do flips here. Let me know if you have any questions!