All Forum Posts by: Brian Schmelzlen

I think the main value that you would find from a property manager (initially) is screening tenants.  However, there are tons of free resources on BiggerPockets and online in general that would help you screen tenants.

Unless you truly have no interest in doing it yourself, I would strongly consider managing your first property yourself.  It will probably be a good learning experience for you (even if all you learn is that you have no interest in managing your own properties), and it will help you save money that you can use to invest in your second property.

Hi John,

Out of curiosity, where is this deal?  The price seems to be about $200k less than anything you could find in San Diego county.

I agree with the other comments that you should always go with the worst-case scenario in analyzing the deal (plus the contractor is a better expert for repair costs than your agent, but I would get multiple bids).

It doesn't seem like there is enough meat on the bones for this deal. Just using the 70% rule, you should be trying to buy it for around $45k. Ignoring that rule given that this is BRRRR and not a flip, if you want to be able to pull all of your money out it seems like you would need to get it for no more than $58k (including closing costs).

Hi @Jon Passow,

For someone in that hypothetical situation, it is good that he/she is looking for a CPA.  If the million dollars is an inheritance, the inheritance itself is not taxable but income that it generates would be.  Therefore, it is a good idea to talk about how to position yourself best for taxes before receiving the money.  It would also make sense to have a financial advisor on the team even though this hypothetical person plans on investing in real estate.  This person would also need a good attorney (both for estate planning and for real estate).

Do you also target your list based on equity?  Absentee owners with large equity in the property might be more responsive.

It would be helpful if you say exactly what you have tried when you say you have tried the basics.

Have you tried driving for dollars?

Have you purchased a list?

Have you run a targeted direct mail campaign for 3-6 months?

I am looking at different value-add opportunities for potential office building investments, and I am curious if anyone has tried selling "reserved parking spots" to tenants?  I would keep a certain percentage of the parking lot available for general parking.

Do tenants like having reserved spots?  If so, do they tend to like it enough to pay for it?

When you do sell reserved spots, do you include it in the lease or have it available as a monthly (or annual) add-on?

The BRRRR method is great, but I am a bit confused as you seem to be talking about doing it with your current house. My understanding of the strategy is that you would find a good investment property, increase its value and stabilize it, and then refinance.

Pulling out cash from your primary residence tax-free can be great, as long as you are getting a better return than the additional interest you are paying.

I like that you are coming up with a game plan, but I have a few issues with it.

1) A $1,000 emergency fund is almost worthless.  For a true emergency fund, you should have have enough to cover at least 3 months worth of your expenses if nothing is coming in.  Think worse case scenario (for whatever reason you cannot work, and all your properties are vacant and/or burned down and you are waiting for insurance to finally pay out).  Your emergency fund should be enough to actually cover you in an emergency.  Also, I am not a big fan of money market accounts because they generally don't pay well.  There are online banks that pay over 1% (closer to 1.5%) for a regular savings account.  Do some research into one with a good reputation.

2) I like this; it is smart to pay off variable rate debt and anything else that can easily be paid off to free up your cash flow.  However, if the car payments are low and your interest rate is around 1%, you might be better off investing than paying off debt.

3) Building your credit score will be helpful.

4) Good luck with this.  It seems like you are trying to be too creative here, and for an amount of money ($1,000) that really isn't enough to move the needle.

5) I think house hacking is a great idea.  However, if you only have one tenant and are living in the other half of the duplex why hire a property manager?  Get a number for a good handyman if you want, but it seems like you would be wasting money to hire a property manager in this situation.  When analyzing the deal include the cost of a property manager, but if you only have 1 unit and you are living next door don't waste your money.  Use the amount that you would pay a property manager to accelerate your other investments.

6) Ok.

7) Ok.

8) I doubt 50 doors will be enough to retire off of (by themselves) unless you plan on living a fairly frugal lifestyle.  However, getting to 50 doors is a good goal to have.

For me, I would sell if I could 1031 into a better cash-flowing property.  In your situation, given that you have had great appreciation but the whole market for SFHs in your area probably also appreciated, I would consider doing a 1031 into a multi-family.

Hi @Will F.

If you decide to outsource to a bookkeeper, there will definitely be a learning curve at first.  Often two bookkeepers will not do everything the exact same way, so I am sure even a great bookkeeper will take some time to learn your system.  After some time and experience working together, I am sure that a good bookkeeper will be able to understand your system and improve it in ways that you would appreciate but perhaps not have thought of yourself.

Having good software that you can operate yourself can be a huge help, but as you mentioned it still requires your time.  That might make sense for someone with just a handful of units, but since you seem to be growing quickly it seems like your time would be best spent working on (or even in) your business rather than doing the bookkeeping for your business.  I would make the time investment to train a bookkeeper to work with your system.

Hiring someone in-house is a huge investment.  It might ultimately be the best thing for your business, but I would start off with outsourcing so that you can see if 1) that works for you, and 2) if you work well with that person (you might be able to bring whoever you outsource to inhouse).