All Forum Posts by: Christopher Abele

I use the same quickset electronic deadbolts on all my properties. All are programmed with the same master code and I pre-program single-use codes for potential maintenance work & contractors ahead of time. I allow the tenant to select the entry code at move in. I do keep a key just in case the tenants let the batteries die. 

A couple of things that I'm seeing in your original post:

1.) Rent is $1,900 but the property is worth $340k? Rent needs to come up. If that's market rent vs. market purchase price then its a bad investment unless you're banking on 0 cashflow and only appreciation. 

2.) What's you're PITI? I'm throwing mud at the wall, but it looks like you're cashflowing around $300 - $500 / month but not putting that back for your safety net. At that rate you're looking at 4-5 years just to cover your short term expenses with 0 income. That's not sustainable as an investment unless you're speculating that appreciation continues at the current rate.

All in all, the numbers don't seem to pencil out properly. Have you set your rent grossly under market rent? If so - you'll need to run the numbers with an increase. If not, it might be time to sell this alligator while the market is up. (Take out a loan to fix it and get it on the market.)

I will never personally invest in a property with negative cashflow with the hopes of appreciation. I know that's a strategy for a lot of people but it doesn't math out for me. 

Makes sense. Just realize, then, that the decision to have a "nice" house remodeled in a way that's just right for you personally is also something that's a roadblock to moving forward with your RE goals. Its not necessarily a "good or bad" type of thing; rather, its an observation that you've made your own home a priority over your long-term goals. 

I've seen this in multifamily where there has been a lot of investor interest. Rents have increased but, in some cases, there's the mindset of "if someone is willing to pay more than its worth..." (Where "more than its worth is defined by the owner.) That same property might have hit the 2% rule (or better) for the owner but, if they can sell it to someone and keep the extra equity it makes sense, especially to an owner who thinks the property value is overinflated (but will sell for the overinflated price.) 
 

 Choose a couple of vanguard etfs - VOO, VTAX, etc. Then you set up a daily purchase of, say, $20. You'll move your funds to the brokerage (I use Robinhood despite the bad reputation they have because its easy enough to set everything up.) This way, each day you purchase $20 worth. If you stay consistent with it, you'll be buying at the "average daily price." When the price is lower, you buy more (with your $20.) When the price is higher, you buy less. Its a common technique for long-term investors. If you're leaving the funds in there for over a year you only pay capital gains on the profit from it when you do close the position (to buy an investment property.)

I'm also a little curious about your personal living situation as you've mentioned that you already own your primary. What if you look to buy another primary residence and then rent your existing home? Do the numbers work for that? Is it "too nice" of a primary to turn it into a rental?

OOS investing is an option but I can tell you firsthand that there's a lot of due dilligence that's needed. Don't just meet people over the internet and trust that they know what they're doing or have your best interests in mind. 

@Antonio Cypert your numbers don't make sense to my noob mind. 

You saved $10k in 4 months. Continuing on this savings path means you'd land at $30k per year. 

If you need a down payment as you originally stated of "3-4 times ($25k)" then you need between $75k and $100k. That doesn't work out to 8-9 years... That puts you between 2 - 3 years, maybe less if you can put the money to work for you by dollar-cost averaging some investments while the market is down. It might seem like a long way down the road but RE is a slow game. Over that 2-3 years you could be wholesaling (?) which would allow you to build the downpayment even faster and might land you the property type that you're looking for at a solid discount (keep the best one.)

Brief History: Midwest resident and novice investor here. 

Our first investment property is a small, 2 bedroom house purchased (cash) off-market in the winter of 2021. I did most of the rehab work myself which meant 4 months of the W2 and and extra 30+ hours per week on the rehab. Then there was the learning curve and trepidation over getting it occupied, deciding whether we want to refi, etc. (We did refi and are locked in at 3.3% for the next 30 years.)

6 months later we bought our next property, another off-market fixer-upper. There were big reasons why this new place worked better for my family and I. This one took me 6 months to get to the point we could move in. Our existing home is being rehabbed to rent and should hit the market in the next couple of days.

Looking at our finances, including a need for a complete hvac system for our "new" home, we're at minimum a year out from buying again. I'm not going to refi out of any of our 3 properties as we're at 2.25%, 3.12% & 3.3% respectively. 

When I'm not swimming against the stream I feel like I'm drowning. It seems that most podcasts and books encourage action but the real learning happens with hands on experience. I listen to a decent amount of podcasts and read a decent amount of audiobooks already. 

What are steps that you've personally taken when moving from the "famine" cycle of REI and back into the feast stage to keep the momentum going?

@Justin Bailey

Toledo (OH) investor here and I've been running into the same issue. I've been having similar issues. In one case I had 6 different contractors show up to work up a bid and not a single one actually delivered anything, even after a follow up a few days later. (I asked for a bid with a scope of work, although I'm leaning toward creating my own scope of work to contractors and asking them to provide a dollar amount for each area.)

@Daniel K Houck

Great post that truly resonates with me. I just turned 44 this month with two young kids (3 & 6.) We're not a high income family (my wife works in our church) and we live in the Midwest which also creates a different set of challenges. We also just got started last year with our first purchase. Here's what I've learned so far...

1.) I agree that the BP "success stories" are not average Joe. There's a starting point for everyone - high income, rehab skills, etc. The average desk jockey doesn't have these skills. 

2.) They don't tell you how exhausting it is. Get up at 5:30, work all day, make dinner for the family, then put in another 6 hours working on rehabs. 

Like you, I'm probably not going to become a billionaire. I started too late, I have too many sunk costs (and expenses) to leave it all behind, and we're not going to rent extra rooms or move into a duplex. (If it was just me, then fine!) My goal is to get to 10 houses over the next 15 years. My thoughts for us average Joes:

-Start by managing your household like a business. My experience has been that most small business target around 30% net profit. Is your household bringing in more money than it spends? What is your household's profit margin?

-Look for a local REIA and begin attending meetings. Have lots of conversations! You'll likely find the average joe investor there.

-BP focuses primarily on real estate as a business, but when you're first starting out you're really creating another job for yourself. You might someday turn that job into a business or it might just be... another job. Its not all sunshine and passive income rainbows, especially when starting out.