All Forum Posts by: Bryan F.
Bryan F. has started 0 posts and replied 38 times.
Post: Mortgage Rates Are Dropping… But Are Investors Really Winning?
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We are set to close in a week on our first buy and hold purchase in nearly 3 years. We’ve never consciously jumped in or out, but have always just invested when the returns made sense. The last few years we’ve been primarily focused on improving operations and improving our existing portfolio to boost rent/take care of non-sexy, but necessary capex because the returns we need vs seller expectations just didn’t make sense for us. Those dynamics seem to be starting to reset a bit and rates probably have a little bit to do with that, but the more likely case is that some markets are starting to get closer to an equilibrium between buyers and sellers.
Welcome! Fort Wayne is a great market to be a local investor in. We've been investing in Fort Wayne for many years now. I'd recommend reaching out to Jordan Wildman with exp. He's a local investor and agent in Fort Wayne. You probably won't find a better person to help you on your investing journey in the area than Jordan. If you are considering at using a VA loan option for your first investment, you could look at new build duplexes. That would provide you some easy training wheels for your first investment and would allow you to get into a higher quality asset right out of the gate with low money out of pocket. There are a few builders in the area building duplexes on the north side. Good luck!
Post: Out of State investing does not work. With very few exceptions.
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Quote from @Marcus Auerbach:
You've been sold a pipe dream. I get it. Finding deals has become a lot harder in recent years, which leaves a lot of people frustrated and looking for alternatives. And because the grass always looks greener on the other side, you are looking to invest OOS. Because the grass always looks greener on the other side.
Investors are supposed to be good at math, but nobody is talking about how the math is impacted by not being local.
Anything you do remote is harder and costs more. There is a cost burden that comes with OOS investing. I would say that is at least 10%-20% on everything. In some cases, it's hard cost, in some cases soft cost or just inefficiencies. You will on average pay more for the same deal, you have to hire a GC instead of just subs, your contractors may charge you a little more, order too much material or make mistakes you would have caught, if you would have been on the job at least 3 times a week (like I do). Every service call is more expensive and it will take longer to rent it out. The quality of the tenants is lower, simply because nobody watches your money like you do.
The book you have probably read about OOS investing tells you to get three quotes from three contractors. Sounds easy enough. Until you find out how hard it actually is to find just one contractor who has time and is willing to spend half a day walking your property and giving you a "free" estimate. We have a contractor shortage. The good ones don't even answer their phone if they don't know the number. It's these little things that sound so easy and reasonable in that book, until you try to do it.
So when does it make sense to invest OOS?
In my opinion, you have to find an economic delta that is large enough to make it worth while the OOS premium. If you live in Chicago, investing in Milwaukee does not make economic sense. Milwaukee is a slightly better market and you are less than 2 hours away, but it's still remote and the small market advantage in the end not worth paying the OOS premium. Keep your home field advantage. If you work in tech in CA or in finance in NY, it might be worth it to go OOS. Your income is higher and local real estate is absurdly expensive. The economic delta is big enough to offset the additional cost.
Elon Musk calls that first principle thinking, you could just call it common sense.
The absolute worst case scenario are OOS investors hunting for bargain deals in the hood. Because they don't understand. They buy a 100-year-old house at half the median price that has a ton of overdue capex. They hire a cheap PM and ask them to keep the rehab budget under 10k. And then they can't find a tenant. Or just a really bad tenant who trashes the place. They get in trouble with the city, because their house is so bad the city issues work orders or fines them for garbage in the front yard (like a mattress or tires - often dumped by someone else not even living there).
Now the OOS investor finds out that reality does not match the spreadsheet. Perhaps the worst part is when they make the local news and give all investors a bad name, because the press forgets to mention that the absentee owner has not seen the property in years - and it's just bad press for landlords in general - and soon enough local politicians start calling for more regulations..
Based on my own investing experience for over 15 years in Milwaukee I feel in general that it is always best to buy the best quality real estate investment you can afford at the time. Ask me how I know! That is true if you are local, but even more important if you invest remote and every little step is harder and or more expensive.
1.) Start investing local first. Ironic advice, I know, but you will learn more from the experience of doing it all yourself than you will from a book/blog/podcast/social media guru
2.) Dial in your processes and learnings from your experience as a DIY landlord to define how you want to run your OOS rentals (how you screen tenants, find deals, manage marketing, what materials you use on rehabs, how you manage rehabs and turns, etc) and the characteristics/qualities you'll want from your OOS PMs, Realtors, wholesalers, lenders, tradesman, cleaners, you name it.
3.) Pick your OOS market because it offers some sort of unique outsized growth opportunity your current market does not (don't pick it just because it's cheaper)
4.) Travel there often to learn on the ground nuances of the areas, neighborhoods, streets, and to network with all of the folks listed in point #2
Personally, OOS investing has helped me scale. By putting a time barrier between me and some of my properties, it's forced me to get serious about setting up and running a successful business that doesn't allow me the crutch of my own manual labor/time to paper over corners I cut somewhere else. It's also had the additional benefit of giving me higher returns than I saw in my home market of over the period where I was investing most aggressively.
Post: Buying my first investment/rental in 2025!
- Posts 38
- Votes 22
Quote from @Dave Bobka:
Hey Jacycee! For this first property, looking for something in the $100k-200k range. Based on that range, I have been eyeing SF's in IN and OH. Turnkey or close to turnkey would be nice, but willing to consider a fixer upper for the right opportunity.
Do you live in Wisconsin? If so, I'd recommend investing in your own backyard as opposed to going out of state. Spend a little more money than you might have been planning to, buy in a better area (i.e. not a "turn key" 100k house off the mls), and self manage. You'll learn the ropes on how to be a landlord with a lower risk/higher quality tenant-base. Once you've made all of the rookie mistakes and have your SOPs in order, you can go invest out of state with a game plan. If you buy the 100k house in Cleveland off the MLS as an OOS inventor and turn it over to a local PM as your first investment, you might be out of real estate investing in 2 years or less.
Post: Selling one home to get three - smart or stupid?
- Posts 38
- Votes 22
Quote from @V.G Jason:
I don't understand borrowing money to borrow money.
Especially in this environment, why take that risk? Save up and buy deep. Patience and discipline reaps its rewards.
Post: If you magically had 100,000 to invest...
- Posts 38
- Votes 22
Quote from @Chris Seveney:
Quote from @Nico Welthy:
Quote from @Chris Seveney:
Quote from @Dave Allen:
I'm in a bit of a situation
My wife and her parents are selling a duplex they own together.
My wife is trusting me to re invest into cash positive investments.
We could stand to take as much as a quarter million, and tax free since we lived in the property 2 of the last 5 years.
What are some suggestions for markets that would provide cashflow? I'm looking at Duluth MN because of a video posted on BP, but I recognize this is an opportunity most would dream of, because it's one I've often dreamed of
Well now it's in my lap, and the pressure is on.
Hit me with your scenarios, what would you buy? Where?
Thanks for reading
David
I would not buy anything right now, I would wait a year or so and see where prices are headed. In the meantime I would put the money in a low risk account gaining 4-5% which for $250k would be around $1k/month.
Hey Chris - what is driving the sentiment not to buy anything right now? I came into about 800k and looking to go into commercial multi family in the Midwest (Iowa most likely).
I think it depends on the individual and opportunity. I would not buy something right now just to buy something. Now of course there are still deals to be had out there, I am not saying that, but its a lot harder to find those deals today than five years ago when everything was a deal due to low interest rates.
We are always buying but this is my business, so we have a team etc. to manage it. The person who comes into money but not a lot of experience in real estate should be a little more cautious right now.
So overall, I am not saying - do not buy, I am saying be careful. For example I know many who are now just lending because they are getting 10-12% short term which is far better than any cap rate on real estate. you do not have the equity upside as you do real estate but its a way to play the short game to see what happens over the next 12-24 months and decide when you want to buy.
Cash flow is never going to be what your spreadsheet tells you it’s going to be. Focus on buying based on value. That’s what will make you money in the long run.
I'd recommend reaching out to Jordan Wildman with EXP who's a local real estate agent and investor in the Fort Wayne to get started in the market.
Fort Wayne offers a number of different investment options from older multi-families (more labor intensive) to new construction build to rent. There's a number of property management companies and individual mangagers in the area. Depending on the strategy you end up going with will probably dictate what property manager makes the most sense as they all have their different niches they excel at.
Post: Appeal Property Assessment Value in Fort Wayne, Allen County, Indiana
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You'll need to get those in ASAP as I believe the deadline for getting your appeals in for Allen county is tomorrow. If your bank ordered appraisal (if you had one from your purchase) is less than the assessed value, that's a good starting point to submit as supporting evidence. The GIS site can also help you pull comparable sales if you want to submit comps yourself. Additionally, Allen county allows you to use the lesser of assessed values based on either the comparable sales, or the income approach. You'll need to provide leases for the property that are no more than 18 months old. We had a lot of luck getting some our multi-family's down substantially this year switching some to them income method. Good luck! I'd recommend making a habit of doing this annually, and getting started the moment you get your packet in the mail.
Post: Newbie with questions about other newbies experience in Newbie wit real estate market
- Posts 38
- Votes 22
I'm not sure that someone's past performance in the market will be helpful if you are trying to assess your potential future performance. We've been investing in Fort Wayne for a number of years now and have done well. The next 5 years are going to look a lot different for investors in the market than the last 5 did. We are at likely record high price to rent ratios (like much of the country) without much upside on rent growth in the mid-term paired with steeply rising taxes, financing, and insurance costs. So the question comes down to what's your strategy and how active do you want to be in your investing? Gone are the days where you can buy a cheap 100 year old multi-family off the MLS, turn it over to a local property manager, and make a great cash on cash return out of the gate. If you plan to be more active and scrappy in your investing, there's always a way to make money. If you want to be an armchair investor, you can probably find easier asset classes that will offer a better return despite what your initial spreadsheet numbers might be telling you.