All Forum Posts by: David Hanson

Greetings, fellow investors!

Today, I’m reaching out to share something a little different from our usual real estate discussions, yet something that’s equally exhilarating. It’s not a secret that real estate investing requires a keen eye for opportunity, a dash of risk-taking, and an adventurous spirit. Interestingly, these are also the qualities found in those who pursue the thrill of flying—be it through powered paragliding, ultralights, or fixed-wing gliders.

I’ve discovered that my passion for the skies and my real estate investment journey share more in common than one might think. Both arenas challenge us to see the world from new perspectives, assess risks smartly, and enjoy the journey as much as the destination. This unique intersection of interests got me wondering: Are there other real estate investors in our community who share this affinity for the skies?

Whether you’re an experienced pilot navigating the heavens or a real estate enthusiast curious about the world of flying, I believe there’s immense value in connecting. Here’s why:

• Shared Learning: Just as we analyze markets and properties, understanding the dynamics of flying requires keen insight and continuous learning. There’s much to share and learn from each other, from navigating airspace to assessing investment landscapes.
• Networking with a Twist: Imagine the networking possibilities that combine our twin passions. Discussing property potentials while soaring above them could offer a whole new perspective on investment opportunities.
• Unique Investment Opportunities: Our combined interests could lead to unique investment opportunities, such as developing airstrips in emerging markets or investing in properties with easy access to airfields.
• Community and Camaraderie: Lastly, building a community of like-minded individuals offers not just business opportunities, but also camaraderie and the chance to share incredible experiences both in the sky and on the ground.

I’m eager to hear from you! Are you an investor who loves to fly? Do you see parallels between the world of real estate investment and the freedom of the skies? Or perhaps you’re curious and want to explore how these interests might intersect?

Let’s start a conversation below. Share your stories, your passions, and how you think these worlds can come together. Whether you’re a seasoned aviator, a real estate guru, or someone who dreams of flight, there’s a place for you in this unique community we’re building.

Looking forward to soaring to new heights together, both literally and metaphorically!

Greetings, Real Estate Enthusiasts!

Let's explore how AI and OpenAI are revolutionizing the way we approach real estate investments, be it for flipping, BRRRR (Buy, Rehab, Rent, Refinance, Repeat), Short-Term Rentals (STR), or Long-Term Rentals (LTR). The integration of AI in real estate is not just a trend; it's a game-changer in making more informed and profitable decisions.

How AI is Transforming Real Estate Investments:

1. Tenant Experience & Retention: AI helps with predictive maintenance and efficient tenant communication, enhancing tenant satisfaction and retention​​.
2. Lease Management & Optimization: Dynamic pricing and lease renewal predictions are now more accurate with AI, maximizing returns on rental properties​​.
3. Risk Management: Nuanced tenant credit assessments and AI-driven security systems are vital in safeguarding investments against risks​​.
4. Marketing & Lead Generation: AI enables targeted advertising and immersive virtual tours, attracting the right tenants and buyers​​.
5. Financial Analysis/Underwriting: AI aids in accurate cash flow projections and simulates various investment scenarios for better decision-making​​.

AI Applications in Real Estate:

• DataRobot AI Platform: This end-to-end enterprise AI solution provides insights for forecasting future real estate market changes and identifying profitable investment opportunities​​.
• AI-Enhanced Platforms: Companies like Rex, Redfin, CoreLogic, and Zillow use AI for various purposes such as communication between property maintenance teams and renters, automating property recommendation processes, and providing accurate property value estimates​​.
• AI in Your Business: Steps to implement AI in real estate range from identifying business areas for AI implementation to training your team and monitoring performance​​.

Discussion Points:

• Are you currently using AI in your real estate investment strategies? If so, how has it impacted your decision-making process?
• For those who haven't integrated AI, what are your apprehensions or challenges?
• Can AI in real estate replace human intuition and experience, or does it serve better as a supplementary tool?

References for Further Reading:

• HelloData.ai - 7 Ways to Use AI in Real Estate Investment Analysis
• DataRobot - AI for Real Estate Investment
• Built In - 20 Examples of AI in Real Estate
• DealMachine - The Complete Guide to AI in Real Estate

Looking forward to your insights, experiences, and discussions on this transformative technology in real estate investing!

Hello Real Estate Investors!

Today, we're diving into a fascinating topic: the influence of Starbucks on rental property values. Known as the "Starbucks Effect," this phenomenon suggests that proximity to a Starbucks can significantly impact real estate values. Here's why this matters to us as investors:

1. Property Value Appreciation: Research by Zillow found that homes near Starbucks locations appreciated 96% between 1997 and 2014, outpacing the general real estate market's 65% jump. This suggests that proximity to Starbucks can be a strong indicator of property value growth​​.
2. The Starbucks Principle for Real Estate: While it shouldn't be the sole factor, proximity to Starbucks can be a strong indicator of neighborhood stability and potential for long-term value. It's a helpful tool in assessing the long-term potential of a property​​.
3. Market Research and Location Strategy: Starbucks spends heavily on analytics and research to choose profitable locations. They look for areas with promising demographic, income, and economic metrics. As investors, we can use Starbucks' location choices as a proxy for strong market potential​​.
4. Comparative Effects of Other Retailers: It's not just Starbucks. Properties near specialty grocery stores like Whole Foods and Trader Joe's also show higher value appreciation. This broader "Retail Effect" underscores the impact of certain retail establishments on property values​​.

Discussion Points:

• Have you considered the proximity to Starbucks or similar retailers in your investment decisions?
• How do you weigh this factor against other considerations like school districts, crime rates, and local amenities?
• Are there any success stories or cautionary tales from your experience related to this phenomenon?

References for Further Reading:

• Mental Floss - Starbucks Effect on Home Values
• RISMedia - The Starbucks Principle in Real Estate
• AIP Commercial Real Estate - The Starbucks Effect

Looking forward to your insights and experiences!

Personally, my rental portfolio all falls within 5 miles of a Starbucks. I did not do this on purpose honestly but glad that it worked out that way. These articles linked above have given me positive reinforcement and education for future location consideration. 

$78,000 231 S Forest Chickamauga, GA 30707-3064 We currently have a wholesale assignable contract available for a property located at 231 S Forest Rd. This property features a charming manufactured home with a wrap-around covered porch and a spacious 2-car garage measuring 23' x 27'. The home was built in 2002 and is situated on approximately 0.43 acres of land.Although the property requires some attention, such as drywall work, flooring, kitchen appliances, and paint, it holds immense potential for the right buyer. Additionally, a new water heater has already been installed, adding to the property's value.The parcel ID for this property is 0161 062. We are currently selling the assignable contract for $78,000. The property is vacant and available for viewing at any time. If you're interested in exploring this opportunity further, please feel free to direct message or text me for an appointment and access to the property. Don't miss out on this chance to invest in a property with great potential!Pictures & Video available here https://bit.ly/231SForest

Before closing on an investment property, I undertake several crucial due diligence steps to ensure I make an informed decision. These steps include:

1. -Property Inspection: Engaging a qualified inspector to thoroughly assess the property's condition is paramount. This inspection covers structural elements, electrical systems, plumbing, HVAC, and any potential issues that may require costly repairs or renovations.
2. -Financial Analysis: Conducting a detailed financial analysis is essential to evaluate the property's potential profitability. This involves reviewing income and expense statements, calculating cash flow projections, assessing the property's rentability, and analyzing potential vacancy rates.
3. -Market Research: I conduct extensive research on the local real estate market to understand trends, supply and demand dynamics, rental rates, and property appreciation potential. This helps me assess the property's investment viability and market attractiveness.
4. -Title Search and Legal Review: Engaging a qualified real estate attorney to conduct a title search is crucial to ensure there are no liens, encumbrances, or legal issues associated with the property. Reviewing all legal documents and contracts related to the property purchase is also essential to identify any potential risks or contingencies.
5. -Environmental Assessments: Depending on the property type and location, I may conduct environmental assessments to identify any potential environmental hazards or liabilities. This includes assessments for issues such as lead-based paint, asbestos, mold, or soil contamination.
6. -Zoning and Permit Checks: Verifying the property's zoning compliance and investigating any potential permitting requirements or restrictions is crucial. This ensures that the property's current or intended use aligns with local regulations and avoids any legal or operational complications.
7. -Insurance Review: Reviewing insurance coverage options is vital to protect the investment. This includes assessing the property's insurability, estimating insurance costs, and identifying any specific coverage requirements.
8. -Professional Network Engagement: Leveraging my network of professionals, including real estate agents, property managers, contractors, and lenders, allows me to gather insights, obtain multiple quotes, and make informed decisions based on their expertise and recommendations.

By meticulously conducting these due diligence steps, I can mitigate risks, uncover potential issues, and make well-informed investment decisions. Performing a comprehensive evaluation of the property, its financials, the local market, legal aspects, and environmental factors enables me to assess its suitability for my investment goals and ensure long-term profitability.

How do you perform due diligence?

Quote from @Eric Fernwood:

Hello @David Hanson,

The goal of real estate investing is to achieve financial independence. To do so, you need a reliable passive income. A reliable passive income requires meeting the following three requirements:

• Reliable - Your income continues even in difficult economic times.
• Inflation-Compensating - Rental income increases faster than inflation, compensating for rising prices.
• Persistent - Your income lasts; you or your spouse won't outlive it.

The process of acquiring reliable passive income properties is a process. Much like peeling and onion, as illustrated below.

Location

Location is the most important investment decision you will make because it determines all long-term income characteristics including:

• Whether rents will keep pace with inflation
• How long your income stream will last
• How reliable your income stream will be
• How much of your rental income is lost to overhead
• Whether you or the government control your property

Tenant Segment

The only way to have a reliable rental income is if your property is continuously occupied by a reliable tenant. A reliable tenant is someone who stays for many years, pays the rent on schedule, and takes care of the property. And, since you will hold the property for many years, you will need multiple reliable tenants over the years. However, reliable tenants are the exception, not the norm. The best way to always have a reliable tenant is to buy properties that attract people from a tenant segment with a high concentration of reliable tenants.

You can select a tenant segment with a high concentration of reliable tenants through property manager interviews.

Once you select a segment, the next step is to determine where and what they are renting today. Based on this, you can create a list of the segment’s housing requirements. Below is an example of what a segment housing requirements might look like.

• Rent range: $1,500/Mo. to $1,850/Mo.
• Type: Single-family
• Configuration: 3+ bedrooms, 2+ baths, 2+ car garage, 1,200 SF to 2,100 SF
• Location: North of the river and east of Line Rd.

If you choose a property that does not match all of the segment's housing requirements, you are purposely excluding that segment from renting your property.

Property

You identified the tenant segment you want to occupy your property and you know their housing requirements. To attract people from this segment, buy similar properties.

Important: Each property's characteristics only match a single segment's housing requirements. So, find a segment with the right characteristics, and then buy properties that match their housing requirements.

However, there are addition criteria the property must meet:

• Short time to rent
• Reasonable renovation cost and risk
• Acceptable initial ROI and cash flow
• Reasonable purchase price
• Low maintenance cost
• Acceptable area rental restrictions
• Located in a thriving area with potential for future growth.

Summary

Consistently acquiring reliable passive income properties is the result of a process, not luck or the opinions of others. To acquire such properties, start with the location and then peel the onion one step at a time.

 Couldn't agree more. Well written! 

Quote from @Alan Asriants:

Quote from @David Hanson:

Quote from @Alan Asriants:

First I consider location, then structure (style of building - this is important in understanding the mechanicals, electrical, plumbing etc. - weird layouts and victorian homes converted into multi family can be a headache to deal with and can substantially increase your cap ex.), then I look at cash flow. Generally over 10% is good with minimal cash invested (just a down payment on a turnkey property or a value add where I can cash out a large chunk of my asset)

Thank you for your insightful feedback! I appreciate your emphasis on location, the importance of evaluating the building's structure, and the focus on achieving strong cash flow. Your points align with my own considerations when evaluating investment properties. Looking forward to further engaging with you and the community on BP. Thanks again!

 Yessir! Location, location, location!
I find Having an easy cookie cutter structure makes it easier to rent out. Weird layouts, slanted ceilings are a tougher sell. 

Looking forward to connect to!

 Yes if its not broken don't fix it. This strategy is proven and logistically less work. However in a niche market and a shorter term lease can provide a higher return, but its another animal entirely. Thank you so much for sharing! 

Quote from @Jennifer Dixon:

Hey ya'll! i'm a pro member with access to the rental estimates. I've noticed BP rent estimates are usually under the rentometer rent estimates. Which do you think is more accurate, an avg of the two? BP? I tend to tell my clients a range using the two but i'd be curious to know other folk's thoughts. 

 The 2 you referenced as well as Zillow Rent Estimate are all great tools, however you will never beat a great property manager in the trenches who has the raw data from rentals they personally manager. My PM manages over 950+ units in Chattanooga Area and has incredible tools. I often find that BP and Rentometer are low compared to what a good PM can get. 

1. Have you ever experienced a major obstacle or setback in your real estate investing journey? How did you overcome it?

For Example:

Yes, I have encountered a significant obstacle in my real estate investing journey. A few years ago, I purchased a property with the intention of renovating and renting it out. However, during the renovation process, we discovered unexpected structural issues that required extensive repairs, resulting in a substantial increase in project costs and timeline.

To overcome this setback, I took the following steps:

1. Comprehensive Assessment: I engaged professional contractors and inspectors to conduct a thorough assessment of the property. This helped me understand the full extent of the structural issues and develop an accurate budget and timeline for the repairs.
2. Strategic Financing: Explored all options for additional financing. Personal funds, Personal Loans, Hard Money, Conventional Financing Options, Refinance another investment property, HELOC on personal residence, or BELOC on Investment Property, etc. Which one was attainable within timeline and financially made the most sense.
3. Collaboration with Experts: I assembled a team of experienced contractors, structural engineers, and architects to devise a comprehensive repair plan. Their expertise and guidance were invaluable in ensuring that the repairs were carried out efficiently and to code.
4. Adjusting the Investment Strategy: Considering the increased costs and timeline, I reevaluated my initial rental strategy/exit strategy. Instead of renting out the property immediately, I decided to shift gears and explore a fix and flip approach to recoup my investment and mitigate holding costs.
5. Market Timing: I closely monitored the local market conditions and strategically timed the sale to align with an optimal selling season. This helped me maximize the property's resale value and minimize the impact of the setback on my overall investment returns.

By implementing these strategies and remaining resilient throughout the process, I was able to overcome the obstacle and turn it into a valuable learning experience. It reinforced the importance of conducting thorough due diligence, having contingency plans in place, and building a reliable team of experts.

I would love to hear from other investors on how they overcame unknown obstacles.

Quote from @Alan Asriants:

First I consider location, then structure (style of building - this is important in understanding the mechanicals, electrical, plumbing etc. - weird layouts and victorian homes converted into multi family can be a headache to deal with and can substantially increase your cap ex.), then I look at cash flow. Generally over 10% is good with minimal cash invested (just a down payment on a turnkey property or a value add where I can cash out a large chunk of my asset)

Thank you for your insightful feedback! I appreciate your emphasis on location, the importance of evaluating the building's structure, and the focus on achieving strong cash flow. Your points align with my own considerations when evaluating investment properties. Looking forward to further engaging with you and the community on BP. Thanks again!