All Forum Posts by: Zach Hoereth

@Jennifer Sarmiento lucky for you most of the education on BP is free or close to it! There is quite a bit to unpack in your 2 questions, but here are some things to consider. Don't fall victim to some of these "mentors" or self proclaimed "coaches". There are so many resources out there you can leverage before needing someone that you must pay for their guidance. The VA loan can be a great option getting into your first property and your idea of doing a live in flip is fantastic... but you are in a market where prices are incredibly steep.That does not mean that there are not deals to be had you will just have to search a bit harder.

If you are considering out of state investing make sure you educate yourself on the market. Call vendors, ask for recommendations, talk to others who are investing in that market, and build your team. You will need to have boots on the ground that you can trust so that you are able to find great opportunities. You mentioned turn-key properties in Indianapolis.. be careful with these because you will see a suppression in your returns. Someone has already solved the problem. That said, it doesn't mean that you cannot solve a similar problem on a different property and reap greater returns. Turn-key providers are no smarter than you... they have just taken initiative to solve a problem. Keep an open mind! 

Perhaps you and your husband need to sit down and figure out what goals the two of you would like to reach financially within the next few years. From there, you can then decide which route may be best fit moving forward. Hope this helps! 

Cheers,

@Ivan Guillen you in for this one?

What's up @Chenell Mangiagalli, sounds like you have been hard at it for 15 years! Just as @Christian B. mentioned investing in the U.S. is a different animal. That being said, I have seen a number of people posting about investing in condos. I have never been able to make the sense of the numbers from a cash flow standpoint because of the various fees associated with ownership. You also need to be aware of the assessment fees that can hit owners unexpectedly. If the associations reserve fund is low and something like a hurricane hits, the owners of those units will have to pay a special assessment. If you are wanting to stick to the residential game I would look at SFR (Single Family Rentals) that either have a low HOA or none at all.

To answer your budget for appliances & A/C sometimes a general rule of thumb can be 10% of the monthly rent. However, this will be case by case depending upon the condition of your investment. If the property is closer to turnkey (completely renovated) you will have to set less back for budget items. On the flip side of this, if the investment needs work it is likely you will need to set more back. Hope this helps! 

Cheers,

What's up @Eldin Kalic! Sounds like you are in the preliminary stages of narrowing down your market. From living in SWFL for a while (Ft. Myers/Naples area) I can say that the place is exploding. That said, be careful that you are not overpaying and getting yourself into a sticky situation on the front end. You can make some serious money on the acquisition if you do it correctly. Personally, I buy for cash flow and let any appreciation serve as the cherry on top. Appreciation is great but one should not lean on this as the pillar for any investment.. especially on the residential side of things. 

You did not mention what kind of properties you were looking into just yet, but if you start to consider condos or homes in neighborhoods with HOAs make sure you understand all the fees associated with ownership. These HOA & condo fees can kill your returns. Additionally, if bad weather hits and the condo structure is damaged you may be hit with assessment fees. Hope this helps!

Cheers,

Lately I have seen a number of folks posting about suggestions on "investor friendly" agents. Unfortunately, this term is being thrown around loosely and I believe it is time we clear the air. It is not uncommon for investors to prefer an agent that has been around the block a time or two. That said, how is that one can vet whether an agent is truly "investor friendly" or not? 

In the past I have stuck with two questions to get the ball rolling and they are as follows:

1.) How many investment properties have you sold within the last 12 months? (Be very clear here... this does not include cookie cutter homes in the suburbs where those big juicy commission are hiding) 

This one gets the conversation started and gives you an opportunity to see if the agent can talk the talk and back it up. An agent should be able to quickly share with you what their numbers look like and what the transactions have consisted of. 

2.)  Do you own any investment properties yourself? If so, what kind and how many? 

Feel free to be more specific here, but the key is to identify whether or not they are in the game themselves. Often times you may find that he or she is just chasing a commission (not always a bad thing.. might find some hustlers). You will know right away when an agent owns properties because they will be able to share experiences in various areas that you may be looking into. This can advantageous to people who are not familiar with an area. 

Moral of the story... Don't to be afraid to lean in and ask the uncomfortable questions. These are the guys & gals that will be sending potential "deals" and you need to know if they are well equipped to properly vet opportunities or not. Hope this helps! 

Cheers,

@Demetrius Cooper BRRRRs are the hot topic right now with the BP book and lots of success stories. Be careful that you do not get yourself into something that puts you at the mercy of an appraiser. I just completed the refinance portion of my first BRRRR. It is a great strategy to grow a portfolio but I learned a ton from the entire experience. The numbers are as follows:

Purchase: 60k 

Rehab: 40k

New Appraised Value: 170k

I was able to pull out $127,500 through the loan I got. 75% LTV fixed rate 30 year term. After closing costs I cleared 118k. Home run... right? Yes, the numbers did work out great and I am happy with the outcome, but I felt that the appraisal came in low. The unfortunate thing about residential real estate is that properties are sold based on comparable sales. Moral of the story? Don't be afraid to go bigger and look into the commercial side of things. It takes the same amount of time to do a big deal as it does a small one. Hope this helps ;)

Cheers,

What's up @Sierra Gearlds! I will assume there will be a number of replies to this thread with realtors chomping at the bit to work with you as an investor. I have personally experienced many agents in Indianapolis claiming to be "investor friendly." The question is... what does this actually mean? 

If you are going to be working with someone I would start by asking them a few basic questions that should determine whether or not they are versed in the investment space. 

1.) How many investment properties transactions did you close in the last 12 months? (Not cookie cutter homes in the suburbs)

2.) How many investment properties do you own yourself? 

These questions are not to put anyone down who has not sold investment properties before. It is to establish the type of transactions that the agent is most familiar with. However, there is a difference when it comes to working with an agent who has bought and sold properties for themselves. 

Look for someone that wants to build a relationship with longevity. An agent can become your eyes and ears when a good deal pops up or can help you stay clear of bad ones. Simply put... know who you working with and what their strong suits are.

"Well the rent covers the mortgage..this looks like a deal to me!" Ehhhh ok? ;)

Hope this helps! 

Cheers,

What's up @Gilbert Chan! Explore the vendors and see who aligns with what you are wanting to get done. @Richard Bonisa has some great points above... but I cannot stress enough about doing your due diligence. Don't be that out of state investor that is falling victim to inflated prices and overpaying. Shared some thoughts in an article I put together on the BRRRR method in the link below. The deals are out there, just have to have the right set of tools to know what you are getting into. Have some fun & hope this helps!

https://www.zachhoereth.com/post/is-the-brrrr-method-for-everyone

Cheers,

@Jess Archives Looks like you have started to peel back the layers of this real estate thing.. love it! The few markets you have listed are indeed cheaper markets which allow for a better cash on cash return. Indianapolis specifically can be tough if you are not careful. Tons of gentrification going on which makes it block by block. Make sure to do your due diligence on turnkey providers here just as you would any other vendor. Don't discount those B-/C class neighborhoods that can provide good cashflow without overpaying for an asset. Most out of state investors that I speak with immediately look towards turnkey opportunities without considering other avenues. These B-/C class properties can be identified and operated with similar effort as turnkey properties, but with a bump in returns. Don't be afraid to look at all of your opportunities! Happy to refer vendors I've worked with in the past. Hope this helps!

Cheers, 

Hey @Joanne Kim! Sounds like you need to define your criteria so that you can align yourself with the right kind of team. Like @Ivan Barratt mentioned it will all depend on the size of the asset you are interested in buying. Happy to refer some folks on the residential side of things. I would encourage you to network and connect with some folks that are in your area. Chances are there are people near you that are investing in the midwest. I know @Frank Lin happens to be one of them. He may be able to help a fellow Californian if you are nice. ;) Hope this helps! 

Cheers,