All Forum Posts by: Broderick Graham

I want to submit an offer on a property that has some foundation issues, but the seller is willing to pay for the repair (quote already in hand). The warranty is for 25 years after the repair has been made.

I'm not worried about the issue, but I'm new to REI and I don't know how much it will scare off potential buyers when I go to sell after having rehabbed the property.

Is this usually a no go for buyers? Anyone had experience with this?

I found a post from 8-9 years ago in which several people confirmed that Detroit was landlord friendly. 

Is this still the case or has anything changed to make it difficult to now have rental properties in Detroit as far as managing tenants goes?

A real estate agent who has her own portfolio just sent me a listing for a triplex and mentioned that by raising the rents we could substantially raise the value of the property.

My understanding is that a 2-4 unit multi-family is valuated based off of comps alone.

Can anyone verify that amount of income for a 2-4 unit multi-family property is factored into the official value that an appraiser would send to the bank?

@Courtney Halperin - Did you ever find a good realtor fitting this criteria? If so, do you mind sharing the name/contact info?

@Ed Matson: Thanks Ed, I will certainly look to go the route of residential loans.

@Kelly DeWinter - love the creativity as well as the practical possibilities. Thanks for the feedback!

Context:

As a new, bright-eyed, soon-to-be real estate investor in multi-family properties I want to be aggressive in building up a portfolio to where the rental income would allow me to step away from my full-time W2 job within the next few years. I also realize that I don't know what I don't know and that could hurt me. As a result, I want to lay out a scenario I hope to create (let's assume I can create the scenario below) and I am asking feedback on all of the things that could go wrong that I should anticipate/prepare for:

Scenario:

• 5 fourplex properties = 20 units (average $900/month rent) - Looking for cash flow not necessarily appreciation for these properties
• $1.5MM in investment property debt (Average purchase price $300K; Market Value $400K)
• $500,000 equity across properties (Average $100K)
• Loans: Conventional fixed rate or seller financing fixed rate
• Rental Income: $18,000
• Mortgage for all properties monthly: $10,000
• Cash Reserves on hand: $200,000 (separate from the equity in the properties)

Reason for Scenario: My purpose in stepping away from a full-time job would be to start ramping up flips to pay down the mortgages over time. The expectation would be that I can at least do 4 flips a year (average $30K) to cover our living expenses and let the rental income build up the cash reserves month-over-month for vacancy, repairs, capital expenditures, etc.; however it would be a safety net from month to month, if needed.

Request: I want to know any and all of the possible financial or other real estate investing issues that I might come up against that I need to be prepared for that could put me in a precarious financial situation.

So please, unload any and all possible events that would make this scenario something that would put my financial situation at risk.

Thanks for your time!

@James Wise @Tom Ott: Your advice makes sense and is duly noted. 

One clarifying question: Do you view out of state BRRRR's as the same level of risk as a flip since I would need to contract work to be done to force appreciation, or do you see the main risk being in the resale aspect of the property? I'm trying to pin point what part of the process you deem as the most potentially problematic.

@James Galla: James, I really appreciate that insight about being a legal target regardless. That's a fair point that most people wouldn't be doing checks into my financial standing if they want to find a reason to go to court.

I definitely have been enticed towards those lower cost units but am trying to find a sweet spot of safe, up and coming neighborhoods where the costs are still reasonable. With a BRRRR approach in mind, I'm hoping to ensure the units are in relatively good shape from the onset, but will be mindful of the tenants I rent to in order to try and keep them in good shape. Thanks again for those points of consideration!

@James Wise: Thanks so much for that guide to Cleveland neighborhoods. It helped me rule out several properties that I was considering. 

In way of flipping, I haven't done any yet. I'm conflicted between taking longer to scout out a deal or two here locally in Utah where I live in order to get my feet wet and a better overall process in place before going out of state OR just jumping in and buying the investment property in a market like Cleveland and BRRRing it (essentially the same thing from what  I can tell, minus having to sell it) to get familiar with the process. After I have several successful side hustle flips/BRRRs behind me, I want to transition over full-time to flips locally and in 2-3 other markets at a time as well. 

@Antoine Martel: I appreciate you confirming that you have had good experiences in the Cleveland market as an out of state investor, and that my strategy sounds logical, on paper at least. I see you do turnkey properties, but if your company also manages any properties in Cleveland and are looking to add additional properties, I may be interested in chatting about that after/while I find properties to rehab and rent out. Thanks for the offer.

@Nicolas Carucci

@Nicolas Carucci: You are right, sir. Definitely have not been punched in the face yet. Looking to get in the ring like you said about taking action, and hopefully I can start out with minor bumps and bruises as I look to get some momentum. I'll be sure to keep learning while taking action pretty soon here. Again, I appreciate the words of encouragement!

Hi Bigger Pockets Community,

I'm brand new to REI and have been consuming as much information as possible over the course of the last few months trying to determine what my strategy should be. Would love any helpful insights/constructive feedback to my proposed strategy below:

What I want to accomplish: At this point, my ideal is to get to 10 units as quickly as possible by purchasing duplexe(s) and four-unit properties that average at least at least $250/unit each month in cash flow right out of the gate, and then I would be looking to do several flips over a several year period to pay down the mortgages as quickly as possible (I realize a lot of investors say this is dumb because it makes me a legal target if I have equity in my properties and/or I'm not using any equity to its full potential. I'm not worried about those two aspects though).

How I plan to accomplish: In order to achieve this I'm looking out of state in markets like Cleveland, OH (open to suggestions for midwest and southeast) where I can find cheap properties that won't necessarily appreciate much, but will bring the cash flow I'm looking for.

Long Term: Once I get 10 units of this type paid down and am financially free, I figured I would then focus on looking more earnestly at properties that are in more expensive/higher appreciating markets that perhaps just bring more modest cash flow. 

Any experienced investors out there who can provide feedback around things to consider, why it is or is not a sound strategy, etc?