Looking for properties and information

[Russell Quealy]

Hey everyone! 

So I have been researching and trying to learn about investment properties for the past 5 years. I have bought 2 properties in the past and while living in the homes I renovated and flipped them. It was a long process (few years) as they were also my primary residence. I just moved out to Weatherford and I am wanting to get started on true rental properties that cash flow well. But I'm looking for realtors who deal with investment properties and I'm wanting to get more information on hard money lending and how the repayment for this works, if it's a monthly payment or a lump sum at the end. Also I'm a big numbers guy so figuring out how the money works with fees on hard money and what I would be expected to pay after the refinance process. Also if there are any contacts here that would know where to find properties that would need minimal work, I don't want to replace wiring and framing due to damages. Something that just needs updating and such to bring the life back into the property. I've been seeing a lot of 3 bed 1 bath houses but I don't know how those would do for rent or the areas to stay away from. Any guidance on this would be awesome, but I feel like I'm in analysis paralysis with some of this stuff. I'm looking to buy in the spring when I've settled into the area. 

Thank you and I look forward to some responses!

Russell

[Corin Prendiville]

Hi Russell,

It is a lot to parse through. If I was you I would research a few different neighborhoods that you like and then compare the rents, purchase price + anticipated renovation cost. Turnkey investments close to city centers won't really cashflow in this market and even getting a BRRRR deal today that is worth the sweat equity is a struggle, the further out from the major cities you go the more reasonable things get and the less competition there is.

You need to compare your expected return with what you can handle as a landlord and investor, some people only invest in B or higher neighborhoods, others are perfectly happy buying in D neighborhoods all day long. The higher class property you get into you are more seeing equity paydown and appreciation as your long-term ROI, but if you put enough cash down anything cashflows of course. I would avoid anything that doesn't look like a rental myself if you are interested in making money while you hold the property, that means 2/2, 3/2 or 4/2 in decent neighborhoods with ideally no HOA and lower than average taxes. Once you start getting into new builds with HOAs and $8,000 tax bills it becomes a lot harder to make any money off anything but appreciation, and you will get killed on make-ready and CapEx with such a large property. If you are flipping its another story, anything can work and higher priced homes often have better upside.

I got started buying a property that needed some TLC and fixing it myself, forced appreciation on it by 30k in the process and then rented it out when I moved. The easiest way to get a portfolio going is to buy a personal property, live in it a year, spruce it up and then rent it out and move on to the next house with another personal home loan. Even an easier fixer upper like flooring, paint, some kitchen reno is not a bad buy sometimes. Going for the hard work isn't always the most money in your pocket at the end of the day. 

As for hard money its a longer conversation I could give you some details about how it works but every lender has slightly different criteria, loan amounts, etc. Your best bet is to talk to a few hard money lenders who could share with you how they do business, what your payback schedule would look like (often nothing until due or interest only), when the loan is due, and how much they would loan on a sample property. The rule for most hard money lenders is they loan on the property not the individual, they will usually have a BPO done on the place you are financing to determine its value, you will want a bit of your own money to play with if you go the hard money route. The harder part right now isn't getting financing for the deal, its finding a good deal.