All Forum Posts by: Abdi Muya

Hi Abdi, I have some friends I can connect you with, particularly a nationwide mortgage broker with great expertise on creative financing and investor dos and don'ts who could be good resources for you without pressuring you into anything.  Give me a shout and I'll connect you with Kyle.  Another business partner of mine is a marketing pro who helps investors anticipate which properties will book out well and which ones might struggle, provides some creative design tips too, if you're into STRs at all.  Both of them will answer any questions you might have without any judgment.  This is how we all learned!

@Abdi Muya

Don't count vermont out. I have a very successful rental in Northern Vermont. There are several multi's on the mls right now that I would strongly consider if I had the time right now.

Quote from @Gloria N Gear:

Hi Abdi,

I am going to to try to hop on a call with you.  I was actually working in the investor real estate space for 3 years before I took the jump and did it myself.  Now I am on property #9 (that took 5 years).  

Follow Nathan Gesner's advice.  Break it down step by step and you will feel confident to move to the next decision.  

Do you want to Flip or Hold?

If you are holding, do you want to do Long term, Mid term, or Short term rentals?

What is your comfort level on construction - cosmetic, mid-level or gut to the walls?

I also agree with him that your Property Manager is the most important person on your team.  (And I am a realtor saying that).  They are the one that is going to protect your investment long term.

 Hello, I was just reading your response to this post as I am in the exact same boat! Trying to narrow down a market/markets that we'd like to invest in. Would love to speak with you as well if you're open to that! 

@Abdi Muya Hi. I live in New Hampshire and currently see many options available in Vermont. Not all are expensive.

I like investing locally and think it’s the best way to start.

@Abdi Muya - I'm not sure if you're reference a real estate broker or a mortgage broker. If a real estate broker, I highly suggest working with one that is local to any market you are interested in buying property. If a mortgage broker, while having knowledge of local markets helps, it's not nearly as dire to be local as it is for a real estate broker. Also, if you're looking to use a DSCR loan to finance the property, most mortgage brokers don't need to be individually licensed in each state.

At the end of the day, you need to feel comfortable with anyone on your team, as well as the area you want to invest.  Do not settle for anything less!  I'm happy to answer any additional questions you might have on the financing side of things.  Just shoot me a 

A big part of why I posted in here was so I could be able to reach multiple brokers across the country who specialize in real estate investing with hopes of connecting with them. I've seen a couple replies from people implying I hired a broker in Vermont to assist  with out of state transactions. In reality, it was a no cost sit down with someone my mother worked with in the past who helped her with her current home, and had a lot of the numbers and information of the home and equity we were looking to access. He understood we were going to work with an out of state broker and we just wanted to get some additional information he might have been able to provide. Seeing that you're in the Indianapolis area and that being a desired market of ours, I'll definitely look to connect in the future. Thank you for your response!

I would not risk my mother’s money in stocks or crypto or any other avenue I have no experience in. First you need proof of concept that you can do it on your own. Then you can utilize her money later to grow the portfolio faster once you have demonstrated success.

In general I agree with @Nicholas L. but I believe over a long hold RE has been forgiving.  

Here are some of my thoughts:

- you are entering a tough market.  Interest rates have doubled in last 2.5 years.   Rents have not and cannot go up to offset the increased cost of financing.  Result is negative initial cash flow.
- best chance of near term success is local to you, somewhere you can drive roundtrip with time to spend at the property in a day. 
- reality is MLS listings using realistic expense estimates at high LTV is cash flow negative.

- negative cash flow can get old fast especially when large cap ex expenses happen.  In this market, it is important to be prepared and know there will likely be trying times. 
-Off market requires work and/or have risk.  It is very rare for an off market property to be rent ready without risk.  I personally feel off market is not usually a good choice for a newbie. 
- avoiding lower class is important but even more so OOS.   Pm can only do so much to help over come a lower class property.

- OOS the PM can be as important as the purchase.  Neither can be bad or you will struggle.  
- initial cash flow has poor correlation with long term cash flow.  Rent growth has much larger impact on cash flow than initial cash flow for a long hold.  In general, high initial cash flow markets have poor rent growth outlooks.  
- educate. Read BP forums.  Go to RE meet ups.  If you can find a successful RE investor to mentor you that would be valuable.  
- residential RE is not passive even with the use of a pm.  Recognize this.  
- house hacking is one of the better current RE strategies. 

In this market, RE investing is likely a long term strategy.  Be prepared for bumps in the road.  Be prepared to spend some time.  Over the long term, RE has produced great returns.  

Good luck

@Abdi Muya

hello.  i am here to help, but i am going to be blunt.  if you buy something in a random out of state market where you don't have a team or a network, and use 100% borrowed funds, which is what it sounds like you are proposing, you will lose money.

those funds seem like they're free, but they're not.  i would strongly encourage you to pick a market within 1-3 hours of where you live that is slightly more affordable and make it your mission for the next year or 2 to learn that market and save up enough cash so you are not 100% leveraged.  see these threads for what not to do.

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

https://www.biggerpockets.com/forums/48/topics/1160450-run-i...

Quote from @Abdi Muya:

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help 

Hey Abdi! I recommend reading “Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties” - I found it to be very helpful when I got started investing 2.5 years ago.

Here is a summary of the book.

https://www.nateliason.com/notes/long-distance-real-estate-investing-david-greene

The book also mentions the importance of having a rockstar Realtor, contractor, lender, and property manager.

I invest locally in Columbus and Cleveland. I can send you a list of contacts in Ohio to help you build your team, property manager. Let me know how I can help!