All Forum Posts by: Aamir Shah

Personally I would not do REI until 1) I have a stable income 2) I have enough cash reserves 3) I have a good retirement strategy. Any form of investing comes with risk, and I wouldn't bet my livelihood on it. Only invest money you are okay losing. Just my 2 cents.

I might be coming off more conservative than others, but this is still investing. You typically don't want to invest money that would cause a major impact to your financial life. I say this because with 20k your options are fairly limited and you need adequate cash reserves to properly do REI.

With 20k, you could potentially put 20% down on a 80-100k home, but then your equity would be tied in that deal, you would cash flow around 200-500 a month and thats it. If something happened where you need a new roof, how would you cover that cost?

If you ask me, I would save up more before starting. You can always invest in the stock market and work on saving more until you have more cash reserves. Once you have enough cash to buy a home cash + rehab + capital expenditures, you can BRRRR/flip over and over.

If you have a high risk tolerance, you could also consider a hard money loan. With this approach, you could BRRRR or flip now but I would probably partner with someone with experience if taking this route.

Hey Dan,

I was in a similar situation to you, living in Orange County and trying to figure out how to get into real estate. I also looked into out of state turnkey companies. I was really close to making an offer on one company, but when running the deals into the biggerpockets calculator I was just not seeing great returns (don't trust turnkey providers numbers, always run them yourself). 

The market is high here in Cali, but its not high everywhere. Take a look at IRR's viewpoint report as they track where each market is in terms of cycle. There are many markets that are still in recovery.

I looked into many markets, but I just couldn't find people that were trustworthy. Everyone was a salesman. Nobody was being honest. I finally found some good people in Detroit suburbs. Through them I have been BRRRing. I have so far acquired 4 rentals all in this area and my returns have been good. 

If you go the out of state route, I would not recommend turnkey as you can BRRRR yourself for better returns. Take a look at David Greene's Out of State investing book. The book will teach you to follow these steps:

1) Narrow down to markets you are interested in

2) Interview and build a team in that market (realtor, contractor, lender, property manager)

3) Buy, rehab, rent, refinance and repeat :)

Great SFH, priced great for a rental, flip, or primary residence. See https://www.zillow.com/homes/3747-Aries-Gln,-Escondido,-CA-92025_rb/

@Rob Terpilowski purchase + rehab was cash. Started the refinance after finding a tenant

@Account Closed I followed a lot of advice from David Greenes Out of State Investing book. Had my contractor send me videos, itemized invoices and regular updates with pics. Had other contractors double check the work and give their own bids. For deal analysis I got multiple opinions from realtors and property managers. Generally speaking I refused to work with anyone who is not tech savvy. People I work with have to be good at sending me digital content (videos/pics) and have to be good at staying in contact via text/email. 

I finally completed my first out of state BRRRR! Received me first rent check a month ago. I was a little nervous to start but I am happy with the outcome. It ended being a decent deal; nothing blow your socks off.

First I started market analysis. I found I would not be able to cash flow in California so looked out of state. Looked in Kansas City, Indianapolis, Memphis, and Detroit. Ultimately I decided on Detroit Metro in the suburbs. The biggest reason was I just found better people out in Michigan. The other cities just seemed saturated with investors and it was hard to find reliable boots on ground. In Detroit, I was able to find great deals on MLS, good realtors, property managers and contractors. Now - I know Detroit has a bad reputation. But the suburbs are fairly low crime (see trulia crime heat map of Redford, MI) compared to downtown; plus the market is an appreciation based market that actually cash flows (hard to find).

The plan was to build a team of 3. I had a realtor, property manager and contractor lined up. With time my first realtor was sucking, but my property manager was kicking *** (shout out to @Keith Jourdan). He also happened to be a realtor, so i started using him as my primary realtor. In a short amount of time, I finally placed my first offer.

First offer was in Redford, MI. Offered 80k cash on a home that needed ~20k of rehab and would appraise for ~120k and would rent for 1250 a month. Was surprised to get an accepted offer right away. 

Next came the rehab. I got a few quotes on contracting. Surprisingly my realtor and property manager (Keith Jourdan) gave me the best quote and also gave me in depth video walkthroughs of the rehab needed. We started the rehab and things were good at first until we got an inspection done from the city. We had to replace the driveway and other electrical code issues which added around 9k of additional rehab. That was painful; even more so being out of state. So overall the rehab cost me 27k.

Rehab took around 2 months. We found a tenant quickly. So end of the day, 80k cash purchase plus 27k rehab. 107k all in. Home should appraise for 115k-120k. 1250 rent. Cash on cash is around 13% after refinance. Would have been a much better deal if these surprise rehab costs did not come up. 

I am now going for deal number two. Wish me luck!

Congrats! I am also investing in your neck of the woods but from out of state. I will connect with you. 

How much time are you looking to invest? I have found with real estate, more time spent means higher returns. 

@Clifton Kaderli I invest in index funds tracking the US market. I consider this a relatively safe investment. If the US stock market tanks and doesnt recover, so will US real estate. I am willing to bet that the US will continue to grow over my lifetime (otherwise we are screwed). There will probably be dips along the way - bring them on. My best returns have come during the last market crash. I am choosing real estate as a form of diversification mainly to supplement my income. I am looking to increase my monthly paycheck and make my wife's job optional and perhaps mine also. For that reason, buy and hold or BRRRR seems most fitting based on my goals.

@Tamiel Kenney syndication is definitely on my radar. It seems to be the "safer" choice for me, where I can get somewhere around 14% IRR over 5 years. Part of me wants more control. I feel I would learn more owning and managing my own properties and that knowledge would be more valuable for the long term than the passive syndication route.