1st Post: Olympic Sprinter by day, new RE Investor by night!

[Aaron Brown]

Hey BP! 

My name is Aaron Kingsley Brown and I'm new to real estate investing. I am 25 years old and I am a professional Olympic sprinter representing Nike and Canada. I love what I do, but I know it won't last forever and there is always the risk of an unforeseen injury or underperformance that can hinder my earning ability. Thus is what peaked my interest in passive investing as an alternative income stream to supplement what I earn now. I've been researching real estate for over a year now (books, BP posts, podcasts etc.) and I am ready to pull the trigger and start gaining some real life experience! I plan to gradually expand my portfolio by buying a mix of SFH and small multi-family homes in the central Florida area to start with before expanding my horizon. My ultimate goal, much like everyone on here, is financial independence before it's time to hang up my spikes and retire!

In the short term, I endeavour to have 3 units by the end of 2017. I have my first single family property under contract and it is a fully rehabbed 2b 1b in Sanford built in 1988 and is 912 sq/ft. I have a few questions to ask before it closes. In hindsight I should've asked prior to making an offer, but I didn't want to continue waiting on the sidelines. This message is lengthy, so feel free to answer any section you'd like (I really appreciate you all for taking the time to read this)!

1) Although I train in Clermont and currently live in Winter Garden, FL, I grew up in Toronto and went to school in Los Angeles, so my familiarity with the Central Florida area is limited. This property is located right next to the downtown part of Sanford, which is apart of Seminole county. My real estate agent has told me that this is an area that is growing in demand because of the quality of Seminole county schools and the fact that a lot of investors are buying, rehabbing, and flipping in that neighborhood. I saw some evidence of this, as there was a mix between really nice renovated houses (like this one) and dilapidated houses that look old and trashy. I've searched my property on greatschools.org and it is in close proximity to both schools that are 8-10/10 and schools that are under 5. Is he right about the quality of schools in Seminole county? Do those lower rated schools offset the higher rated ones when it comes to my property? Can anyone give me their personal opinion on the growth prospects of the area in terms of property prices and market rents? How long do areas that are transitioning take to become a better area overall?

2) When I went to visit the property, the house itself was fantastic. It was built in 1988, but has been completely rehabbed inside and out - which is attractive as a first investment, as I can build up my reserves for CapEx and maintenance longer before something big goes wrong. When we went to see house, it was on a Friday night and the aroma of marijuana was piercing through the air, which came from some of the neighbors in the more run down houses. They were also playing loud music and looked as though they were about to throw a party. My real estate agent, who's also a property manager, said that tenants renting in that area will know the area and what they are getting into and he had no concerns about getting it rented. I don't want to jump to conclusions because I have no prior experience, but would this be a cause for concern or was he right to assuage my fears? I've also looked at the crime rate and my area falls in the moderately safe side, with the region to the east being completely safe. However, some of the neighboring streets are more risky on the map to the south and the west a few blocks away. I would imagine that the more the area becomes rehabbed, the more the crime will dissipate, but I don't have any experience so that is basically just a logical assumption. How much will this neighbouring crime affect my property's value and ability to rent to good tenants?

3) The rent amount I am able to get for this house is also a question mark. The range on Zillow is changing constantly, as it goes from as low as $900-$1100 to as high as $1000-$1200. The rent rate from the appraisal I had done on the property came out at $950, but my real estate agent felt that was a conservative estimate. He is also a property manager in the area and he is confident that he could get $1000 at it's lowest and possibly even $1100 at the higher end of the spectrum. Rentometer has it right around $1000. Does anyone have any insight on the market rents in Sanford right now to confirm where they are currently at?

4) Originally I was going to have my real estate agent's property management company take over the property and manage it, but I've been exploring the idea of self managing more and more (I'm currently reading Brandon Turner's book on managing rental properties). Does anyone have any recommendations for a first property in terms of managing? I look at it as potentially learning on the job and I'd love to hear your first experiences as a first time landlord at your first property. Right now, if I use $1000-$1050 as my rent number, I would cash flow about 6-8% net return and 7% cap rate using a property manager. Self managing would bump it up to 10-12% net return with an 8% cap rate. 

Basically, what I am wondering is if this is the type of territory I should expect to see when investing in C class improving type neighbourhoods, or are any of these things red flags. I know there will be things that go wrong with my first investment in real estate, but I want to start gaining that valuable experience early on so that I can learn how to mitigate these in the future and grow as an investor. I've looked at many properties in the area and my main deterrent from walking away is the likelihood of finding another property that has been rehabbed this well at this price point that will cash flow. Is this investment worth the risks that could effectively end up being "paid education", or should I back out and look for a better prospect? I'd love to hear your thoughts and if you've made it this far, I truly appreciate your insight!

Thanks BP,

Aaron Kingsley Brown