All Forum Posts by: Devin De Lange

Hi Virnisha, 

I think the question to ask yourself is whether you are going into this with the goal of coming out on the other side with more immediate capital (fix and flip) or if you are interested in holding onto it long term, but not having immediate access to the capital (long term rental). If the latter, you can refinance in 6 months to a year (as the value of the property will likely go up with a renovation) and get the equity out to buy your next investment property. With a fix and flip, you would see that money upon the sale of the property. Another question to ask yourself is how important tax ramifications are to you? A fix and flip means paying taxes on capital gains upon sale, where a renovate and rent means deferring those taxes. 

Hope this helps!

Hi Anthony, 

I'm sorry to hear you are going through this, but happy to hear you made a decision that is best for you in the long term. 

If in your contract with the builder you made it conditional on inspections (including a radon inspection) and completed the inspection within the due diligence time period, I would think you should be able to back out of the contract without paying any additional costs. Do you have the communication with the builder in writing? Meaning, when they said no the first time around, was this in email or text format. That would give you more evidence should they try to pursue the $7500.

Radon tests are typically conducted over a period of several hours/days. Which test was performed in this case? Any test is subject to possible mis-reading, though those are more exceptions to the rule. It sounds like it is too late for you, but you could have conducted a separate test with another provider as a check to see if the first test was accurate or not (had the builder pay for it). 

Regardless of where you landed, Radon is not cheap to treat. It is a big investment to purchase a property knowing this is an issue and then have to treat it with a company. Would the builder be willing to pay for that?

Hope this helps!

Hi Wes, 

First of all, congratulations on your second investment property! This is huge, and you should be so proud. 

I think it is dependent on your comfort level with the tenant. Is the tenant willing and wanting to do the install? I have some tenants that what distance from us as their landlords--they truly want to feel like this is their space, and thus they want to do everything on their own. However, they have also proved themselves to be trustworthy and responsible. In this case, if the tenant is trustworthy and willing to take it on, I think you can let them do it. If, however, this is a new tenant and you are unsure how you feel about them doing the install, I would have someone do it for you. Perhaps the cable company charges a small fee and can do it themselves? Sometimes the risk (self-install) outweighs the reward (saving money) especially if there is an unknown factor with the tenants ability to do the install. 

Hope this helps!

Hi Jose, what I've learned the hard way is to know yourself enough to know what you can handle. A fix and flip sounds good because of the capital it can produce, but you will have to manage a team from long distance, which has its challenges when you are just starting out. It also requires a lot more capital with the potential of using hard money loans. All of these things are great methods of getting into real estate investment, but they are complex and have a lot of ups/downs. I started with a property that needed mainly cosmetic fixes -- new granite, knobs, paint, floors, etc. It was more expensive than I thought it would be and took longer than I thought as well. So, when you are searching, I would look for spaces that have good bones and already have the bigger projects done. For example, you find a space with good floors (LVP, tile, pretty good carpet - can be cleaned), but needs a paint job and some granite/new counters. Those small renovations can make a huge difference, and a lot of people can't see past the paint and clutter in photos on Zillow/Redfin, and that gives you an advantage. 

Feel free to message me if you have any other questions. I am here to help! It was hard to get started. 

Hi Austin,

Welcome! It is so great that you are thinking about this now, so early in life! Many of us wish we could have stated sooner. 

I suggest utilizing all the tools at your disposal on the BP website, listening to podcasts, following investors on social media, and watching YT videos. This allows you to get fully immersed into the world and to start developing a solid foundation of information as you kick off your investments. The forum is a great place to meet different community members and search for posts with similar questions you may have. The blog has great articles, and the tools are great for analyzing properties and finding professionals in your area to help. Outside of BP, there are a number of great podcasts and YT videos to listen to or watch to help you learn the basics.

Information is a game changer! Just don't let the overload of information lead you into analysis paralysis. Feel free to connect with me. I'm happy to help. Good luck!

Hi Rob,

Great question! There is no set it stone rule for how often to shop around for insurance. However, if your insurance has gone up substantially, that would be a good time to see what other options are out there. I like to check rates yearly to see if there is an opportunity to change over to something more affordable. Once a year and when needed are also easy to maintain and remember as your policy will likely renew on a yearly basis. 

Hope this helps!

Hi Jose,

Welcome to the world of investing! 

I understand where you are coming from. When I first started I was so overwhelmed by everything I was learning, I fell into analysis paralysis. My biggest suggestion is when you find your right location, don't be afraid to pull the trigger.

It sounds like you have some capital for a down payment so that is positive. For some folks that is a hard step to pass. So, now you are ready to do some research into a location for your first property. It sounds like you want to self-manage, but if you have to drive 12 hours, let's say, they you are already in the lane of long-distance real estate investing (because it's not local to you). If that is the case, I would say you could open up your search to broader markets that are further away and be open to property management. Property management takes typically 8-10% of the rent off the top, but it allows you to purchase properties in other states that are more affordable. If you are looking for something in the 100-200k range (based on the capital you have for a 20% down payment), places like Ohio or other places in the midwest are great opportunities. These typically don't appreciate as much as other locations, but they have more potential for cash flow and can be a great way to get started. 

If you are wanting to stay in the 12 hour range, I would suggest researching smaller areas within a 12 hour radius of LA. Is there a small town outside of a city/larger town where people tend to live because its cheaper? You are in an expensive part of the country, so this may take some time to find something. There are also more regulations in CA, if you want to stay there for your first property, which is another reason I mentioned looking in another state and thinking about long distance real estate investing. 

The first step is information gathering and researching markets. Answering the question -- do I need to be able to drive to my property and if so what cons are there to those limitations? Or can I explore other areas of the country to start off? 

I hope this helps!

Hi Andres,

First of all, I'm sorry to hear this happened to you. It's a lot to handle on all fronts. 

I found a few interesting resources on this (linked below), and they all seem to summarize the same main steps:

1. Secure a notification of death from a family member or lawyer

2. Secure the property

3. Handle closing out the lease and remaining rents

4. Cleaning out the property - the designated next-of-kin and executor will be responsible for removing and dispersing the deceased tenant’s belongings before the lease period is over.

Unfortunately, it does look like this can be a long process and patience will be needed as you will be dealing with an estate. 

Link 1

Link 2

I hope this helps!

Hi Peyton, 

Great question. This was one of the biggest questions I had going into investing. There are a lot of great articles out there, but sometimes it can lead you down a rabbit hole and it can get overwhelming. 

I would start with identifying what operating expenses are. Here's a good site that lists out operating costs (Link). You can create an excel doc (or something like it) to list the operating expenses out in Column A. Then, you need to deep dive into your market and cost bracket to find the costs, especially if you are going to self-manage. This can take time, but it is really helpful to better understand the long term costs of your investment. For example, for property taxes, you can search Google for what the state taxes are on a primary/secondary property. You can use that percentage to determine your yearly taxes and then divide by 12 to understand how that will impact your monthly bottom line. In some states, the property tax rate is different depending on if it is a primary or secondary property, so this is something to keep in mind. Then you make your way down that list of operating expenses and put in the estimated costs. You may have $0 for marketing because you will use a free service. Your insurance premium (which you can get a quote for free in a few minutes or search the avg. insurance rates in an area), may be higher or lower depending on your location. You can call your the local utility company to get an idea on utility costs. Etc.

Another route to take, is to interview a local property manager. They typically work their local market and have more detailed estimates. 

Hope this helps!

Hi Kevin, 

First of all, what a win! This is an awesome spot to be in. 

There are a few markets out there that still meet the 1% rule. I've found that typically in those markets, you are buying a property that is likely to appreciate less over time compared to other markets, but are consistent in bringing in cash flow, which sounds like is what you are looking for. Ohio is one of the big ones that comes to mind. If you go that route, with the purchase prices in Ohio, you could probably buy a few multi-family homes and rent them out to provide a solid cash flow. You could also do a split, as you mentioned. If you wanted to stay on the residential side, you could do 60-70% LTRs in a location like Toledo, and then look for STRs in Vegas to bump that monthly cash flow number (especially during peak season). 

Given that you are going from one property to a few and likely out of state, good property management is going to be key. That will also need to be taken into consideration of your monthly bottom line, if you decide not to self-manage. 

Whichever route you take, with the capital you mentioned, you have the opportunity to diversify and build a great portfolio.

Hope this helps!