All Forum Posts by: Jeff Wallenius

I admit, I intentionally led you astray with the title of this post. I've seen numerous posts on which City, State, Area, Region, etc. is best to invest in. Selfishly I wanted to cut down on the amount of posts I responded to by posting my own. 

Are there areas of the country that are hot? Yes. Are there areas that make more sense to invest in than others? Maybe. The biggest factor of your success in investing will be your involvement, education, and TEAM! This post is more directed to out of state investors who are looking for better returns. 

If you investing out of state, your team on the ground is the only factor that matters. Have a bad contractor, your sunk. Uneducated realtors that lack investment knowledge, your chances of success diminish. Poor turnkey or BRRRR operators that over promise and under deliver, you experience less than promised returns. Real estate has risk, but mitigate that risk in every way possible!

So how can you be successful? Find a team on the ground that provides transparency in everything they do. It's easy to talk success but ask how the property in question fails. Ask how they make money. Ask about their track record. Never send large amounts of rehab money out. If the numbers look to good to be true, they are! 

Start researching the teams, as they will create a hot market by their growth, transparency and success.

Happy investing!

@Phil T. I used to live in Fisher's Landing and still own a rental there! Did a flip in Battle Ground in 2006. 

With a HELOC figure worst case scenario and a very poor appraisal. Are you comfortable leaving 10-15-20% in the deal? Can you swing that payment? Factor in the rate you pay to your HELOC as worst case scenario, and see if you still cash flow.

Happy to provide more detail!

The question you need to ask is where is the best team that I can invest with. The midwest markets are interchangeable for the most part and if you have a great team on the ground you can make money in an average market. On the flip side, if you have a average team, you'll break even in a great market. 

If your buying turnkey your paying retail and your investing solely for cash flow. Appreciation is fairly flatline, of course we've seen some nice appreciation lately, but speaking historically. Don't factor it in to your numbers when investing out of state, plan for cash flow and if you see appreciation you've got the icing on the cake. BRRRR is great, but there are several ways to get taken advantage of and a couple potential hurdles to be aware of. You can also invest in notes and not own properties at all.

Plenty of ways to make money in real estate, your goals and risk tolerance will dictate which route you choose. Reach out anytime, happy to provide more detail in what I mentioned above.

@Cameron O'Connor does it have to be 4 untis and up or does a triplex or duplex interest you? Suburbs ok? I've got some options if so.

Cheers!

Hey @Brian G. , one that we are working on right now is $31K purchase, $45K rehab with an $95K ARV. Rents are $850/month. I have been working this strategy for my own properties but this will be the first one we jump in with an investor. We have been hesitant to open this to outside investors for two reasons. 1. I was not on the ground in Indianapolis up until 1 month ago and managing this for investor out of state is a recipe for disaster. 2. Unrealistic expectations. We wrestled with the fact that most investors believe they will return 100% of their capital, each and every time. This is not realistic in my opinion. Can it be done? Of course, however I tell every investor to plan on leaving 10-15% in the property. That figure is high, however you have to invest in a conservative manner and I would rather be surprised when we do better than to face you and tell you the appraisal came in low and your leaving money in the deal.

This system only works if you have transparency on every aspect of the process. You need to know exactly how we make money and how much. We make our money on the front end sale and also a small fee for property management, but we will work with our investors to see what the best strategy is for their situation and taxes. 

Transparency on the construction budget, you need to see every cost and have someone on the ground that knows the market, rental community, etc. so as to not over pay for upgrades that will see no returns. You need to send draws instead of one lump sum of money for the rehab as well. Never send the entire rehab cost up front to a provider!

We use a software system called Builder Trend so that each and every investor can track the progress of their property. 

The biggest unknown is the refi appraisal. We can run comps, make educated assessments on the end value, but your value is in the hands of the appraiser at that point and they may see the value completely different than our side. This where I caution investors to plan on leaving money in the deal. 

With that said, and those understandings in place, I will move forward with assisting investors on this strategy. It can be done, but will rely on heavy communication, transparency and a multi-plan approach by both the investor and us.

I've already hijacked this thread, happy to discuss further on a private message or phone call preferably. 

As Jay mentioned, there is no need to use a HML and if you do not only will your costs go up with front end points and interest, you also run the risk of having to replace their money with cash on the back end. @Noel R. as we spoke about, plan on leaving capital in the property as the refi appraisal may come in lower than anticipated. If a hard money lender is used you'll be paying those points, interest, and possible having to bring cash to the table to close the refi transaction on the back. 

Your number for entry is closer to the $70K mark on average. Again, as we spoke about you need transparency in a ground partner as there are several ways to increase costs. 

@Leigh Hall I think your strategy is solid! Finding a real estate minded broker sometimes can be difficult as they don't always know how to run numbers, rehab costs, knowledge of construction, property management and other such items that are important when investing in real estate. While I am not a real estate agent, if you need assistance in Indy I'd be happy to provide my two cents.

@Matthew Avery welcome aboard and good to see a fellow firefighter jumping into the game. I've been in the fire service for 17 years and just took a year leave to take my real estate investing to the next level. Let me know if I can help, it would be great to jump on a call.

@Brandon Bolinger good to see a fellow firefighter on here! I'm just north of Indianapolis now. What kind of price points are you seeing in your area for Multi's?

As a real estate investor I would be cautious of just finding any agent. Very few agents know investing, how to run numbers, Cash on Cash, construction costs, property management, etc. If your looking in Indy I am not an agent but happy to help if I can. Feel free to reach out.