All Forum Posts by: Chad Kastel

Thank you so much :).  I forgot to mention, I'm going to be a guests on Joe's Podcast on April 11th, I'm not sure when it airs.  But I'm going to go a little more depth in to my story.

Hey @Kenneth Garrett

I live in South Florida started researching real estate in November 2018, went under contract with a mix-use triplex property in upstate, NY (never been there) on December 10th.  After I closed, I decided I want to scale much bigger and wanted to go in to larger MF's.  I went to the Best Ever Conference in Denver with one of my goals to find a partner with a little more experience than me.  But not someone with so much experience they wouldn't want to work with me.  After meeting well over 200 people I found someone who aligned with my goals.  We are in the process of forming a partnership.  It was a phenomenal experience.   

I also have hired a coach, while expensive he is going to save me money and time in the long run by helping me to avoid potential mistakes and will accelerate me to making money faster than if I did it on my own.   We speak ever other week for an hour, I get "homework,"  which I complete and then we discuss.   

@Michael Randle.    Cap Ex is going to be subjective.  Depends on the age of the property and what repairs it needs done.   I've been using 5% but I don't think 10% is wrong.   Vacancy rate can be determined using the data that craig's list or zillow presents.  You can also create "dummy" adds on craigs list to see if the price point you are advertising for rent will actually be attainable, you can base your vacancy based on that and the type of tenant you may obtain.  I've been using between 5-10% depending on the neighborhood.

6 months is conservative. Three month is the supposed minimum.  The more properties you have can push the number down, if you had 100 properties maybe 4.5 months on average is fine.   For now 6 months probably gives you the most leeway to make mistakes and for bad things to happen (and for you to worry a lot less).

In terms of the MLS, where are you living? I know in Florida I could not find cash flowing deals using a similar Florida, But I've been able to use the MLS in other states.

@Jeremy Segermeister.  Ditto what Anthony said about maintenance, Cap Ex etc..    This may be the formula that you're forced to use in California to try and justify deals. You would 100% consult a CPA to find out if these numbers work and make sense.  Since you'll likely going to be doing it again. I don't know what you do from work, but if you could find a way to get other passive income you can also write the passive loss's from the real estate against that and save tax's on what you otherwise would've paid on that income.  Investing in a good accountant is always worth it.

@Account Closed  Your question is vague.  As a guess It seems like you have a budgeting question.  My questions to you are what do you make and where do you spend your money?  If you don't have a budget, you need to start one so you know where you can make cuts from to be able to save for the down payment.

Hey @Jeanysha Jean-Baptiste

You're taking all the right positive steps which is better than 95% of people out there who talking about getting in to real estate.  What you're experiencing is purely mental, so to overcome the "fear and doubt" you need a mindset book and meditation.  I've been recommended many times a book called "the miracle morning."   Read that and it should help you with your mindset.

As a young college student it is going to be harder to break in to any business.  It's not impossible, but you just need to work harder.  Thankfully you're young and have time.  If you want to prove yourself to any potential business partner, make sure you understand the nomenclature and can have a conversation in whatever your specifically dealing with.  Right now it's wholesaling.   Above else, being consistent is extremely important, even more so if you're young.  If you say you're going to do something, make sure it gets done.  You are far less likely to get the benefit of the doubt.  

Hope this helps :)

Hey @Curry Blackwell.  My first property was an air bnb house hack in a major vacation area.  If you haven't purchased a property yet my suggestions is to make sure that if it was normal rental with a year lease it could cash flow positive, that way if for whatever reason people are coming to stay changes you're not stuck losing money.    The "good" is if done well you should be earning considerably more than you would if you rented the property as a standard rental.  The "bad" is that until you can afford to pay someone to run your air bnb there is a lot more work.   Interacting with guests before during and after is a must.  Your reviews matter, so you always have to be on your "A" game.  Another potential bad could be the City's rules and regulations.  Some cities are very "pro" transient rentals and vice versa.  But that can always change when new leaderships comes in to local government.  I didn't really have too many "ugly's", but I was very diligent about who I let stay at my property. If they didn't have reviews I would make sure they were fully aware that the property was in a quiet neighborhood and any noise complaints would result in expulsion.  That usually kept the bad guests away.

@Duane Gunkler.  This is definitely a subjective answer.    In terms of vacancy, if you're renting out the entire townhouse, it's either going to be 100% occupied or 100% vacant. By renting out the rooms individually you're actually theoretically limiting the likelihood of 100% vacancy because you are less likely to have two rooms empty at the same time.  

The theory will depend on the demographics of you're area, if the townhouse is in a very suburban neighborhood, or in an area with a lot of studio apartments, it will probably harder to rent out two single rooms than say in a college town.   If you're curious if this is possible, do a "test" advertising on craigs list and see how many responses you get for the singles vs someone renting the entire location out.

For my perspective the extra $200 per month would not be worth the hassle unless the market catered to that (i.e college type town).  But I would start to consider it at $300 per month and up.  At some number the "juice is worth the squeeze".

Another thought is to reach out to a great property manager and pick their brain.

Hope this helps.

Hello @Sinil Kim,

  I'm a newish investor (I have 5 doors).   I live in South Florida and was looking for small MF's and was having trouble finding cash-flowing properties (looked at 100 properties).  I ended up purchasing a mixed-use triplex in upstate NY near Binghamton. I've never been there before. I didn't visit the property.  I read @David Greene's  book about how to invest out of state and followed his action steps to purchase a property out of state.   It took me 3 weeks between reading @Brandon Turner book on how to purchase rental properties and David Green's book before I started making offer.  It takes effort, but it's not complicated.  "Out of State" really refers to any area that you're not familiar with and can't self manage. The tools you learn are tangible and helped me with my purchase.   You will need to get interview and find a good realtor who knows the area well, general contractor, maintenance person, and property manager.  Generally speaking rock stars know rock stars....so if you can interview and find one of those you can get to others.    

In terms of where to invest, maybe network with someone you know who is in an area that you can afford and has the cap rates or CCROI you're looking for.  Start with social media circle, if one of your friends doesn't invest in real estate, someone in their circle probably does. 

In terms of if you should visit the property, I don't think it's necessary.   Go to google Earth, you can visit the neighborhood that way. Personally there is nothing I can do from a maintenance/ fixing the place.   When looking at a property I would ask the realtor to take more detailed pictures of any properties that they go visit.   Then if there are any issues that need repair you would have your maintenance man or GC take extremely detailed before and after pictures.  

Hope this helps :)   

@Amy Chen. I don't know the specifics of Brookline, Pittsburgh. You can do a search on any number of government survey website for population growth, median SFH purchase price, unemployment rate etc.. to determine if it's a market that fits your desires.

I did just purchase a mix use property in upstate, NY and wanted to chime in with some concepts you may or may not be aware of.    I made two mistakes.  One is I didn't know insurance cost more money and can be more complicated with mixed use properties, it ended up costing me about $30 per month, not a huge deal.  If you haven't reached out to insurance companies, consider getting some quotes before you do to make sure you don't end up making a mistake that will hurt your bottom line too much.  Second mistake: BOA and Chase bank both had policies they would not give me a re-finance for a mix-use property (I bought in cash). I ended up having to find a regional bank that was a portfolio lender.  Will cost me ~$50 per month.  Luckily my deal is fat and now my CCROI is about 10% worse.