All Forum Posts by: Jim S.

Hi Maor,

Looks like my property that I'm considering selling (5bd near Westminster) except with much higher expenses!

You haven't included capex, maintenance, or vacancy and it's already negative cashflow. Based on these numbers I'd guess you are somewhere around $250-400 in negative cashflow a month. Given that you also lived there for more than two out of 5 years you should be able to sell it without paying federal capital gains.

Seems like a clear sell to me but that's just my opinion.

If you need a referral to an agent I have one that I'd highly recommend. If you want a "pro forma" i.e. fancy spreadsheet to analyze the cashflow of your property PM me and I can share the template I use for analyzing properties.

That $100 cashflow buffer will disappear real quick once you start getting vacancies, unexpected major repairs, or other issues. I'd recommend either working harder within your market to find a true deal (probate, send letters, or buy a real beater off the MLS) or look to the midwest/south and invest remotely.

You can certainly buy properties without ever seeing them (I have for 4 out of 5 so far), but you will need to take the time to analyze properties if you don't want to end up with a dud. As an initial screen look for properties that will bring in 1-2% of the purchase price in monthly rent. Look on BiggerPockets to find a good agent in the market you want to purchase in - most typical agents are clueless when it comes to investment properties.

I would advise the opposite of Michael for now and say stick to what you think is a reasonable budget. Better to make rookie mistakes on a $130k property than a $400k property.

I put $15k on a Chase Freedom unlimited @ 0% APR for 15mo and 1.5% cashback when I was doing a live-in flip in Denver. Paid it off the day before interest started to accrue.

I rent in SF and invest remotely. Overall I'd recommend this as it forces you to build systems whereas if you live in a house you will become the property manager and contractor for it.

I did a live in flip while I was living in Denver to convert a 3bd into a 5bd + fi it up floor to ceiling. I'm glad I did it to learn more about what goes into a rehab but if I could do it over I would've just continued to invest in my cashflow markets instead. I had bought two properties remotely before I did this.

It's a much safer to learn buying for $35k/unit in the south or midwest than $350k/unit in the bay area. I need to go to a David Greene meetup to see some of the numbers house hackers are putting up locally but for now I'm perfectly happy getting a 20%+ cash on cash return in the midwest on 2-4 units.

The multi-families I own are in Albany, NY & St. Louis, MO. I am also looking to buy multi-family properties in Milwaukee, Little Rock, and Omaha eventually. In general the midwest or south are good cashflow markets.

My other random properties are in Colorado, it's getting pretty rough to find a cashflowing market there now.

Sent you a few PM firms. No, you will put 25% down on a non-owner occupied 2-4 unit building most likely.

1) The numbers work better in multi-family. I also have a ski condo that I AirBNB & a 5bd in Denver but those barely cashflow, they are equity plays. 

2)  No, I haven't physically visited any of my multi-families. I don't see a need to but I probably will the next time I'm in town. Having a good team + good communication is much more important than physically checking up on your properties, especially if you want to scale.

3) Yep $100-200 cashflow per unit to start is great. 

My first multifamily property was negative cashflow for the first year and a half since I hired the cheapest property manager I could find off Thumbtack. Apparently that's not a good strategy. My current property manager started eviction proceedings on day one when he took over. Now I make $15k/yr in cashflow off a $110k purchase price property. 

You haven't said which city you will move to which makes a huge difference. If you are moving to San Francisco you will 100% have to buy remote on a recent grad salary/no substantial savings. If you are moving to the South/Midwest there's a good chance you could do a single family house-hack as well as the previous suggestions of a multi-family. If you can afford multi-family and it's an area you want to live go for it, SFH would be more feasible in a more expensive metro.

Look into getting a HomeReady loan (better terms than FHA). Let's say you can buy a 4bd fixer upper that needs cosmetic upgrades for $130k (will vary by market) which would rent for $1300 semi-fixed up. With a 5% down loan you would need to save up about 10k for the downpayment + closing costs (try to get seller to pay these) and have $5k on hand for basic repairs or ignition you're responsible sign up for a 0% intro APR credit card.

Let’s say you can rent the other rooms for $500 each, that would easily cashflow while providing you free housing. You can make small upgrades (painting walls, staining banisters, replacing carpet, etc.) yourself and after a year rent out the whole place for $1300 or attempt to continue to rent by the room for higher cashflow and buy another one with the same process.

 Hi John,

Great goal! After buying a few 2-4 units myself in two different markets (both remote) I would recommend giving my system a shot:

1) Ask around on BP/search topics for great property management firms in Indianapolis. Call the top 2-3 and set up 15 minutes with them to discuss which sub-markets are worth investing in, how many units each company manages, what software they use, how many employees they have, and what services they offer. If they offer an in-house brokerage, try using one of their agents who you know will only be looking for investments properties, if they do not have an in-house brokerage ask them for a referral to an agent. Ideally the PM company is well respected and handles acquisition, renovations, & property management all-in house.

2) Talk with the agent about the same idea of which sub-market/neighborhoods you should look at investing in. Overall I don't see a great reason to use more than one agent when you are first starting so pick the agent that you seem to have the best relationship and get setup with an MLS search. You can always drop your agent if they are not meeting your needs (assuming they haven't had you sign a buyers agency doc).

3) Review deals for the 1-2% rule, for the first property I’d recommend nothing deeper than a cosmetic rehab so “as-is” properties should get a deeper explanation from your agent. Your goal will be to learn over the next year what items need maintenance, and see what kind of crazy scenarios can happen when you have 4 tenants. Download a sample pro forma from online or send me a PM and I can give you the one I built to analyze 2-4 units and small commercial multi-family deals. Always ask your agent if they can get current rents/expenses but if not you’ll eventually get a feel for what the market rates look like for water, sewer, garbage, and any other utilities you need to pay for.

Less than two years ago I was in the market for my first MF property and with some luck if these two deals close I’ll be at 25 units by the end of September. Good luck!

It’s different for each state/county. Call the county clerk’s office for the area you are looking to invest and ask them.