All Forum Posts by: William Anderson

CJ M nailed it.  Don't worry about interest rates.  Evaluate each property on its own merits.  The number work or they do not.  When I started investing many years ago my rates were usually between 7-9%.  I made lots of money.  Remember rents are going up due to inflation.  The rising rents should help your calculations.

When considering the offer, a good quasi rule in this market is to pay what you think that property would be worth in six months to one year.  If the seller goes for it, you have a cushion.  In the end, with a fixed mortgage or cash purchase, you need only be concerned with where rental rates are going.  I recommend that people for the time being stick with four units or less until we get past the elections, China, the Russian war, etc.  Then again a good deal is a good deal.

I was an investor in the 2000s and did very well.  Even at the end of 2008-2010, you could do well then after picking up the pieces.  There are always good deals out there.  

Kaleb,

The others on this have addressed the VA thing, I wanted to mention the nurse rentals. An excellent way to make money. I have a nurse friend who refers traveling nurses to vacation rental hosts in my area. More often they are in the area for a few weeks. Often they share a house. A good way to use the STR concept.

Liz, 

For your first investment, this house seems like a big ticket item.  You may want to ask your agent if that agent has experience with investment property to look for something less costly.  It's about mitigating risk.  Starting Murphys Law may hit you in the face.  Lower your risk going in.  Of course, buy right, that house will not be the only one with potential.  I have walked away from many potential buys because it was not quite right.  I have rarely looked back because there is always another one on the horizon.

Congratulations on joining the club.  It takes lots of imagination and initiative to get started and you have that.

Mohammed, 

Good for you. You understand that investing is all about making money not buying the house next door. New York is an expensive state compared to some other states for a beginner. Start with laying out goals. You have funds to buy a property and they are where? What is your current return on that investment? Start your goal setting by selecting a reasonable ROI that is higher than the return on your funds now. If you are invested in equities, your average long-term return is 7% or less. Setting a goal to earn 9% for example or greater is a good start.

The actual act of buying is down the road for a new investor, learning the business and it is a business that should come first. How will you hold the title? Did you create a business e.g. LLC? What about accounting and taxes? Start by learning all of these aspects before you try to buy a property.

Skipping well along and leaving lots of stuff out, you need to work with a real estate agent who has actual investment experience.  An agent that owns multiple properties with years in the business.  It takes a while to make all of the mistakes that turn you into an expert investor.  Your real estate agent can be your partner, not financially (it does happen) but in the sense that your success is their success.

When you get to the point when you believe you are ready to take the leap, let me know.  I work with clients from outside my area, Mississippi Gulf Coast on a regular basis.  I am originally from CA and relocated here in part due to the great investment opportunities.

Juanita, 

What type of deal are you interested in?  Residential rental long-term, short-term rentals, commercial?   If you don't know that's ok as well.  If you are just starting without experience, go where there is low-hanging fruit.  Residential rental property.  This is the easiest business to learn with the most opportunities at the lowest cost of entry.  Please elaborate

Anthony, look around for a small shop where the broker only has a few agents but has a good reputation.  The problem with the big shops that have dozens and even hundreds of agents is the broker has little time to mentor you.  After all, it's the broker who started the business and in most (but not all) will be the most experienced in the office.  Why settle, learn from the best.

When you have years of experience and have learned the business then it may not matter where you go.  Agents tell me all the time they can't get time with their broker, that's a shame.  FYI, under state law, the broker is personally responsible for your conduct and is obligated to train you.  Laws do not usually specify that it has to be the broker in-person training you but that person is responsible.  

Sorry all, I don't recognize wholesalers as legitimate. Not because I am a broker but because these people are not investors. They have not invested anything but a little time. Deals go bad and the seller can be left holding the bag so to speak. Buying with no down payment that's a real thing. Owner financing with zero down, I can understand that. Convincing someone to create an LLC and throw their property in and you throw in labor to rehab, yes, works for me.

Chasing down a widow who just came from the funeral home and is confronted by an opportunist, well..... If you want to become an investor, save your money and make a real investment.  Buy a house with 3.5% down or use one of the ways I listed below to squeeze by.  

I admire people wanting to make money in real estate but wholesaling is not sustainable.  Someone has to lose on the deal and it's almost always the seller.  

My property management company offers both long term and short term rentals.  Often they receive requests to rent the short term rentals for three or four months.  What they do is to rent it for 30 days per reservation.  The guest must reserve and pay for the 30 days then do it again and again.  They do not have a discount beyond 30 days so it does not make a difference if they book multiple stays rather than one long stay which is not permitted.  

These longer stays are usually company sponsored arrangements where they have workers in the are for a project.  The company pays for the stays so there is no issue with legal tenancy etc.  Also, for a 30 day stay, they have to pay for a mid stay cleaning.  This insures that the property is kept in good condition.  

I do not prefer these stays because they are at a discounted rate and in the main season they can hold you back from greater income.

John is correct.  None of these other services are as accurate as your own eyes.  If you are looking for a property in a specific area, take look at the rentals.  Yes, it means moving around in their calendars.  You should start early if you are going to do this, you can't look back on the calendar.  Also check for cleaning and other fees listed.  

When I am looking for a client, I obtain at least 10 similar properties as close as possible.  Sometimes I will dig deeper and go to 15 and I try to get as many months as possible from their calendars.  Yes, this may seem to take some time and It does but it's a pretty accurate method.

Go with what you are comfortable with.  One other thing I do in my market is call others that I know who own multiple properties and ask how things are going.  We often refer guests when there are issues with bookings, maintenance etc.  It's good to know your competitors, in this business they are friendly.  

Angela, your fear of investing at a distance is very common.  Speaking as someone who has often invested many states away and in Europe as well, it comes down to making the right choices.  There are two major hurdles, finding the property that will cash flow and finding a good property manager who will keep it rented and maintained.

You need a real estate agent who specializes in income property.  I am speaking of an agent who actually owns investment property and understands all aspects including how to analyze it for profitability. Interview the agent in person or phone.  Ask for references, call the references.

When you have nailed down a good agent, ask the agent to refer to you a good property manager.  Real estate agents are the best sources for this information.  For example, I work on the Mississippi Gulf Coast.  The state requires property management companies to be affiliated with a licensed real estate broker.  Essentially the brokers license helps to protect you in the sense that there is something on the property managers side at risk.  It's not likely they will refer you to a poor manager.

Now that you have your real estate agent and property manager in place, it's time to go shopping. Set your goals e.g. one single family home in an area that can bring in 20% COC. Determine the amount you can spend for the purchase, closing costs and furnishings. Run your numbers and you will know how much house you can afford. There is much more to this as you probably know from the forum.

I ask my real estate agent to drive by the property about every six months just to look at the outside.  This helps as a double check on the property manager.  

The Mississippi Gulf Coast is a great place for an STR. We have an all year market because of our beaches and 12 casinos. In fact, we get many visitors from Texas. Prices are among the lowest in the country. The cost of gas about as low as Texas but our property taxes are far lower than Texas. I own several STR's that all generate impressive income. I am part owner in a property management company so I know that the property manager is taking good care of mine and their clients properties. Good luck