All Forum Posts by: Bob Stevens

Hello @Sandra Feurtado,

Do you need to visit the city where you're considering investing? I'm not sure what you'd learn that you can't find online. When it comes to individual properties, maybe—especially if you don't have an experienced and trusted investment team in place.

Before I continue, what is the goal of goal of real estate investing?

The goal of real estate investing is lifelong financial independence. Financial independence requires an income that enables you to maintain your standard of living throughout your life. Such an income must meet three requirements:

• Rents outpace inflation: Every time you go to the store, it takes more money to buy the same goods. Unless your rental income outpaces inflation, you won't be able to pay inflated future prices and you'll soon have to return to work. For rents to increase faster than inflation, there must be significant and sustained population growth.
• Sufficient income to replace your current income: This will require multiple properties. If you buy in a city with significant and sustained population growth, i.e., with high appreciation, you can use cash-out refinancing to buy additional properties with minimal additional capital from your savings.
• Lasts throughout your lifetime: For your tenants to continue paying similar rent, they must remain employed at comparable wages. However, most non-government jobs are temporary. The average company only lasts ten years, and even large companies listed on the S&P 500 typically survive just 18 years. This means that in the foreseeable future, every non-government job your tenants have will likely end. Your tenants will only be able to continue paying their current rent if new companies move into the area, creating replacement jobs with similar wages and skill requirements. Companies have considerable flexibility in choosing where to set up operations. Four of the major criteria they consider when selecting a location are:
  • Low crime: Companies are unlikely to establish new facilities in high-crime cities. Never invest in any city on this list.
  • Low operating costs: Every company faces competition. To succeed, they must keep their operating costs low. Many cities have high overhead costs that consume a large portion of generated revenue. Avoid investing in cities with high operating costs.
  • Pro-business environment: Companies prefer locations where they can operate smoothly without excessive government interference. It wouldn't make sense to choose a city where you'd spend significant time and money battling regulations just to conduct normal business operations. Avoid investing in cities with anti-business environments.
  • Metro population >1M: Companies require significant infrastructure. This is not available in smaller cities.

You can evaluate all these criteria from anywhere in the world using the internet. Here's a summary of what you need to know:

• Population greater than 1M and growth rate: The source for metro population size and population change: Wikipedia
• Crime.
• Operating costs: State income taxes are a good indicator of government efficiency. Here's a map comparing income tax rates by state.
• Rent control: Never invest in any city that imposes significant limits on your ability to manage your own properties. Use Google to research for this information.

Once you select an investment city, you need to find an experienced investment team. The team is crucial because all the information you acquire from seminars, podcasts, books, and websites is general. You'll be buying in a specific location, subject to local rental regulations and other unique factors. An experienced local investment team can provide you with all the in-depth local information and resources you need.

Summary

So, you can do all the research you need without visiting the city. In our case, we've delivered over 530 properties to clients worldwide. Of the 200+ clients we've worked with, fewer than 10 were local; all the rest lived in other states or countries. We've never met more than 60% of our clients in person, and few have ever come to see their properties.

In my opinion, you're better off researching potential cities online and interviewing potential investment teams via Zoom than traveling to the city.

 Where did I say 1200-1500? Did you mean to reply to someone else? I literally said "as high as you can negotiate or is legally allowable". In some areas there are rules around what you can and can't charge as a security deposit is all I was saying. It's good that Miguelli is working with a competent local agent who knows what they're doing, knows the local rules that apply to his situation as well as what is customary for the market, and has done this before. Miguelli, I would just go with your agent's advice on this seeing as they probably do this all the time successfully. The one thing you might ask them about if it's not already in the contract is a per diem charge if the seller doesn't move out by the agreed-upon date. I usually do $250-1,000 per day depending on the price point. I've never had a problem with the seller not moving out personally but it's good to have protections in place if that happens such as a stiff charge for every day that they stay past the lease/PCOA term.

Interesting to hear that people aren’t familiar with this as it is very common. It’s called a post-closing occupancy agreement in my area. Just get a security deposit that you hold in escrow from the seller’s net proceeds (as high as you can negotiate or is legally allowable in your area, in my area the most you can do is 1 months rent) and have the sellers sign a lease/ post closing occupancy agreement like a normal tenant. You can include a steep penalty per day that you charge if they fail to move out by the agreed-upon date or hold more money in escrow if you don’t trust them to move out. I can see doing the roof and starting on the exterior while they are still there but anything inside I’d probably wait on. Everything is negotiable. 

Hello All,

This is Sasank. I'm from Irvine, California. I've been trying to get into the real estate investment for a bit. This forum looks interesting and helpful with real conversations. I'm looking into out of the state investments and would love to connect with people.

How long do you have to wait if the renters are late on their rent before you’re allowed to file an eviction notice here in Utah? Also sounds like there are different types of eviction?! Is there a specific one for this situation? What information or materials would I need to file one?

Hi BP looking to see if anyone has experienced this before…

Been working a deal out with my agent (well known on this forum and has great reviews) and trying to close on my first out of state rental property. I was initially looking for a turnkey property but after finding this deal and going down the rabbit hole it has turned into a BRRRR.

Property is well priced and seller agreed to lower price after inspection was done and scope of work completed by GC. Both parties have agreed on price however seller needs max of two weeks after closing to move out since they need funds from the deal to move. 

I’d like the begin rehab as soon as possible and PM will be managing the rehab for 10% of rehab price. Per the agent, ok to start rehab while seller still in there for a few days up to two weeks.  my main goal is to just get the roof in before weather gets bad.

is there anything I can do aside from a 3k escrow holdback suggested by my agent to prevent getting burned?  I’m worried they won’t leave or damage the property. (Property is already in poor shape). Agent says this happens all the time.

 But what cities you recommend for section 8 cash flow city from the city you named?