All Forum Posts by: Andrew Rellinger

Hello, I took the first steps in getting started in REI since August by purchasing How to Invest in Real Estate by Josh Dorkin and Brandon Turner and educating myself on how to get involved. I have since finished the book and understand the importance of taking action and not making excuses such as "I need to read [insert title here] book before I buy my first property", "I don't have enough money", etc.. I am dying to take action and buy a property so that I force myself to TRULY be committed opposed to buying a book and calling that "being committed to REI". I decided that I want to do SFH rentals and am currently reading BRRRR by David Greene. For reference I currently live with my parents and I currently have about $10-12k saved up dedicated for REI. I am not sure if I should get in the market now or wait. I would love to hear input from the people who are currently investing and get perspective and insight on which option is smarter.

Why I want to get into the market now:

• Interest rates are only going to continue to rise.
• I want to learn hands on the experience of BRRRR
• Time is going to pass anyways, so why not get involved and buy a property to learn REI

Why I want to wait to get into the market:

• I can save money and continue to educate myself
• The money I save up will allow me to more easily afford a house and repair costs before renting it out
• By more easily being able to afford repairs, the time it takes to fully rehab a house will be less than waiting and saving each paycheck for every repair I want to make.
• If I wait and save aggressively, it will likely put me in a better position to scale my portfolio sooner and perhaps buy two homes in the same year that I decide to buy my first property.

I know I am going to make mistakes on my first property and it will be more of a learning and educational experience rather than one that is flawless. Should I just take action and learn the business, or should I continue to save and educate so that I can more easily scale my portfolio latter opposed to starting off right now?

Is it smarter to wait to have enough money so that I can build my portfolio faster or smarter to take action now, learn the business and build my portfolio at a slower rate being more strapped for cash?

I was recently visiting my friend and over the course of a few months, no one has shown up to their neighbors property. They informed me that they believe the owner had died and that the property is now in their children's hands. I am not sure how accurate that information is. I looked on the property tax documents for the city which the vacant home is in (lets call this City A for reference) online and there is an address which is different from the address of the vacant property listed (lets call this City B). I looked up the address of city B in the city's property tax system and it came up with a different name than that of the property tax document listed on the documents of the vacant home. Looking at the homes utility bill history that is made available, it seems that the last time there were values for the water meter was in April of last year.

1. I would like to notify the owner that I am interested, get an inspection of the property so I can estimate repairs needed, get 100% capital so I can BRRRR the place. In what order would you do all these steps? I am not sure on the best way to start since this would be my first property.

2. How do I reach out and inquire about the home? How do I confidently know that I am sending the inquirey letter/postcard/ etc. to the correct place? How do I find out if there are any liens on the home? How do I find out who owns the home? How do I initiate the process of buying the home?

3. When it comes to capital, I have about $10k saved up. I would need about $80-100k saved up, but I might be able to ask one of my wealthy friends for a private money loan. I've never had a private money loan so I am not sure exactly how they work? Is it simple interest rate? Compounded interest rates? Do these things get established between the two parties (i.e. me and my friend I would be borrowing money from)? Any tips with getting and establishing a private money loan would be very helpful. 

Have you ever been in this situation when looking for a property? What would you recommend doing? Any advice would help here. Thanks!

Work on creating a budget. Stick to that budget. A little sacrifice now can save a lot later!! Only go to college or trade school if you can pay out of pocket. College isn't as necessary as society makes it out to be. It does help get to a higher income if you study a STEM field. Keep in mind that after graduating you'll need to pay off your college debt, pay for your living expenses, and the small amount of money left over you'll have to contribute to real estate investing (REI). The less debt you have and the tighter your budget, the more you will be able to contribute to REI. I was able to graduate debt free with an engineering degree with no help from family, if you want to hear more about how I did this then DM me. If you are not in the position to go to college and come out debt free, then do this: What hobby are you good at that could make you money? then go and do that, start a business and side hustle to get some income, work a job or 2 and focus on living frugal, educating yourself, and saving capital. A little sacrifice now can pay huge dividends in the future. Right now, focus on reading about real estate and building skills for REI that don't involve having capital. read as many books as you can and get involved in the community. I suggest start off by reading How to Invest in Real Estate by Brandon Turner and Josh Dorkin. Once you read about strategies to invest in real estate pick out a book on that strategy as your next read. Also pick out a book on financing strategies for real estate.

TLDR: Educate yourself in REI, build capital, focus on the things you can do without capital (laying the groundwork, networking with others, building your team, etc.) while you build capital. I hope this helps, best of luck!

Hello I have never bought a house before, but am looking to take action and get started in REI. Currently I am working on saving capital, gaining knowledge, laying some groundwork, and assembling a team. So the process of BRRRR seems self explanatory, however, the refinance step is providing me with great difficulty in how it helps to builds wealth.

Example of where I am confused:

You buy a house for $100k in cash and decide to do the BRRRR method. You pay $15k in rehab. The ARV is $150k. There are no closing costs. The place rents for $2k so it cash flows quite well. Then you refinance it and get 75% of the ARV back which is $112.5k. You could use this money as a down payment on a new property, but since you refinanced, you have to pay off the mortgage. This means you spent $115k in the house in cash for purchase and rehab and now you owe the bank $112.5k.

1. Wouldn't this make you more in debt, why refinance when you could live off the cashflow? Why is the refinance step useful? it seems silly to get a mortgage on a property when you paid in cash in the first place.

2. How is it possible to refinance a property that you bought in cash? In my head this is the same as buying a car with cash then asking to have an auto loan. it makes no sense to me. 

3. Is there a certain type of loan you get when refinancing so that it will free up cash? I guess I am confused on the process of refinancing. Do you get the cash in hand from the loan you took out? 

4. When you refinance do you get the money back in cash? I am confused on how this all works. 

5. Are there closing costs when you refinance?

6. How exactly is refinancing freeing up cash? You buy a property in cash and then you get a mortgage on it that you have to pay back. then you buy another property with this cash and refinance that property and now suddenly you have 2 mortgages. How is this beneficial? Can someone provide me a clear example to show the benefit of this and how it builds wealth?

Clarification on these questions would be extremely helpful. Thank you!

Outside of the number analysis (cash flow, ROI, etc.) what things should I be looking for. How many beds/baths? Square footage? What things do you look for when touring a home to potentially invest in as a SFH rental? As I am just starting out and looking for my first property I want to know what I should be keeping my eyes peeled for. Thanks in advanced!

Hello,

I am interested in buying my first property sometime next year after saving enough capital. I am near done reading my first book on REI (How to Invest in Real Estate by Josh Dorkin and Brandon Turner) and I have decided that my strategy will be investing in SFH likely via the BRRRR method. I have some questions regarding housing expenses and management:

1. When renting out your properties, what expenses are you in charge of as a land lord and what expenses do you make your tenant in charge of? 

2. Do you include mortgage insurance in their rent you charge them? 

3. Is landlord insurance a waste of money? And if you have landlord insurance do you tie this into the tenants rent to cover it for you?

4. What maintenance do you make your tenants responsible for? What maintenance are you, the landlord, responsible for? 

I am looking forward to reading the answers on these questions. Cheers!

Hello, I am looking to invest in a single family home. I am very new to real estate investing and have not yet purchased any property. I am looking at suburbs of areas I grew up around (within 30 min). I have two locations I am looking at but I have a few questions that come from my lack of experience. 

Location 1: Great school, lots of company's in the area, and great demographics. Property cash flows some, but most money would be coming from appreciation.

Location 2:  Poor demographics, low school ratings, and not as many booming industries nearby. According to the numbers and bold assumption that I can find good tenants, this property would cash flow much better. 

0. Would you suggest investing in location 1 or in location 2? Why?

1. How do you go about analyzing a location of where to invest? 

2. How to you gauge if the property will attract the right tenants? 

3a. How much does demographics play into your analysis? 

3b. Would you invest in a deal in a location where the demographics are poor, but the property would cash flow incredibly if you had the right tenants?  

4a. How do you incorporate vacancy into your number analysis? 

4b. How do you come up with an accurate number of months for vacancy? 

5. What are all the things you look at regarding the location when looking to purchase a single family rental home?

Thanks for reading and for any advice/responses! happy investing!

Hello, I am in the beginning stages of real estate investing. I am looking to buy my first single family rental property ($200-300k) in Southeast Michigan probably within the next year. I am currently working on saving capital, creating a detailed system to have in place. Part of this system is having a team. I often thought of taking the course and exam and becoming a licensed real estate agent to learn more in the industry and the perks that come with it such as getting to view properties before everyone else. I have no experience in sales or anything of the sorts so it would be a steep learning curve. I haven't quite decided if I should go for it or not, but I am wondering how to build my team. I looked to see if there are real estate investing clubs in my area and there are, however, based on my research not many people attend the events in my area and the ones that do, are often new to the game which I am not looking for. I want experienced individuals who are very familiar with real estate investing and bonus points if they have an investment portfolio of their own. Ideally I am looking for these professionals to be local to the Southeast Michigan area in which I plan to buy my properties. I am looking for:

- Attorney

- Realtor 

- Real Estate Agent

- CPA

- Mortgage Broker

Do you have any suggestions and/or recommendations on how to find such professionals that doesn't include real estate investing clubs and networking events? 

Thanks for reading and happy investing!