All Forum Posts by: Ben Firstenberg

Not Atlanta specific, but I strongly recommend lining up your property management system before you start. If you're going to self manage, try to pre plan the process as much as possible so all you have to do is execute once you've closed on the property. If you're going to use a property manager, interview a few beforehand until you find someone you feel really good about. 

When I bought my first property, I stuck with the in place management and they were terrible. We were hemorrhaging money for about 6 months before I finally got it together and fired them. 

Same goes for any contract work you're planning on doing, if there's a renovation component. 

I recently wrote an article on my blog that you might find interesting about choosing real estate investments. Here's a link. I'm also working on another post called "Lessons learned from buying my first rental" which I'll publish soon. 

If you'd like to discuss anything further please reach out. Happy to help.

For this, even though it's on the smaller side, I'd still use a cap rate.

Rough numbers: $600/unit/month income --> $450/unit/month after expenses (?) * 6 units * 12 months = $32,400 NOI.

Given this is a mobile home park, I think a cap rate around 8-12% is fair. Depends a lot on the condition and location. So value of around... $270k-400k.

I'm curious how you're calculating $165k. But if this property is available for 200 I'd be really interested. If you don't buy it maybe I will! 

General advice I'd give to anyone just starting out. Get your first deal done. Do everything you can to make sure it won't burn you, but don't sweat it too much. Don't wait for a home run, don't try to time the market, don't worry if it's perfect. It's a monumental first step and everything will be different once you've closed your first deal. Everything. 

To your question about working with investors, it's definitely possible what you're asking for. It's hard to do at your age/experience. I don't think it's likely you'd find many people who would put up the ENTIRE down payment, just because then you don't have any "skin in the game." You could maybe get away with putting up $5-10k yourself if you explained that it's not much money but it's a significant % of your net worth. 

As far as the split, I would think about it as if you were trying to generate a certain % return for the investor and then determine what split it needs to be based on that. They could invest in the stock market at make 8-12% or they could invest in private equity and make 12-15% (if they have decent money). So maybe you need to be a 15-20% return to make it worth their while. That could mean giving them 50% of the deal, it could mean giving them 100% of the deal. 

Starting with JV is certainly atypical but I don't want to tell you it's not possible, since you're clearly very passionate about it. Just understand it will be challenging. Most people start with a house hack or a standard rental. Those are easier, but you have to have the money for it, which is tough.

A lot of people also get their start as a "deal finder" which is, in some ways, what you're describing. This could be an agent or a wholesaler, or working for an established investor and finding deals for them. 

Hope that helps. Best of luck!

I'll be honest, not my area of expertise but I'll contribute because I think it's an interesting question. 

If I were you, I'd look at a local or regional bank. Banks typically have a desire (and occasionally a mandate) to reinvest in the regions they serve. So they can sometimes give better interest rates and services to local customers. The really big banks have better resources but they don't really care, so it's different. 

That said, landscaping design sounds like a business where you might be moving or borrowing large amounts of cash. So you don't want to go to a bank that's too small, otherwise the bank won't might not be able to fill all your needs, as they would be concerned about having too much exposure to your business. 

So I think I would start with some mid sized banks, meet with the people they have and see what kind of impression they make. Then go from there. 

All that said, a warm introduction is always worth more than a cold call. So if you have a warm intro, I wouldn't be too picky. 

In my experience, a lot of PMs think it's not worth the extra effort but you'll find some that will do it. They may just be harder to find. 

If your ultimate goal is cash flow as quickly as possible, I have two suggestions. 1) Invest in locations that aren't likely to appreciate but have high cap rates (such as Madison and much of the midwest) and 2) Invest in a short term rental in a vacation market. Maybe doesn't have to be a vacation market, I don't know STRs very well. Someone else could probably say more about that. 

In general, the smaller they are, the easier they are to buy. Bigger apartment complexes require investors, lots of due diligence, lengthy closing process... all kinds of stuff that takes a lot of time and effort. It's also hard for a beginner to have the credibility to secure those assets, as sellers will be concerned you won't be able to close and investors will be concerned you don't know what you're doing. 

I'm personally not a fan of STRs, so I'd look at buying 2-8 unit properties in your area. I'd try to add value if I can and refi/sell so you can repeat the process quickly. 

Lastly, don't be too hungry for a deal. Have faith and confidence that it'll come. If you're overeager you can get yourself into some bad situations. 

I'd look at a few different cases. I'd come up with a "worst case" where values drop 50%, a "middle case" where values drop 20-30% and maybe a "bullish case" where it's only 10% or so decline and see how those numbers shake out. 

I think it also depends on what you're doing. If you're doing a BRRRR or flip and need the value to support your exit in 6-12 months, I'd be more conservative. If you're planning to hold this forever and don't need to cash out any time soon, you have room for error since you can just wait out a recession and recovery if you need to.

Lastly, do you think the recent strength of the market was justified? That is, do you think the people who moved there will stay and continue to invest in the community? Or was the neighborhood overhyped and boosted by people fleeing California or New York or something like that?

End of the day, it's a little bit of a gut call in this market. Look at a few different situations, consider your objectives and see how you feel. 

AI might change their job descriptions but I don't think it'll fully replace the jobs. Real estate is very personal and very local. Agents, loan officers and property managers in the future may use AI as a tool to help with the busy work but I believe you'll still need people in the industry. If you're really worried about it, don't turn away from the profession, learn how AI works and use it to your advantage. 

As far as building a portfolio after grad school, if your ONLY goal is to make money, I'd work at being an agent or salesperson. However, given you're going to grad school I suspect you have other goals and I'd say don't underestimate the value of pursuing those goals as well. I work in a 9-5 real estate job and I work as an agent and investor on the side and while I do love it, sometimes I really do wish I was involved in something a little more... meaningful. If you have the opportunity to get involved with something cool/technical/impactful, I'd at least consider it. 

If you're looking to scale, I recommend a value add project. It's definitely tougher and higher risk, but if you succeed, you'll be able to sell at a gain or cash out refinance and repeat the process.

Suburbs like Covington, Cartersville, Stockbridge and Lawrenceville would be good places to start. 

If you're looking for an investor friendly agent or would like to talk more about the Atlanta markets, please feel free to reach out!