All Forum Posts by: Brian Kantor

Hi, @Stephan Akins. I invest in Detroit, and please don't take this the wrong way, but my answer is simply "look harder/smarter."

There are a ton of great deals out there both on the MLS and off-market. I am also of the mind that almost any property is a good deal at the right price and with the right strategy.

First, ask yourself are you looking to fix and flip or buy and hold. Once you've got that settled, you'll want to ask yourself what a "good investment" means to you. Is it $20k+ profit on a flip? $40k? Is it $300/month in cash-flow on a rental? Is it an 8% annualized return on your equity? 9%? 10%? What's something you personally would consider a good buy?

Then pop a target property into a calculator to check out the numbers (the calculators here on BP are great). Instead of using the calculator to determine the end result (ie, that the ROE or cap-rate is say 7.5%), start with the end in mind. Start with that return percentage, and then figure out what the property would NEED to cost in order to get you to that number. Make sure you pad your renovation estimate by at least 30% because you WILL go over budget.

After this you know what offer you can make on that property to get that return you want. Maybe at it's $50k list-price on the MLS, it isn't a "good" investment, but at $40k, the numbers look good in your calculator or spreadsheet. Now you know that you can offer $40k on that property, and if they accept, awesome. If not, move on to the next one. (Note: paying cash or removing contingencies will help make your low-ball offer more appealing.)

You can find great deals both on the MLS and off-market. To find off-market deals, join some DET Real Estate facebook groups. There are a bunch. Wholesalers are always posting deals there. On the MLS, also look for properties where you can add value. Maybe something is listed as 1000 square feet, but you're looking at the photos, and it looks massive. It's very possible that the listing is wrong. Go check out the property with an agent. Maybe it's actually 1500 Sq feet. You've now found value. Look for MLS properties with only 1 photo. People are lazy and just disregard that property. If you go and actually check out the property, maybe it's a gem. Find a 1200 sq-foot 3/1 that you can build a master-bath inside a large bedroom to make it a 3/2. Maybe there is an enclosed porch that you can "easily" turn into a 4th BR.

There are a ton of great deals, if you're willing to put in the work. If deals just fell from the sky, everyone would be a real estate investor :)

Good luck!

@Brandon S., DM me and I'll share three lenders that I've spoken with who lend to LLCs. Full disclosure I have not yet partnered with any, but could be worth chatting with them.

There is no shame keeping some cash for short periods of time. Cash is king. Plop it into an Ally, Marcus, or other high yield savings account. Earn 0.8% interest and be certain that you'll have it ready in full to quickly act when you find your next property. 

Everything else carries some risk, and that means that you may find an amazing property, but can't act on it because your principal dropped below the amount you need.

You're a savvy enough investor to be purchasing real estate in the first place. I assume you have a stock portfolio as well. Ally and Marcus are only bad moves when the bulk of your savings is there; not when you're saving up some powder to shoot for an amazing investment.

Think of it this way: Would you be more upset if your excess $500k was only earning 0.8% APY or if your $500k became $400k, and you couldn't buy that next property?

Hey, @Clayton Hepler. Have you looked into a Wraparound Mortgage? I have never done one, but in short, it creates a new mortgage that encompasses the original. Take a look at that link.

@Jessica Sultani as it stands, my core focus is buy-and-hold, and I've never flipped a property. That said, if I came across a property that appeared to be an amazing flip, I'd do it.

I'll let other more experienced flippers chime in here, but I'd have to say that my take is "it depends". Terrible answer, I know. It depends on how much capital you have (aka, do you need a mortgage), how quickly you can identify properties with solid flip potential, how great a your contractor is, and how long it takes for you to execute.

With that in mind, especially when starting, I would not suggest flipping multiple properties at once. Learning as you go, one renovation is going to be crazy enough to deal with, let alone two or more. I suggest going slow and steady to start and minimize room for error. Find a great agent, find a great contractor, and start looking at properties.

To put things in some perspective, I closed on my last property in mid June, and it needed a lot of work. The renovation is almost complete. When all is said and done, the renovation will have taken about 3 months. 

If you can find a property in a month, close on it in a month, fix it in two, and flip it in one, that's 5 months. So, I think flipping more than 2 in your first year is going to be tough, but again, I don't flip, so just doing a little back-of-the-napkin math for you. Yes, you can certainly do things faster than 5 months with experience, but as this is your first one, I wouldnt rush it. Realistically, 1 in your first year would be a win in my book.

Good luck!

@Jessica Sultani, conventional wisdom says that if you're looking to do both, start with the flip first, and then go into buy-and-hold after. With a flip your money is in-and-out quickly, and you can use the profits to purchase a long-term cash-flowing property that will pay you out slowly over time.

With that said, the actual answer is more nuanced than that. 

First, I'd like to note that covid has changed the flip landscape. People are moving out of (many) cities and into the suburbs far more now than they were a year ago. This means that a flip in one of those cities could be a bad idea if real estate prices drop, whereas a flip in a solid suburb could be a great idea as those prices are climbing. (I am based in NYC, and many houses in the burbs of NJ, Westchester and Long Island are going over-asking, whereas properties in the city are staying on the market.) This means, simply that if you want to flip, make sure you're looking at a blue-collar city that's a little more resistant to covid-flight or the suburbs around those white-collar cities where people are fleeing to.

Second, and more broadly, many experts will tell you (and I am no expert, so take all of those post with a grain of salt), that the best way to "win" at real estate is to be flexible in your exit strategy. Something you may initially consider as a flip could ultimately make more sense as a rental and vice versa. The wisdom here is not to dictate your strategy on the property, but let the property and market dictate your strategy.

Hey, Kyle. I have a recco for you that I will DM you with.

No problem. It's ALL about the research. I interviewed nearly 20 agents and nearly 20 PMs before I settled on my picks. And I think for property #2, I may pick a different PM so that I can watch them in action side-by-side.

 So far so good. My property is not on the market yet, but my video walkthrough of the house went well, the closing was easy, and I'm using my agent to keep my PM in check and vice versa. Detroit has a great price-to-rent ratio, low cost of entry, high percentage of renters, a growing economy, and plenty of short flights there to and from NYC if/when I need to visit. 

There are plenty of great markets out there. I wanted something with a good amount of universities and hospitals, relatively close to NYC, and a blue collar economy that might not suffer as much from suburban flight due to covid.

Hey, @Peter Austin. A lot of really good ideas on this thread already, and I support the sentiment of @Scott Robinson. With low to no cash-flow coupled with the unknown long-term effects of covid on the NYC metro area real estate prices, you do run the risk of both the property value decreasing and the rent decreasing.

I'm not saying that keeping it is a bad idea, but it is not without risk.

Since lockdown a ton of companies have gone remote either temporarily or permanently. Many people will wonder why they should be paying a premium to live in or around NYC when they no longer need to commute. Many young families that had been planning to move out to the burbs at some point in the next 5 years are doing it now. Young people are moving back with their parents and saving all of their previously spent rent money,

I live in Brooklyn and am on Street Easy all the time watching rents drop. $3500 apartments last summer are now renting for $2500 in many cases. Purchase prices will likely see dips as well.

The above makes me question the stability of your property's value in Hoboken (which I know well). Selling your apartment now if you can, and using your equity to buy something in a more investor-friendly market isnt a terrible idea. (I invest remotely in Detroit, and have followed David Greene's Long Distance Investing advice.)

I'd also be careful on assuming that becoming your own property manager is just about having a handyman on-call. There is more to it than that, and if at some point, it becomes too much of a headache, you may decide you need to out-source this role, and your expenses will go up further.

Again, I am not saying to sell or keep, but to think everything through before you decide. Good luck!