All Forum Posts by: Daniel Soovajian

Hi everyone,

With my first out of state buy and hold rental property under my belt as of a few weeks ago, I'm planning a BRRRR for my next investment in mid/late 2019 and and am curious to hear BP's feedback on a few hurdles it seems like I'll face, given the approach I have in mind for continuing my real estate journey.

I've really enjoyed my real estate journey so far but I have a solid W2 job, enjoy the work, and am not interested in grinding out 100 hour weeks to build a real estate empire as quickly as I can. So for the foreseeable future, my W2 job will remain my primary focus and I'll be a part time real estate investor (maybe 10 or so hours / week). 

Taking this approach seems like it will put me at a pretty serious disadvantage compared to other investors though - primarily from a volume perspective (i.e. investors closing 5, 10, or 15 deals a year would command more attention/preferential treatment than I would,  closing only 1 deal a year). 

So what can I bring to the table as a "small time" investor to incentivize top wholesalers and contractors (who strike a good balance between quality and cost) to give me the time of day - especially early on when I don't have existing relationships with either of them and have proven that I deliver on my word.

1) Wholesalers - at this point I don't have a clue what I could offer them - really curious for BP's feedback here

2) Contractors - pay on time and quickly (what is the quickest way to get them payment though?), pay bonuses if they deliver the work ahead of schedule, anything else? 

Looking forward to hearing BP's feedback!

Thanks so much @Michael Noto @Stanley Bronstein and @Dave Foster - very helpful feedback!

I think at this point I need to educate myself a bit more on some of the ins and outs of what's possible with a 1031 (to make the most of everyone's time) but once I'm ready to have a more informed conversation with an CPA and/or 1031 intermediary, does it matter what state either of those professionals are located in when coming up with a solution for my situation? 

I'm not sure if there's any particular advantages or licensing requirements that would steer my decision towards working with a CPA or 1031 facilitator in WA vs. CT vs. TN vs. any other state.

Thanks @Chris Mason !

Hello,

My wife and I recently started our real estate investment journey, purchasing our first buy and hold investment property a few weeks ago. My credit was a fair amount better than hers so I ended up purchasing our first property exclusively in my name to secure the better lending terms than if she was included. I have two questions about our approach going forward with future purchases:

1) Now that we've closed on the property and the loan terms are solidified, would it make sense to add her to the property as another owner so that as we make on time payments over the years it will improve her credit score? The big downside I see with this approach is that we could only purchase 10 properties with loans through Fannie Mae/Freddie Mac if both our names are on each loan vs. being able to purchase 20 properties through Fannie/Freddie if we purchase each property in only one of our names.

2) We both have solid W2 jobs and essentially no debt outside of our investment properties, so once her credit score is about on par with mine, would our improved DTI when applying for loans together enable us to get better lending terms to the degree that it still might be worthwhile to purchase 10 properties together instead of 20 properties individually? Not sure how much worse the lending terms are through commercial lenders (or other avenues) since I've only really looked into traditional mortgages to date.

Looking forward to hearing your feedback!

Hello,

Curious for BP's advice on my situation here...

I live in WA and have a condo in CT that's worth about $125,000. There's $32,000 left on that mortgage and I want to put the equity there to better use. I am exiting the CT market and plan to continue investing in TN for my next few properties. I haven't lived in that CT condo for 2 of the past 5 years so my plan was to sell the condo and purchase an investment property in TN via a 1031 exchange to defer the taxes and depreciation recapture expenses. 

I want to pursue the BRRRR strategy for my next investment property but am not sure how that would work with a 1031 exchange. Can I only use the funds from selling my CT condo on the down payment of the new investment property? Or is there a way to use the money from the 1031 exchange to cover my rehab expenses too? I don't think a 203k loan is an option since I won't be living at the new TN property, so what path forward allows me to make best use of the funds in the 1031?

Or could I put a big down payment (like 75%+) on the new TN investment property, complete the BRRRR with my own funds from outside the 1031, and then refinance to pull the $ out for the next BRRRR?

Last question: going forward, would these type of questions be best suited for a CPA with real estate experience or are they too technical on the 1031 side and I should consult with a 1031 facilitator for advice? 

Thank you!

Appreciate the feedback - thanks @brandon sturgill. Never heard of CIPP until now - definitely will look into that forget. And appreciate the perspective on distinguishing between maintenance and extending useful life.

Hello!

I just purchased my first out of state investment property in TN (woohoo!) and am looking to create a list of recurring maintenance activities to make sure I'm keeping the property in the best shape possible - and to avoid having key capex items fall into disrepair and incur repair costs that could have been avoided.

For context: the property manager I hired will be conducting two inspections each year, where they'll coordinate a time with the tenants to visit the property in person, take photos and video of the inside and outside, and send back a report/checklist of how the property looks and if they feel repairs are needed.

I'd like to hear BP's feedback as to whether A) I'm missing any key maintenance activities or B) I have things listed here that are overkill and probably not worth the $. Here's my draft list:

1) Lawn maintenance - mow grass and trim back tree branches so that they're at least a few feet away from the house and HVAC systems outside

2) HVAC - each HVAC unit has an electric compressor for cooling and electric forced air for heat - besides removing debris from the outside of each unit, I'm not sure if anything else is really needed (e.g. potentially clean condensate pans if they have buildup)

3) Jet the sewer line - there are a few bellies in the sewer line but the tenants are not experiencing any issues as a result of that. I'm not keen on spending thousands of dollars right now to dig up and replace the sewer line to get rid of the bellies, so I figure jetting the sewer line once a year could buy me some time before I have to pay for a more permanent fix

4) Electric water heaters - flush out the water every couple years; not sure if anything else needed

5) Wood destroying insects - termites and other WDI are a concern in this area but I'm not entirely sure the best way to keep this in check. It sounds like you can pay to treat the outside of the property with some kind of chemical spray that keeps the bugs away, but I've heard that spray will quickly wash away and lose its effectiveness

6) Crawl space - open the vents in the summer and close in the winter to promote air flow in warm weather and keep heat in during cold weather. Debating whether or not I should hire someone to inspect this area and see if there's any standing water or moisture build up (during inspection, there was some moisture build up but I'm planning to fix that by improving the soil grade around the house - so it drains away more effectively)

7) Vinyl exterior - periodically pressure wash it every few years? Would this just bring a cosmetic improvement or would it help extend the life of the viny too? 

8) Metal roof - clean the gutters after the leaves fall from trees; would anything else extend the life of the roof?

Looking forward to what folks have to say. Thank you in advance!

Kfir,

I'm a newbie but as far as I can tell, the best way is to make a grid of all the capex expenses for that particular property, track down how much remaining life is on each of them, and divide the cost for each buy its remaining life; then you'll see how much you should set aside each month when you add them all up. 

If you use the BP rental calculator and populate the first few screens, the one where you plug in capex expenses has a link over it. Go to the site it links to and download the Excel grid they have on the article. That'll give you a good starting place to create your own tailored to the specifics of  whatever property you're evaluating. 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Hi everyone! 

I just put this duplex under contract; if I close on it, this will be my first out of state deal. It's located in a desirable / up and coming neighborhood (Hixson, TN), has good tenants, and seems well taken care of (will be verifying that with inspections shortly though). If the inspection results indicate no major fixes are needed, it will have that going for it, plus it's located in a low crime area, and the target tenant for this kind of residence is less likely to trash the place (B+ neighborhood). However, as you can see from the calculator, a 6% cash on cash ROI for that much money invested is not exactly stellar returns.

At this point, I'm leaning towards moving forward with the deal - primarily to learn hands on and to build momentum for future investment property purchases. About a year from now, I should have an influx of cash available for additional deals, so I want to be in a position to deploy that capital wisely. I want to go through the experience of purchasing the property, establishing a relationship with my PM there, and working with contractor(s) to make some renovations once the first tenant leaves. I feel like this property would offer a relatively safe environment to gain those experiences. In the future, as I build relationships in the market and gain experience, I do plan to target properties with better ROI.

Would love to hear feedback from folks on my planned approach

Thank you!

Seriously Jerry.  I'm like ok didn't know that, upvote, didn't know that either, upvote