All Forum Posts by: Christian Rojmar

Good evening BiggerPockets members. Does anyone have a great source for what rehab items can be deducted immediately v. depreciated over 27.5 years? I understand that the major items like replacing floors, bath, kitchen, and HVAC will be depreciated over 27.5 years, but there are some items like scraping the ceiling, updating a drive way, and fixing a bathroom closet that I am not sure about. Can I just put up a "for rent" sign in the yard once the major items have been taken care off and the provide a list of all the remaining items to an accountant who can make a determination for me? Just want to make sure I do not get in trouble for putting up a for rent sign too soon. And I know, I should have gotten an accountant already but working on that now!

Congrats on your first deal! Awesome! What property management company do you use at 5% in KC if you don't mind me asking? That is incredibly low.

What are you guys take on the real estate market in the coming 6+ months? As a start, what is going to happen with the people that own a large number of short term rentals and are unable to get any rental income over the next X number of months? What about all the people that are way over leveraged after seeing 10 years of up up up? Stay safe and healthy everyone! I can see this getting as bad as 08/09 but I hope I am wrong.

@Amber Koontz, I agree 100% with @Tim Herman. Look at the 1% rule as a first step. If it fails, move on. If the property qualify, do a more detailed analysis. If you have analyzed enough properties in your area, you should get a good sense as to price v. value and potential rental value of properties just by looking at pictures and where the property is located which should help as well.

You may want to take out a map and circle an area within a two(ish) hour drive of where you live as a starting point. Then research each part of the circle (school districts, crime rates, businesses in the area, growth in employment, etc.) Once you have found a few potential areas, go there and drive around the neighborhoods to get a feel for the areas. If you want to avoid some of this work, go to local REA meetings and talk to other investors (something you should do regardless). If the area you live in is expensive, it is likely that many of these investors target neighboring areas and will likely be willing to tell you where to focus your search. Find a great realtor in your area that has a lot of knowledge and understand working with investors. He/she will likely be able to tell you where to focus your search based on your criteria as well.

@Farshad Mansouri

I typically use the following as a starting point and then adjust based on location, condition of property etc.:

Vacancy - 6-8% (highly dependent on area - I only look in high quality areas)

CapEx - around $150 for a 1,500 sqf SFR (highly dependent on quality of property, location, if you are rehabbing the property upfront, and how long you are planning on keeping the property). Do not use % allocation for CapEx because CapEx does not change with value of property (it will change based on size of property however so need to consider that aspect)

Maintenance - I typically bake this into CapEx costs which puts the total closer to around $225 for a 1,500 sqf SFR (also dependent on quality of property, upfront rehabbing, etc.). I've heard people using around 15% for both CapEx and maintenance but again, CapEx as a % of rent does not make sense IMO.

Property Management - 11%

I am not sure about utilities - Not something I would pay.

@Lydia R. thanks for the suggesting, makes sense. I will spend more time focusing on my marketing criteria to make sure I target the right properties!

@Lydia R. I appreciate the feedback and your point is well taken. Personally, though, I would prefer not to have potential leads learning that I will not pay all cash or close quickly despite having it in my marketing materials. Since you brought up weight-loss products, what is the reputation of such products that do not work as advertised (which is probably 100% of them) - awful lot of complaints and negative reviews. I want to build a reputation of honesty, integrity, and that I do what I say because in the end, that will benefit all parties involved. At the same time, I may have to rethink my strategy of spending thousands of dollars on marketing if by not including all cash/close quickly statements will make the marketing useless...

Good morning fellow BiggerPockets people! I am thinking about starting a direct mailing campaign (or another marketing campaign) to target specific areas but would prefer not to have the all cash and quick close statements in there. Is it a huge detriment to not offer all cash and a quick close for getting leads? I can pull together funds to do all cash offers but would prefer not to..... Have any of you guys run a marketing campaign without these slogans? If so, what type of campaign did you run, how did it go, did you notice a big impact to your leads and closing rate, any recommendations?

Appreciate the feedback!

Christian

Are there any areas closer to where you live (within a couple of hours driving) that you could look at first. Makes it easier for you to drive out meet with contractors, review rehab work, etc.

If not, do you have anyone in the particular area you want to invest in that you can trust (boots on the ground)? If not, it is certainly tough and risky. I have built a great relationship with a property manager in a new area whom have agreed to go out and do "surprise" visits, take videos, and tell me how the process is coming along. I will also use my realtor as a second source. The third source will be my wife's brother who lives in the area and is in the flooring industry so understand rehabs etc. By having multiple people I can trust on the ground to review the rehab work, I feel confident that I do not have to go out there during long periods of times and make sure everything is going smoothly. Also make sure you vet the contractors carefully and pay as little upfront as possible - i.e. pay for material of the project and then pay once the particular project is completed and you have had a trusted person(s) review and ok the work. That way you have some leverage. You may also want to put into contract that if the rehab is completed x number of days before expected deadline, contractor will receive a 5% bonus and if it is completed x number of days after deadline, a 5% reduction will occur weekly or something along those lines to make sure they are accountable.

I would suggest that you read the book "Long Distance Real Estate Investing" by David Greene if you really want to invest out-of-state. He provides a lot of great ideas for how to reduce the risk of investing out-of-state.

Good luck!