All Forum Posts by: Benjamin Aaker

The income looks tight, at less than 1% of the asking price. Even if you can push the rents up. You risk going under water on this one.

Hi and welcome! Get yourself an agent for this first deal, at least. Agree with the rest of the group that small multifamily is the way to go. I recommend 4 units, living in 1. You'll learn a lot about multifamily management that will help you for the next deal.

Hi Flip and welcome to real estate investing. You'll need to decide whether or not to go with small multifamily and live in one unit. I recommend a 4-plex for this. It'll be a lot easier to get a loan and a typical real estate agent won't have too much trouble helping you. Learn about that and move up to the medium and large multifamily, where the efficiency gets even better. Good luck.

Since you can get a VA loan, you won't have to put up too much of your cash if you are willing to live there. A four-plex is a great way to start.

Hi @Myron Jackson and welcome to BP! Your first step was the hardest: changing your mindset to becoming a real estate investor. Educating yourself is the next step. You said you have been reading. You should also be going to real estate meetups in your area.

Next, narrow down to specific criteria. Small multifamily is a start. Duplex, triplex, fourplex? Will you live in one unit or not? How many beds/baths do you want in each? What areas of Lexington do you like? How much are you willing to pay per unit if the place is fully rehabbed (turnkey?). You can work backward from there if repairs are required.

For your first deal, I recommend getting a real estate agent. Tell them your criteria and they can help you with many of the details. Try to get an agent who has dealt with investors before. Put up a post on BP asking if anyone knows this type of agent in your area.

Next, evaluate every deal that the agent sends you. I recommend using the Millionaire Real Estate Investor by Gary Keller for help in your analysis.

Put in offers - this is the next most difficult step. The most rewarding too. Good luck!

@Chris Alford It's very important to know what the seller is currently getting for rent. Even on these small multifamilys, you have to look at the purchase as an investor and work out the cash flow. The seller is likely using a market based approach to compute the value. Right now, residential real estate is through the roof on price, so it's very likely they are asking too much. To your question about low income: the seller is managing that right now, maybe they are Section 8 tenants, maybe they pay a low rent. Either way, the place brings in a certain amount of money. It needs to be more than the sum total of your expenses plus reserve. If it is, then keep after the deal and do your diligence.

Thanks @Greg Dickerson, I'll take a look.

I'm working on getting a new property manager. In the management agreement, they have a clause that seems to indemnify them from liability. Here's the line:

"Owner agrees to hold Agent harmless from any claims, charges, debts, demands and lawsuits. Owner agrees to pay Agent’s attorney’s fees related to the management of the property and any liability for injury on the property that is over the cost of $500."

Those of you with experience in this area, can you tell me if this is something you have seen before? Or should I run away?

@Greg Dickerson Thanks for your excellent advice. It certainly will take a lot of time to put this project together. Working backward from the finished value is something I hadn't thought of. I'll call some local builders to see what they would pay for lots. Do you have any recommendations on books to read? Thanks again for your comments.

Hi Gavin, welcome to BP and nice work on making money on your first deal. A rarity! Keep up the investing.