All Forum Posts by: Anton Ivanov

@Tony Le Claire

How I picked software engineering? When I was getting out of the Navy, I knew I needed a new career. I did a bunch of "career assessments" (you know the ones that recommend careers for you after a bunch of questions) and generally thought about what I like doing most. What I came up with is engineering in general because I like to build things and the challenge of designing and implementing something that works.

I then looked at which "engineering" careers require the least amount of education/certifications/etc. to get started. Basically the ones I can start on the fastest. Software engineering is by far the winner there. Most employers don't care about degrees or certs, they want to see actual applications/projects you worked on and your code. That was one of the biggest reasons I chose it. But I also tried it and really liked it, so it all worked out.

@Gregory H.

1. Oh, ok. No, that's not included in my cash flow. I've never heard anybody including that in cash flow. It gets accounted for if you calculate your ROI/IRR, but I would consider "cash flow" being the actual money deposited into your bank account.

2. My initial approach was to stay leveraged around 60-70% during the "growth" phase of my portfolio, basically until I reach my unit goal and de-leverage after that. But with all of these people smarter than me telling me I should do the opposite, I may have to re-visit that plan!

3. Yes, commercial financing is very different.

4. Agree!

@John Acheson

Property value fluctuations don't really bother me. I'm a very long-term investor and plan to won my properties for 20-30-50? + years without selling. As long as they cash flow and I keep them rented out, I should be fine even if we have a really big crash like in 08-09.

I have, what I would consider, fairly large cash reserves for any unplanned vacancies, maintenance, etc, etc. About 5-6 months of expenses for each unit/property. I think this, combined with a healthy positive cash flow would protect me if vacancies go up during a recession (which is usually the opposite, I heard anyway) or rents stagnate.

I'll let somebody who lived through 08-09 without getting "burned" chime in here and hopefully provide some wisdom!

@Tou Her

I don't know if I use any "tools", but I like the following sources of information:

Some links that may help you:

• Zillow Market Overviews
• Population Growth from Forbes
• Best Performing Cities Report
• Labor Statistics
• Landlord Friendly States
• City-Data.com

Well and BiggerPockets of course - they have a ton of articles about market selection from various perspectives.

@Lauren Bishop

I've recently published a write-up on Reddit. It's on the RealEstateInvesting sub-reddit on the first page right now. I can't post it here, because I think the mods remove it for "self-promotion" reasons. If you PM me I can send a link. I may do a write up on here in the future, since there seemed to be a lot of interest in my direct mail approach.

@Matt Moreland

I'd say with property managers the first step is to only work with those that came highly recommended by other investors who use them. That by itself will probably "weed out" most of the bad ones. Other than that, run them through 15-20 questions around their whole business and the properties they manage. After a while I think you'll start to get an idea whether it's going to work out or not.

@Brad Chandler

Why do you say that in 5 years returns would decline? Vacancy/maintenance is included in my cash flow numbers and I'm very proactive in keeping the houses in good condition, so I would think the rents/prices would increase? By the way, the majority of my portfolio is in multi-families, not SFRs.

@Jim Sestito

It was a condo, but yes, I still have it. I actually haven't sold a single property yet.

@Dan Albrecht

If you google something like "COUNTY NAME tax collector" or "tax assessor", you'll find a website for each county in the US where you can search tax records by address. Each tax bill will at least have the owner's mailing address and their name. That's how I got the owner's contact info from the property addresses.

@Nixon Davis

I spend a lot of time (months) learning about a city and its different areas before buying there. There are a lot of online sources that can give you background info. This site is one of them - many cities have previous discussions where local investors pitch in on which areas are bad, which ones are good. I use City-Data.com a lot for crime maps, demographic statistics. They have very good discussions about specific areas for many cities. You can use Zillow Market reports to get an idea for average home prices/rents.

I'd follow all of that up with talking to people who either live or work there, especially other investors, agents/brokers, property managers. You start getting a pretty good picture about a city and its various areas the more you talk to others about it and the more properties you look at/analyze there.

Finally, I always try to visit the city and the areas I'll be buying in. Drive around during the day/night, see what's around. Stop by, eat lunch. Just get a general feel for the area.

@Olu Sanya

I don't think there is anything wrong with your deb-free approach. I was just curios as far as the reasoning. I met quite a few people who got burned in 2008-09 and that was part of the reason I keep high cash reserves and don't over-leverage myself. I do plan to start paying off all loans, but I want to reach my unit goal first.

@Amy Hu

Picking a good property manager isn't easy. I always try to work with companies I was referred to by other investors instead of just randomly googling somebody. Vetting each PM against 2-3 real investors who use them will likely save you from a lot of bad experiences. I also have a pretty detailed questionnaire I like to go through with them when I first meet them. If you send me a message, I'll send you the link, because I think the mods will remove it from here if I post it directly.

As far as keeping PMs accountable - I would suggest establishing processes, checklists, etc. and basically training your PMs to do thinks how you like it done. At least when it comes to leasing, tenant screening and make-ready repairs. I'd also suggest doing a phone call at least once a month to check up on things. And don't forget to review each of your statements and ask questions if something doesn't look right. 

I hope this can at least help you get started.

@Sean Lambert

I have a really good team in KC right now, so as long as I can keep finding good deals there, I'll probably keep buying there for another 1-2 years. After that, we'll see.

@Jason C.

I think there was a comment on here where I gave some general thoughts on market analysis. It's a complex subject and maybe I'll write up a separate post about my approach in the future. But in general I like markets that have a good balance between cash flow and economic/population/job growth which drives price appreciation. 

Dallas, Atlanta and Charlotte were all high on my list last time I did this. Dallas and Atlanta I felt got too over-priced, which was confirmed when I talked to some local investors I knew there. I looked at Charlotte, but I felt that the multi-family property inventory there was somewhat low (I could be wrong here), whereas Kansas City has a ton of multi-s. I liked the growth prospects of KC a little better as well. But I think you can be successful with either one if you put your mind to it.

@Gregory H.

1. $10k is purely cash flow, vacancy and everything included. By the way, by amortization I think you mean depreciation? It's not included. I don't include any "tax benefits" in cash flow calculations.

2. My portfolio is about 60% leveraged right now. It's a little low - I like to keep it at around 70% so it's time to do some re-finances soon.

3. My SFRs have 2 VA loans and the rest conventional 30-year fixed. Most of my multi-family has commercial 10 year, 25 year amortized loans.

4. I keep a reserve of about 5-6 months of expenses for each rental property I own. Similar to what's recommended for a personal emergency fund. It's quite a bit of cash, but I like to be conservative in that regard.

@Amanda Hillard

To send a colleague request, use the website, hover over my picture on the left and click "Connect". But I sent you one anyway just in case. You guys are way ahead of me in unit count (52 I believe?), so congrats on your progress! Feel free to send any questions over.

@Jackson Sandland

My startup is in my sig. I don't want to get in trouble for self-promoting it on here, so just click around on the website, it's pretty obvious.

@Mark S.

I'm not a big fan of Memphis and Indi. Last time I did my market selection process they didn't score very high on economic/job/population growth. But I never bought property in either, so I can be mistaken and I'd encourage you to ask people who either live there or are very familiar with those markets.

@Ernesto Hernandez

I think the mods removed it from here, I'll send you a message with it.

@Mitchell Litam

The "side hustle" is becoming more of a full time thing lately, haha. It's the company in my signature.

@mark 

@Mark S.

I think it was around $150/200 month if my memory serves me right. All of their portfolio was in Indi.

I think if you're buying in good, improving markets, then even with turnkeys you'll see price appreciation and rent increases over time, which will increase your safety margin and profit. The key here is the market though. There are many cities that are "hot turnkey destinations", but looking at macro economic/population/job growth and forecasts they're not really going anywhere. Many of these cities are also in the mid-west coincidentally... 

@Ernesto Hernandez

I did a very targeted, small-scale direct mail campaign. Part of my goal was to personalize the letters to the max and that included putting a phone of their property. It made it much more personal and more likely that they would call me, which I think turned out to be the case. I got the phone by taking a screenshot from Google Street View (drop the little yellow person on a road in Google Maps).

I've done a more in-depth writeup on how I ran this on Reddit if you want to check it out. 

@Aaron L.

They look something like this on one of the last properties I bought:

Rent: $3,000/mo ($750/unit)

Vacancy: -$240/mo (about 8%)

Expenses: -$895/mo

NOI: $1,868/mo ($467/unit)

Loan Payments: -$789/mo (30% down, 25 year amortization, 5.15% rate)

Cash Flow: $1,079/mo ($270/uni)

This is post-rehab. I suspect we can maybe raise the rents a bit over the next 1-2 years and stabilize vacancy around 5% to push cash flow to $300+/unit. Building was purchased for $190k, 4-plex.

Keep in mind, these are actual numbers I'm getting, not projections. Again, I would caution against using set/ballpark percentages for every deal you analyze and instead would consider them individually based on property location/type.

@Salvador Arias

See one of my other answers about market selection. I think it's a rather challenging, but a very important step if you're going to buy out of state, because most of your returns will be dictated by the macro-economic conditions of the market you're buying in. I don't want to start throwing cities at you because it's meaningless without knowing your goals, risk tolerance, available capital, etc.

As far as meeting people, you're on the biggest networking site for real estate right now. It's a great place to start. Also pretty much all investors I've ever reached out to are open to a 30 minute phone call or a cup of coffee if they're local. If you spend a few hours a week on networks, you'll eventually have a large network.

@Olu Sanya

Interesting that you're not using financing/leverage. Any particular reason for this? I find that staying leveraged significantly improves my ROI/IRR while I'm still "growing" my portfolio.

@Jay Hinrichs

Thanks for stopping by - love all of your contributions to this site, btw! I did consider paying off all of the loans (or at least starting to) when I basically reached my "unit goal" (50 right now, but could bump that up to 65-75). Since I don't need the cash flow right now, I found that staying leveraged increased my ROI/IRR. But when I'm ready to live off the income, I do plan to spend a few years prior focusing on debt paydown to really boost the cash flow.

@Mark S.

I don't blame you for sticking with turnkeys - I bought 4 myself a few years ago when I was new to the real estate investing world. I basically just reached a point where I felt I could do a lot better sourcing the deals somewhere else. I have met a few investors who have 10+ turnkeys though and they're doing quite well.