All Forum Posts by: Becca F.

Using a realtor and my own search on Zillow, which I send to my realtor if I find something worth considering. I'm buying out-of-state, closed recently on a SFH, move-in ready, negotiated quite a bit off the list price. I haven't done a renovation yet from far away. I may consider doing a flip or BRRRR from a distance now that I have trusted team in the Indianapolis area.

@Eric McCusker

I agree with the other comments. You should raise the rent, not to market rate all of a sudden, maybe somewhere midpoint. And you're breaking even...omg. 

I have a few investor friends in the San Francisco Bay Area that haven't raised the rent or it's been very small increases on their tenants in 15 to 20 years to be nice. They could be getting market rate rent. I'm talking $1600 to $2000 rent when they could be charging $3500 to $4500, maybe $5000 if the house has been updated and looks modern. It's one thing with rent control with multi-units but most SFHs here aren't under rent control here (yet). 

We didn't go into real estate to be a charity. The more I hear about severely under market rate rents I just cringe. Good luck.

@Mario Fernandez

I'm in the Bay Area and recently closed on a SFH, move in ready in the Indianapolis area, for $130,000. I did 20% down conventional loan. The projected cash flow on mine is $200 a month. My Rent to Price ratio is about 0.76%, which doesn't hit the 1% rule but the RTP ratio is worse in the Bay Area, more like 0.54% ratio. I also look at other metrics: is this a growing area, job opportunities, appreciation of properties over time. Cash flow is a major part but not the only factor for me.

If you can put $80,000 down that's do-able in the Midwest but don't stretch yourself financially too much. I found homes in the $59,000 to $100,000 range that needed lots of work. I was looking for $120,000 to $180,000 for move in ready.  I didn't want to do an out-of-state rehab and I know the Indianapolis metro area well, used to live there. I did a local renovation and it's a lot of stress, went over budget and I was on site at least once a week. 

I wouldn't recommend doing an OOS rehab for a first time investor unless you have a trusted team in place: realtor, contractor, inspector, property manager, painter, roofing company (if a new roof or repairs are needed). If you're not able to fly or drive to the property you're placing all your trust in people that they will make good decisions for you. I might consider a BRRRR in Indianapolis now, since now I have a team in place. Another option is buying from a turnkey company but you would need to vet those carefully - some are great and some are terrible. I considered buying a house in Ohio when I talked to one turnkey company but I wound up buying with an Indiana realtor who works with lots of investors. Good luck!

Quote from @John Morgan:

@Matthijs Pol

I’ve got 17 rentals and use turbo tax. It walks you through everything and is easy to do. And saves everything year to year. I pay an extra $40 for audit protection which they work as my representative if I ever get audited.

 Wow you have 17 rentals and use TurboTax? Does it make a difference if you hold the rentals in LLCs or own personal name as far as how complicated the taxes are. I don't have any LLCs yet (I know that topic has been discussed to death on BP). 

I have 3 rentals on my 2022 return, with a 4th rental that I just closed one to report on my 2023 taxes. I just got off a TurboTax call and she recommended that I take my documents and sit down with a CPA and that I should be getting Schedule Ks. She said if I want to do it on TurboTax myself I can. 

I got confused with the improvements I made on a rental - I paid the contractor XYZ amount (materials and labor) and he purchased the rough materials (drywall, insulation, recessed lights, bath tub, shower enclosures, paint, etc). I bought the kitchen cabinets, countertops, other lights, faucet fixtures, bathroom vanities, tile). On the improvements am I just adding up the costs of materials? It wouldn't make sense to add the labor cost in to the value of the home but that was a large part of the total cost of renovation. The TurboTax rep seemed impatient with me and kind of rude so I didn't want to annoy her anymore. 

I just closed on a SFH 2 weeks ago. I'm still looking to buy but taking time.

Premium deposit account but unlike a CD I can access the money quickly if needed. I'm also buying a few stocks and REITs. I'm considering Fundrise - there have been a few posts on BP and the people commenting said they are getting good ROI.

@Zeliang Zheng

Echoing what a few of the others have said, out-of-state BRRRR will be challenging. I did a local renovation which went over budget and I was on site at least once a week. It was a down to the studs kitchen and 3 bathrooms, all new electrical wiring. The contractor would call me and I'd leave work early, walk throughs with an electrician, give me options that are better and cost effective for renters, etc. It was a really good learning experience seeing all of this in person and buying some of the materials myself (kitchen cabinets, countertops, lights, bathroom vanities and fixtures, appliances).

I'm investing OOS, primarily in Indianapolis metro area right now. I also used to live in Indiana so I'm familiar with the most of the cities and suburbs and which are Class A, B, and C areas. I just closed on a SFH, move-in ready. There were a few minor repairs and it's ready to rent out now. I have a pretty good team with a realtor who works with investors, property manager, and contractor. I have a little more confidence since the local renovation that I may consider doing a BRRRR OOS in the near future.

I've heard a few investors pose the question do you have more time vs. money? If you have money but not much time, it might be better to buy a turnkey property, either on the MLS or turnkey company (some are good and some are not good). I did talk to turnkey company but I wound up getting in contact with a realtor in Indianapolis and found the house off the MLS. If you have more time, maybe a BRRRR would work better. Indianapolis has good rent to price ratios so I think it's a good market and it's landlord friendly. If you'd like to talk to my realtor, I can message you her contact info. Good luck!

Quote from @Alex Blackwood:

We are in the early innings of real estate investing becoming completely democratized. 

Similar to fundrise, there are platforms that give you all the benefits of real estate, including tax benefits. 

There is no one size fits all approach, so invest across a number of the platforms and find the one that works for you. 

Other competitors are roofstock, mogul.ooo, arrived homes and more!

I personally would recommend mogul.ooo, but then again, I might be a little biased.

The original post was from 9 years ago. I had never even heard of Fundrise or Roofstock back then but I wasn't a real estate investor then. I'm also considering buying from Fundrise. I'm buying a few REITs targeting different types of real estate, retail (Realty Income: O) and apartment communities (Avalon Bay: AVB) (my reasoning being that a lot of people are renting, especially California where home prices are very high) and maybe Public Storage.

 What other platforms give tax benefits like real estate?

@Kimberly C.

I have properties in the San Francisco Bay Area and out of state. I just closed on my 2nd property in the Indianapolis metro area. I don't have a lot of time with a W2 job so I bought the house from a flipper, $130,000 (negotiated an aggressive offer with some countering). The flipper got the equity which I'm okay with. If you don't have time, I would suggest not doing a renovation - I did a local renovation which took 5 months and went over budget and I was on site at least once a week and I purchased some of the materials (kitchen and bathroom cabinets and countertops and lights). The BRRRR method is super popular but I think it's difficult to do OOS unless you have a really good team in place.

With my first Indiana SFH which I've owned for 10 years, I've seen it appreciate about 70% (much of it from 2019 to 2021, like many homes across the country) in a Class A suburb with great school district. Midwest has affordable entry points and positive cash flow but I don't think it appreciates as much as other markets (Texas, Florida, Arizona). I was looking for turnkey from $120,000 to $180,000 in my recent search and I used a local realtor. I'm starting to re-evaluate my strategy of buying inexpensive homes in the Midwest to looking at other states where people are moving to like Tennessee (Nashville area), North Carolina, Florida (need to check insurance rates), Arizona and going for higher appreciation but home prices are higher in those areas. I do think the Midwest is steady and reliable and doesn't see the big price swings like the Bay Area (homes going 50% down in value during the 2008 recession and increasing dramatically in the last several years)

With $190k, you could buy a few SFHs in the Midwest. If you want to talk to my Indianapolis realtor who works a lot with OOS investors, I can give you her contact info - no pressure but just to help you gather information. I've also talked to a realtor in Cincinnati. Do a lot of research. Good luck!

@Sarah Jukes

You bring up a great question. I just purchased my 4th rental property and I've been considering paying down one of the mortgages vs. continuing to expand my portfolio. From my non-investor friends, they are horrified that I bought a 4th property - "you have so many mortgages and debt, you should have paid cash for that 4th property (I considered that but got a 6.99% interest rate conventional loan), stop buying property and put your money into a CD". 

 I'm trying to figure out how many more properties I would need to buy to replace my W2 income. I'm not at my financial freedom number yet to quit/retire early from W2 job (could work part-time or independent contract work, just don't want to have to work full time), which I like to do in about 3 to 5 years (3 years is very ambitious)

@Sam Yin

Sam, you were able to dig deep into REI and quit/retire early from your W2 in 2 years? Amazing. How many more properties did you wind up buying?

@Harry Dhaliwal

I'm in the San Francisco Bay Area. You don't mention what part of California, not sure what MCOL is. I have 2 properties here but I acquired them a while ago so I'm not paying the current high prices or interest rates. I looked in the Bay Area in the last year and the best I could find was a $649,000 3 bed/1 Bath SFH that needed lots of work. An investor bought it for $680,000 (bidding war with investors) and it rented out on Zillow for $3600 a month (after the rent was lowered from $3995). That's a terrible return but maybe they're hoping for appreciation and being able to raise the rent.

Other local investors and realtors have recommended in less desirable areas (Antioch, Pittsburg, or Stockton which is technically not the Bay Area). Or 2 hours out in the Central Valley, like Turlock. I'm still looking at high $300,000s to $500,000 on a SFH. Doing a brief Zillow Rent search, I wouldn't be able to get more than $2300 to $2500 and my mortgage payment would be much higher than that.

I have 2 SFHs in the Indianapolis metro area, one is in a Class A neighborhood with great school district and has appreciated 70% in the 10 years I've owned it (most of it from 2019 to 2021). Tenants are great and it's landlord friendly. I just closed on another SFH but it's Class C in a growing area (coffee shops, etc). I was looking in the $120,000 to $180,000 price range for turnkey. If I want to do a rehab I found SFHs for under $100,000. If I go up to $250,000 I'm in Class B maybe Class A area but price to rent ratio isn't as good. Midwest is very affordable and you can cash flow positive but the appreciation isn't as historically as high as other states (Nevada and Arizona come to mind). I've been going for inexpensive properties that cash flow since I have appreciation with the 2 California properties but now I'm re-thinking my strategy.

 I've read several articles saying people are moving to warmer weather states like Florida, the Sunbelt and Tennessee (Nashville is a hot market). I would have bought in Nashville if I was willing to spend $300 to $400k. I'm considering the Florida Panhandle area (Fort Walton Beach, Navarre Beach, Panama City Beach) but I need to find out about insurance rates. I would echo what Randall and Brad are saying. Good luck!