All Forum Posts by: Cory J Thornton

@Michael Bender - 

I do not have all the personal experience to answer each of your questions, but I did have a few thoughts to share after reading your post. 

- In this market a 1031 exchange property is not easy to find. You will need a very clear plan in place to achieve selling three properties as a part of an exchange and consolidating into a single larger multi family property. 

- I'm not sure anyone will be able to give you a solid answer on the cash flow question. This will be very property and market specific. If you are rolling everything into a mobile home park you can likely find a CAP rate of 12% provided you are area agnostic. If you are wanting a true multi family property, in an in demand location, that is more turn key in nature, then your CAP rate is probably going to be 6% or less.

- A big aspect of how every deal preforms is the debt. If you are looking to take your equity and match it with debt then you are probably shopping for a property with a price tag around $3M. I would recommend developing several banking relationships now to get an idea of what debt options are available to you. Then use the term sheets you collect to run your numbers on potential properties. 

- Your stated goal is cash flow with minimal personal involvement. You also asked if a manager was needed. If you are willing to step into the role and function as a professional property manager, then you can improve cash flow. If you optimize to keep personal involvement low, then you will absolutely need professional management, but will give up some of your cash flow for that trade. One tenant takes active management. You will absolutely need a solid plan for how to manage Fifty or more tenants. 

- Given the amount you are looking to exchange, and your desire for minimized personal involvement, you may want to consider finding a commercial property with NNN leases in place. This is a shift away from residential and will have a new set of risks, but if you educate yourself on this space, then it could be a path to cash flow, with much less personal involvement. I don't have any NNN properties, but I do have a few commercial spaces and I personally enjoy the commercial investments over the residential.

It sounds like you have made some awesome progress on your journey as an investor. When you are sitting on $700+ in equity, it opens up a lot of different options. 

If you are in the Raleigh market it would be great to connect in person or if there is anything my team or myself can do to help, just give me a shout. 

@Ryan Overcash - Everyone buys real estate for different reasons. Each of us are unique as individuals with different priorities, different risk tolerances, different bank balances, different partners, different time horizons, ... 

Personally I do not touch anything without positive cashflow on day one. If I have to trade geography for cashflow, then I understand I am giving up the first three rules of real estate (location, location, location) to make that trade. 

I have clients who want real estate for depreciation, they don't mind a break even investment, and are looking at appreciation in a 10-15 year timeline. 

You are 100% correct that cashflow with a Raleigh or Durham address is nearly impossible to find. Cashflow can be found within a 45 minute commute. 

Great conversation starter! Since we are both in the same market thinking about the same things, I would love to grab a coffee sometime and connect. 

Happy Thanksgiving! 

@Shonda Rountree - I LOVE your apatite for taking action! Jumping into the deep end has risk ... but I personally love finding ways to challenge myself and force myself to learn fast. 

If you ever need anything on your learning and investing journey, just give me a shout. 

I hope you have a great Thanksgiving. 

Again, fantastic job launching your portfolio. 

@Benjamin Carver - I think that this is a neighborhood by neighborhood discussion ... so much changes between zip codes. Both cities have a good proximity to big industry moving to the area and big developments forming in the area. I personally think some of the best appreciation with a 5-10 year outlook will be in South and South East Raleigh. Most folks here in the BP community are keenly focused on cash flow, which in an economy and rate environment like this, is probably a safe approach. With that as the case, there are very few deals that produce a positive cash flow, without a heavy value add, with a Raleigh or Durham address. 

Personally, I'm looking more at things in a 45 min commute to these areas than I am inside of these areas. 

Great conversation starter. I am interested to see what everyone else has to say. 

Hey @Eddy Torres - Welcome to the BP community! 

If you are just getting started then the single biggest thing you could do is work to build a strong local network. 

- @Ryan Casady runs a monthly BP Meet up in downtown Raleigh. 

- @Shane Lafleur runs a monthly Pints and Properties event in downtown Raleigh. 

- The Triangle Real Estate Investor Association has around 20 in person networking events every month. 

TREIA

The best thing to do when getting started is to put yourself in a room full of people who are on the same path as you, and make a habit of letting everyone know who you are, what you do, and what you are hoping to accomplish. 

I try to hit up these events as often as possible myself so if you ever attend, shoot me a text and may be we can take this connection from the forum to in person. 

Best of luck on your learning and investing Journey! 

 @Adam Schneider- I just realized you gave us a recommendation here in BP. Thanks for the support my friend. It is always much appreciated. 

@Graham Storey - If this is your first major renovation and property purchase, then please find a GC or an experienced investor to walk the property with you. We are all victims of "we don't know what we don't know" and there is a huge potential for missed items in a potential renovation. 

Big picture, you need to have a level of comfort with the major systems of the property, from the ground up. 

- Land/zoning/UDO/flood maps/property drainage 

- Sewer 

- Foundation/structural 

- Measure the property yourself to make sure it is in the ball park of the stated sq'

- Plumbing / Electrical / Mechanical 

- Roof

- Cosmetic ... this is usually the only obvious thing and has the fewest expensive surprises. 

One of my first big renovation projects I missed a significant electrical detail and I missed that the property was 200sq' smaller than the listed amount on the tax site. Both of those mistakes were painful learning curves. Thankfully, I bought the property at a price where I had the room to make a few mistakes. My total project was budgeted at $8k and ended up being $22k with me doing a significant amount of the work to control the project cost. We won't talk about the ARV difference on the missing 200 sq" ... live/invest and learn.

Best of luck on this deal! I hope that whatever the outcome ends up being, that it's a successful step for you as an investor. 

@Christopher Reid - The best thing to do is put yourself in rooms full of people who invest in real estate. There is a Bigger Pockets meet up this Wednesday evening at Carolina Ale House in Raleigh. Thursday night at NC State there is a Triangle Real Estate Investor Association meeting. Both of these are fantastic places to network. If you are really looking to get connected, I would highly recommend joining TREIA. They have 15+ in person education and networking opportunities every month. TREIA ... If you end up attending any of this week's events, shoot me a text. It would be great to connect in person! 

Welcome to the wonderful, and sometimes insigne world of real estate investing and best of luck on your learning and investing journey!

@Jay Whang- Are you investing for equity/appreciation or investing for cash flow? Are you looking for a house hack or a full rental? Are you targeting a short, mid, or long term rental strategy? Do you need something turn key or do you have a network or skill set that makes a value add property something you could consider? 

The more of these questions you can answer the better position this community will be in and the better position you will be in to determine if Garner is right for you. 

Garner is a great area with tons of potential. If you need cash flow, it may not be achievable on turn key long term rentals. If you are just looking for appreciation, and can sustain a break even or slightly negative cashflow, then Garner may have some opportunity for you. 

If you ever want to chat through some of these factors, feel free to give me a shout. 

Best of luck on your real estate investing journey! 

@Shall Tu - With every investment a key part of the strategy is risk management. With real estate your three levers to pull are legal protections, insurance, and property management. 

Every single investor will have different risk tolerances and every single investment may generation a slightly different answer to each of those areas. 

A gas station on a NNN lease, a single family home as a long term rental, a short term rental, and an apartment building all need to be looked at and thought about differently.

I have plenty of clients who hold property in their personal name and plenty that use an LLC. Personally, I put my real estate under an LLC for two reasons. 1) For me this is a business, not just a long term slow build towards retirement. It also helps keep my name off of deeds, which I prefer. 2) As a property company with a mix of commercial and residential, we set up our insurances with an additional general liability policy that covers above and beyond our property insurance.

Again, just because something is right for me, in no way makes it right for you. It really comes down to understanding the trade off of each decision, and making the choice that fits you best. 

Best of luck on your RE investing journey! If you're ever looking to grow your real estate portfolio in NC, we have a team of investor friendly agents as well as a property management crew.