All Forum Posts by: Chad Kastel

Going in to the corporate world simply because you put all this effort, time, and money in to school is something called the "sunk cost fallacy."  You've made a mistake and then are going to continue on that path simply because it is a mistake.  

That being said I give general advice to people in your situation. Work your W2 job, save as much money as possible. Get your real estate license (multiple revenue streams). House hack a home (using FHA or FHA 203K). Save as much money as you can and learn as much as you can. Once you amass capital + have cash flow it will be very easy to exit the w2 job if you hate it and not have to worry about where your money is coming from. This is especially true if you also have built up some clientele as a realtor.

By doing it this way you're building yourself a hedge.  Yes you might be starting a little slower on the real estate side, but you're also giving yourself many options for your future and building a good foundation.

Hello Adrianna,

I'm going to do my best to answer your questions below.  A little back-round on myself.  I stumbled on to bigger pockets in mid October.  I starting ready my first book by the end of that month.  Put an offer on a property December 10th and closed 1 month later.  The property is a 3.5 hour plane ride away in upstate NY and I've never been to the town.  I had little to no knowledge of investment properties before coming across bigger pockets.

1. Analysis paralysis is a huge part of getting started in real estate BC unless someone spoon feeds you, where do you start? There are a millions towns, many strategies, many success stories, and failures. First, you should start with a strategy. Are you purchasing turn-key rentals? SFH or Multi-family? Are you flipping/brrrring? wholesaling etc. Then you should start networking, first start with your friends or family, reach out to people and tell them what you want to do. You may have someone in your life doing this already or they may know someone. Then start going to local real estate meetings which is another way to network. I have been non stop talking about real estate. The way I ended up buying in upstate NY was through conversations over social media with a friend. He had properties in a near by town that were cash flowing well. He introduced me to a mutual friend who was looking to get in to property management who introduced me to a realtor who introduced me to a regional bank who gave me a loan. After analyzing many deals and putting offers in, I bought

2.  Purchase the "pro" account for bigger pockets.  You get a calculator which can help you estimate the cost of rentals, rehabs, etc... Read the bigger pockets books and other real estate books.  Learn your craft.  I could give you the specific books I read if you'd like.   Listen to as many podcasts as you can.  Then, if you have friends that are interested, explain them what you're doing and why you're doing it as if they're investing in the deal.  If you read about how to analyze a deal, listen to it, and then explain it. Then you know how to analyze a deal.  After you completed question 1 you'll have contacted a realtor (or some other way to obtain listings) about the type of project you want.  Analyze every deal that comes your way.  Play with the numbers, Assume worst case scenarios, middle of the road, and then perfect scenarios.  

3.   If I knew the exact answer to this question I'd probably be a billionaire.  But this also depends on your strategy.  There are certain towns where you want to be flipping and certain towns where you want to be turn-key rentals.

4. Network network network.  Go to real estate meetings, real estate conferences.  Constantly talk about it, ask questions, troll the forums.   I've had two major mentors in my life and I've mentored one person all non real estate related.  I believe in the concept. That being said, I think too much emphasis is being put on getting a mentor.  There are a lot of books on real estate and if you come across a deal you can post it in the forums (it will black out the address) and other BP members will help you analyze it.  That's building a make shift mentor.  

@Adam Johnson.  I don't know the history of the structure.  But the commercial unit is not on the bottom.  The unit is it's own stand alone space.  I'm not concerned with turnover.  The reason it is empty is b/c  the seller didn't renew the lease on long time tenants because they were trying to sell the house.  In addition, I just purchased it and doing some minor renovations/maintenance and will be renting it after.

I will not see major appreciation of the property, this is mostly a cash flow deal.  I didn't buy based on potential rent increase, the number are great as is.  That being said, the landlord before me did not strike me as someone who treated this as a business and probably did not raise rents correctly.

The market research on regular rents was done correctly.  I DO NOT live close. I should've one the market research on commercial space, but I failed in that area.  I thought we would just be likely to sign them to a 3 year lease and move on.  Only after doing more reading did I realize I should at least evaluate what the space is worth.

@Ellie Perlman.  Thanks for the response.  I just assumed rentometer was for residential, not commerical.  I'll look in to it.

Hello Fellow Landlords,

I purchased a two family residential property (vacant) that has a commercial unit on the property but complete separate (occupied by a pet grooming store). This is in Binghamton NY.  The grooming store has occupied the location for 5 years.  After an inspection they have kept the place in good shape.   They have changed the property to suit their business, but the did it in a way in which it would be easy to convert it back to normal without much time or expense.    I don't know how to analyze commercial rent for square footage and I have two questions:

1. Can anyone suggest a website (like trulia) that can help me determine what fair market value for rent is for a commercial space

2.  In the abstract I would like to keep these tenants.  They are good wholesome people who pay their rent on time.   They pay $800 a month and can't afford to pay much more.   My question is what percentage of what would be considered fair rent would be mathematically incorrect to take no matter how good and stable the tenant.  For example if I knew fair rent was $825 and I'm collecting $800, I'm not going to raise rents at the moment and risk losing the tenant.  But if fair market was $1200, this would be easy for me to raise rents or try and find a new tenant.  I'm not sure where to draw the line?I have plenty of cash reserves and it would not kill me to lose the tenant financially.  But I also don't want the hassle of finding a new tenant who could potentially not be great.

Any help is appreciated.

@John Williams  It won't hurt to make the seller understand you're serious.  I could see a strategy for using a large earnest money.  Such as you stumbled upon a really great value property and the large earnest money would put the owner's mind at ease for whatever reason.  Otherwise it's probably too much risk to put that much earnest money for ~180k deal. 

If you want the best ability to negotiate the best sales price then use cash.  If you don't have cash I don't see adding more earnest money ruining your leverage.  It might be a tie-breaking variable if the owner was choosing between offers(For example someone else was offering 185k with 1k earnest and you're offering 183k with 20k earnest). But again, this is too much risk with not enough reward.

@Jason Bott

Thank you Jason.   The information you have provided me has been tangible and unbiased. It has sincerely helped me.  I will do my best to pass the information on as I read or talk to people who have similar questions.  I made the mistake of spending all my time learning how to analyze  and purchase a deal.  Of course I knew about insurance, but I didn't send time in advance on learning about concepts or nomenclature.

@Jason Bott.  Thanks for the response.  This article helps.   A few follow up questions:

1. How do I determine which agents are NOT bound to a single provider?  Is this something I just ask directly?

2.  How do I determine how much insurance I need.  The quotes I'm getting are offering 1 million liability that has 2 million of total liability per year?    Is this industry standard?   How much insurance do I want?  Is this based on how much the property is worth?  Is this based on my net worth?  Am I supposed to get umbrella insurance?  All my quotes have also determine different values for the building.  None of them have included "loss of rent/business coverage"

I'm happy to read any and all articles.

@Paul McCue.   Thank you for the response.  Did you sell because you moved away?  I've actually never been to Binghamton.   I was forced to buy out of state because South Florida was not great for my price points and the cash flow I was looking for. I will let you know if I find wholesalers.

Hello Fellow Landlords,

     I'm closing on a property Friday and I've gotten a bunch of insurance quotes.  But I've realized these aren't apples to apples.    I'm buying a property for $78,000.  I'm thinking for 1 million dollars in limits.  What I don't know what to do is what coverages to ask for.    In addition, this property has a commercial unit which has added a layer of complication.  Any help or articles you can point me to will help.

I'm purchasing a Two Family property in Johnson City, New York with a commercial unit on the property.  I'm looking for references for good property managers in the area.   

In addition, I'm planning on buying property to BRRRR and/or flip and am looking for realtors and wholesalers to help set me up with those deals.