All Forum Posts by: Wes Blackwell

WOW AGAIN! This post just keeps better and better! Stepped away for a bit because I got real busy and come back to an avalanche of responses! Good to see that the Sacramento area is thriving with investors and real estate professionals! Perhaps we'll be able to have another meetup soon in the new year!

Hi @Dennis Cobos! Great question!

I actually did this exact same thing with my girlfriend less than a month ago. My advice is to treat this investment as exactly as it is... a business venture. You both went into this property together, and one day you may sell it together. Assuming the investment over time remains equal (costs for repairs, mortgage, etc.) then you are equal partners.

And so, if the relationship ever ends, you can end it as equal partners in this business venture. Depending on how mutual and calm the relationship ends (if ever), you basically have three options:

1. Sell the property and split the profits 50-50
2. Keep the property and split rental profits 50-50, or hold to sell later at 50-50.
3. One partner can buy the other partner out for their share of the investment.

Now, if one of you is making a really large down-payment with your own funds, you may want to put something in writing about getting that money back if the relationship ends and the property has to be sold. You don't want the other partner thinking they are entitled to half of the equity 6 months from now when they didn't contribute anything towards the purchase of the home.

Hi @Tim Jones! Nice to meet you!

Just sent you a colleague request and private message. Anyone else who sees this post and is interested in connecting just send me a colleague request or contact me via the info on my profile.

Hey @Wen Guo! Just sent you a colleague request with a private message. Anyone else who sees this post down the line can send me a p.m. on here or contact me via the info on my profile.

Hi @Derek Jones!

If you haven't done so already, I would highly advise that you and your client attend several local real estate investing meetups and meet some wholesalers face-to-face. You'll meet tons of people you wouldn't on here, and by meeting face-to-face it will be easier to establish a connection and really get a good sense of who you're working with and their level of professionalism and overall "non-scammy-ness" as that's such a problem in this industry. Best of luck!!!

@Account Closed -- I would highly suggest that you start working with an agent who can do all of the property analysis for you. We can also access every single deal on the market, as well as see what properties are currently renting for, have rented for, extra notes on properties only available to Realtors, etc.

I have a handful of properties currently available that will cash flow with as little as 5-10% down. The properties are certainly out there, but Zillow, Realtor.com, etc. aren't really meant for investors to use to analyze properties. That information is only available on the MLS and so you'll need to partner with an agent to help you access the information you need.

A knowledgeable one will also understand the market and neighborhood around the property, as well as understand what your goals are as an investor, and should have experience working with other investors like yourself in the past. And don't worry, the seller pays the commission on the transaction, so you basically can't lose by deciding to work with one. They can get you into properties, provide you with extra information to help you analyze the market, and act as a barrier in negotiations to help you get the best deal possible.

I'd love to meet with you sometime to see if I can help you find the right kind of property that you are looking for and better understand the local rental market.

Hi @Justin Monday! Great question!

The two most important qualities of ANY real estate professional or service are Trust and Communication.

You need to be able to trust that your property manager will only select high-quality tenants, won't have too high of a turn-over just to charge you more for finding new tenants, and will use well-written contracts and leases and manage the tenants in accordance with the law so you don't end up in hot water.

You also need them to communicate with you on a regular basis, promptly returning your calls, emails and inquiries, inform you of any potential issues or other need-to-know items. You need to know that someone will respond ASAP to any question you have and that they take their job seriously as your property manager.

When you first reach out to potential property managers, the way they handle your inquiry will show you how they handle response, and that will tell you if you want to explore further with them and have the possibility of trusting them to handle your investments.

Trust and Communication.

Hi @Ryan Blake! I'm currently working another investor who's trying to accomplish your same strategy through house hacking a multifamily property using an FHA loan and living in one of the units, so I've already thoroughly analyzed the numbers and can provide them to you for any property that's currently on the market in the entire Metrolist MLS area.

The greatest challenge you're going to have is finding a property that will still generate positive cash flow when you put 5% down or less. Mostly it will only be $100-$200, but remember that's on top of living in the property for free. Although, I do know of one currently in Sacramento that will cash flow at $550+ per month if you can put 5% down (approx. $15,000)

But in general, the numbers are going to be tight, and your interest rate will be higher using a VA or FHA loan with little money down... but the perspective to have is that you essentially get to live there for free or for a significantly reduced amount (like if you had to come out of pocket $300 to make the mortgage payment). You can sock that extra money away every month, and either save it to invest in the next property, or sell the property in two years with the capital gains exemption and then re-invest in something else.

My brokerage is actually a veteran-owned company, and working with VA loans is one of the things we specialize in. I'd love to meet with you and help you gameplan for the future and understand the local multifamily market so you can analyze what type of property you'd like to purchase when you're ready to pull the trigger.

Hi @Joseph King! Maybe I can help!

I'm currently working with several other investors who are looking for the exact same thing you are... cash flow.

My advice would be to look for properties that can make the numbers work first, and then decide whether or not the area the property is located in is one you want to invest in.

If you focus on neighborhood first, you'll have blinders on and probably end up disappointed when any property that comes on the market in that area is so expensive it takes all the cash-flow right out of the deal.

What you'll want is a local real estate agent who not only understands your investing goals and property requirements, but can also properly analyze the area and inform you about each individual neighborhood. You'd be amazed how many agents don't even know how to look up crime data or neighborhood demographics. It's appalling. 

I've recently created a report of every property in the Sacramento area analyzing it's cash flow, and can further expand on each property and provide you with further information and neighborhood analysis. I'd love to grab a coffee sometime and see how I may be of value to you and assist your investing goals in this area. 

Hi @Ryan Blake! Let me see if I can help without knowing too much and point you in the right direction...

To determine value, try looking online at other properties in the area that have sold on Realtor.com, Zillow.com, etc. Try to find a property built in the same year, same # of beds/baths, same features and updates, and within 20% up or down of the square footage. If you can get an average of price-per-square foot for properties within a quarter mile of yours, just multiply that by your square footage and you'll have a pretty decent estimate of the property's current value.

Depending on how much equity you have, you could sell it and get all of it, keep it and have the renter pay the mortgage off over time, or pull out some equity to invest in other properties. Just make sure you don't pull out too much... you'll want to make sure the property is cash-flow positive because over time you'll have expenditures for repairs, vacancies, etc. and you don't want to have to come out of pocket for those if you don't have to.

If not rented and you want to hold onto it, you'll need to determine if you want to make any improvements to the property before renting it. The main thing you'll want to consider is the cost-of-improvement vs. increased rent.

For example, if you could put $15,000 into a new kitchen and some cosmetic updates and it allows you to rent for $300 more per month, you'll recoup the cost to make the improvements in just over 4 years and get another $3,600 rental income per year after that.

To find out what properties rent for in the area, you can try looking on Craigslist to see what other landlords are asking and compare your property's features, size and location to theirs. Also, you can try using Rentometer.com and it will give you a rough overview of the rents for the area.

Ultimately, it would be best to find a local real estate professional or investor in the area that can act as your boots on the ground. Real estate is hyper-local, and all of us here in Sacramento likely have little idea about the market and neighborhood in Miss. Try posting in their forum.

One thing that also may help is finding a local property manager in the area to work with. They will definitely know the local rental market, and probably have resources for repairs and other resources you may need to keep you property up and running.

Hope that helps! Come back once you know more details about the property and we will be able to advise you further.