All Forum Posts by: Bo Goebel

Property managers- 

Brandon Czoer- Goebel Realty,
Mary Moll- Evansville Homes for Rent

Lenders- 
Jared Ziliak- Evansville Teachers FCU

Kyle Anslinger- First Bank

John Lloyd- Hoosier Hills

Good luck.

Hey @Nicholas Stergion, I'm from Evansville and am active in the market. 

I'm happy to help, but anyone that's going to give you any worthwhile advise needs a little more information from you. 

What investment class are you looking for?

Are you prepared to purchase or doing research? What is the price range you're looking at?

Who (property manager, lenders, other investors, brokers, flippers, wholesalers, etc) would you like to connect with? 

Out of curiosity, what made you settle on Evansville, IN? I love the idea of other people investing and improving in the area. 

The cookie cutter expenses for a C class property is ~55%. 

I'm not saying they're lying, but they are not including all of the expenses of the property. Maybe the owner completes the pest control, maintenance, lawn care, etc. But those are expenses you would realize... so they must be accounted for.

@Ben Mosh Market selection is really important, so your question is a great one. 

Buy and hold strategies are typical in cash-flowing markets, usually off the coast (especially in the Midwest/Southeast). Good market indicators surround the law of supply and demand- population growth, job creation, job diversification, high-median income, low cost of living, etc., and typically are broken down by submarkets. Because real estate is hyper-local, saying "invest in Dallas-Fort Worth" is much too broad to be of any value. One area of DFW could be overbuilt and too expensive, while the neighboring area is growing and has high demand/low supply. 

SO... for market selection, I would always advise you 1. select 1 or maybe 2 markets, and 2. Invest in a market that you are familiar with. Having a good team/ people you can trust on the ground in the areas you are investing is more important than being in the best market. Try to qualify the market you grew up in, or have family, or visit often. If not, get to know the market well prior to investing in it.

For price range, with about $60k you should be looking no higher than the $200k range for a turn key rental. Simple math below:
200,000 X 20% = $40,000 down payment
Closing costs/set up fees= ~$7,000-10,000
Initial repairs/cash reserves= ~$10,000

Getting resources from here regarding the BRRRR method or just long-term buy and hold strategies will be extremely helpful in your search.

Great options, @James Newkirk
First, you would not pay taxes if you sold. No capital gains on up to $500k from selling a primary residence. 
I am a big proponent of leverage and investment properties, so I would recommend something close to option 5. My only caveat- I subtract 30-35% of total income to the "invisible" expenses of vacancy, maintenance, capex, and property management. So ensure that you have adequate cash reserves on hand to tap into if you get hit with a big expense. 

Too many of our brothers and sisters use their VA benefit to maximize that loan amount, end up underwater, and cannot afford to sell a property that they can't afford to own.

Most importantly, ask the right questions to find out what the seller's wants and needs are. Be authentic and transparent. Start there, and if owner financing aligns with his goals then it's not a difficult sell. That is when I'd pull out the different options, first verbally and then shoot over a spreadsheet if he or she is interested. (You should definitely run numbers prior to talking to the seller).

The options I would list are 1. the price you could pay if you did not have any owner financing
2. The price with a small portion of owner financing (with a down-payment interest rate that you believe to be competitive 
3. The terms including a more significant amount

EX) List price $250,000
1. I can pay $195,000 conventionally
2. I can pay $230,000, $20,000 down and pay you $210,000 over the next 15 years at a 5% interest rate, which is a monthly payment of $1,660
3. Any other scenario you would like. 

Obviously, I have no idea what your actual numbers are. 

The title company can help with the closing docs, including the promissory note. "Due on sale" can be enacted if the seller currently has a mortgage on the property... in which case it would be better to keep in the seller's name. 

@Mike Burr

Are you local to the area? There is a meetup that is not on BiggerPockets... and I am also starting my own this month.

What specifically are you looking for? 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $305,000

Purchased a SFH in East Nashville. Operate it as a STRP (short-term rental property).

What made you interested in investing in this type of deal?

Nashville is an incredible market, especially for STRPs. The house is a great location within Nashville.

How did you add value to the deal?

Purchased the house brand-new, so it was in ideal condition. The best partner in the world, my wife, has been crucial to the décor, management, and constant improvement of the property.

Lessons learned? Challenges?

Research and knowledge are pre-requisites to success.

I am confident short-term rental properties are an option for more investors than use the strategy. It is a different niche, with its own challenges, but could provide great opportunities for certain properties.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Evansville.

Purchased a duplex in Evansville, IN, in June '18. Immediately completed a cosmetic rehab on the property and rented out both units. After 6 months, refinanced to pull out all money invested.

What made you interested in investing in this type of deal?

It was important go full cycle with BRRRR.

That being said, the most rewarding part of this project is getting my family involved in the process. Partnering with them in different aspects has showed them the power of real estate investing.

How did you finance this deal?

Found the best financing terms through commercial loan with a local credit union.

How did you add value to the deal?

Exterior paint, landscaping, replaced roof, several new appliances, interior paint, fence installation/repair. Other miscellaneous.

Lessons learned? Challenges?

Do not renegotiate on minor details... but always assess the deal as new information is uncovered. If there is a deal-breaker, bring it to the seller's attention with intention of solving the problem.

As always, being transparent, honest, and acting with integrity will benefit in the long run.

Short answer- Yes- A refinance is necessary prior to every term expiring. But most lenders holding the loan would adjust rates and possibly some terms of the loan and still finance the property. This can be an effective way of paying down the loan, but has inherent risk of rising interest rates. 

If the goal is to keep equity in the actual property low, and cash on hand high, then a cash-out refinance is possible everytime as well. If you're looking for a long-term hold and meet requirements, best strategy is finding "agency debt."