All Forum Posts by: David Ribardo

@Chris Engler That does not sound typical for any of the lenders that I work with. All of them will respond within a day, most of the time well less than that. There are plenty of options here in the Lehigh Valley, so there is no reason to stick with one that isn't getting the job done for you. If you are unsatisfied with the current loan officer, request a new one from the bank, or look at other lenders. 

Hi Erin! My favorite phrase applies here - everything in real estate is negotiable. The best terms I have seen my clients get is a $50 / unit / month flat rate fee for management, and the worst was one property management company that quoted 10% per month of collected income, plus a 1 month rent "lease renewal fee", plus 10% of any repair costs. (No, they did not go with that company!) You can negotiate this with the property manager directly, and if they don't like the terms you are offering, you can take your business elsewhere. As you build a bigger portfolio you will have more leverage to negotiate for better rates and terms on your management agreements.

Jame, best of luck with your new investment. It's an awesome time to be flipping here in the Lehigh Valley - we had more than 40 people come check out one of our new listings last weekend, and I'm seeing anything properly priced get multiple offers in the first week it's listed. Let us know how it goes for you!

@William McGivney, welcome! Let me know if you have any specific questions about the market in Allentown, It's my home market and I'd be happy to share my thoughts.

Gabe, I think that's what makes the difference in successful investors - staying in the game even when things go wrong, and focusing on improving their business. 

Atlanta has treated me well. It's a strong market, and I've got a good partner there. We actually just got a very attractive offer, and if inspections go well, will be closing on the sale of that 8-unit in June. We will most likely be reinvesting the profits (60% ROI after holding it for 1 year and 1 day!) with a 1031 into another 8-12 unit property. As long as you can keep reinvesting your profits, you will be able to do more and bigger deals. Sounds like you are on track to be crushing it in the next few years!

Hey @Gabriel Green-Lemons! I actually did that down south - while living in Louisiana, I invested in NJ as a passive investor for a duplex in Trenton, then shortly after partnered to buy an 8-unit in Atlanta. Most of my buyers in the Lehigh Valley are out of state. My two bits of advice - define what your ideal market looks like before you start your research to avoid bias, and make sure you have your whole team together before committing to closing. Buying out of state without a turnkey is not too difficult, you just have to put the work in to get the right people working together. By working with already established investors in the local market (not turnkey, but as a partner on their deals) I was able to leverage their systems and contacts, which made things go smoothly.

I've made it four years without regretting my decision to invest out of state. In my opinion, the biggest challenge is going to be finding a good contractor - the good ones aren't cheap, and the cheap ones aren't good. Keep an eye on your property management - I've had to fire three so far, but the turnover was surprisingly easy. Most of all, good luck!

@Stephen Kunen The real question - now that you guys have met your investment goals for the year, what are you going to do until January!?

Also, to go back to that metric - my simple math didn't include rehab. With Allentown, any time you buy a property for $15-20k, it's pretty easy to spend the same amount in rehab... so that $2,000 / month easily drops to a much more realistic level then!

@Andy Rousch, Ouch! I went by there the other day and was thinking that water looked perfect for swimming... super blue and crystal clear. (And on private property, of course!)

@Roxanna Pifer - I have been switching my focus to include Monroe county the past two months. Purchase prices there are lower, but rents and demand are lower as well, and it kind of balances out. The big advantage I see is lower competition, since many out of state investors target the Allentown / Lehigh Valley markets. Unfortunately I think it is picking up. When I got there, the Sheriff's sale was held in what felt like a large closet. Now because of all the people that attend they hold it in the main courtroom!

@Andy Rousch, I recommend you look at the Philadelphia and Allentown markets if you want to be a passive investor, or stay in your local community if you want to be hands-on. 

The big advantage of Pennsylvania is that laws are more favorable towards the landlord then in NJ. Allentown and the Lehigh Valley would be convenient, allowing you to see the properties you are buying, meet your team in person, and have a lower price point then Philly. You could easily get there for a day trip if you wanted to do some work on your places as well. Philly properties are a little higher priced, but there is a ton of growth in that market.

If you want to be a more hands on investor, consider staying in your local area. You already know the in-demand areas, and there is a price point that will make (almost) any property work. Using correct vacancy rates, tax numbers, and rent projections will allow you to compare deals across markets. When comparing markets, I like to look at the ratio of average purchase price per square foot to average monthly rent per square foot and project that to see what my expected rent for a hypothetical $100k rental property will be. Comparing these will give you a good idea of how easy or difficult it will to find on-market deals. For example, in DeRidder Louisiana, I could expect to get $740 per month in rent for an average $100k home purchase... but in the West End of Allentown, there are portions where I could expect to collect over $2,000 / month rent for the same investment.

You make your profit when you buy, and there are price points that will make SFHs and multi-family homes equally profitable. If you can buy four SFHs that bring in $250 per month in cash flow, or one 4-unit that brings in $1,000 per month in cash flow, in the end you will be equally successful. Yes, bigger properties will get you economies of scale. However, you generally will see lower Cap rates as the building size increases. I have SFHs as well as multi family properties (2-8 unit) in my portfolio... my SFHs have been just as profitable, making 20%+ cash on cash each year.

I'll agree with @Brian Adzadi and @Thomas S.. Overall, I think people invest with what they are comfortable with. You can be just as successful with a portfolio of SFHs, a couple of multi-family properties, or a combination of both- but go pick out what is best for your market and crush it!