All Forum Posts by: Farakh Zaman

@Farakh Zaman

I may be late to this discussion but I think you are on the right path. I have an engineering background and analytical skills but after being in this market for about 2 years, I have realized that relying on specific numbers doesnt always make sense - I will give you an example from a very recent transaction.

1) I follow a buy and hold strategy and was scouring through FSBO site and came across a duplex for sale for $69k. I was told that one side was already rented for $800/month while the other needed about 10-15k in repairs. There was one comp in the area within 1 year and nothing else, which was tripping up all the number crunchers. Whoever was trying to bid was going by the numbers to get the home at 70% ARV but no one saw the fact that the property would cashflow at $1600 a month. Even with around $38k out of pocket including closing costs, repair costs and HM holding costs for 1-2 months, it would fetch a net of $800 cash flow (conservative) every month from both units, which is a 25% CoC after PITI and property management. A decent return in my opinion but here is the kicker - the property finally sold for $48k through a wholesaler after being rejected by many investors - that gives even better CoC returns than I projected. Granted, these kinds of deals dont come often but they still happen in this crazy market. So, I stopped believing in going purely by numbers like buying at 70% ARV etc - there are other factors that need to be considered as well to get some deals going.

2) Since you mentioned that you have enough money to put cash down and the fact that you already attend REI seminars and meetups, why dont you advertise at those meetings that you are a private investor willing to loan money against a first lien on the property for 7-8% interest only for 2-5 year period ? I am sure a lot of people need that kind of money and you can get tons of connections to get you better leads. I am not sure about the Hawaii market but if you are interested in DFW market, please PM me and I am always looking for private investors as I cannot fund all the deals myself.

I am sure that with a slight change in your strategy, you will get on the right track. I wouldnt want to give up after all that effort. Good luck my friend !!!

@Farakh Zaman

Here are my thoughts - 

Time of ownership is the most important aspect of an appreciating and income producing investment - When I first started investing, monthly income wasn't a crucial part of my investing strategy. I was investing for the long term play. So, I bought marginal properties based on the cash flow calculators that are commonly used.  One property didn't move the needle much- two, three, and even four properties didn't amount to much ----BUT as TIME went on, and rent prices increased -- as tenants payed down debt and properties appreciated --- as I took advantage of the tax benefits --- BIG things started happening... I sold some of my first purchases and took equity gain and moved to better neighborhoods -- Now I have quit a job that I had no intention of leaving when I first started investing... the growth took on a life of its own and now, looking back, I wouldn't be in the position I am in today had I not made those marginal purchases to get the ball rolling...

You mention that money isn't really a problem for you like it is for others - Maybe relax your numbers a bit to get started --- go out and do what is takes to acquire some property and let a few houses start carrying a bit of weight --- they may not do much in the beginning, but as TIME works its magic, you will be surprised by the outcome.

Good Luck

jeff 

Simple answer. If it doesn't bring you joy, don't do it. I'm in the same boat as you but for different reasons. I started bigger pockets a few months back and got excited by hearing the podcasts. They make it seem so easy! Of course it isn't. Plus it's very frustrating. At the same time I started listening to The Minimalists podcast. And instead of me wanting MORE MORE MORE (Real estate, rentals, buy n holds etc.) I'm starting to see that perhaps LESS LESS LESS may be the answer to a happy life. So I'm at a bit of crossroads with what direction I want to take my life. You say you have plenty of money, and you live in Hawaii which is awesome! A cool way to get into the real estate game w minimal stress could be to Airbnb out a room in your house (or a tent in your backyard.) Meet interesting people from all over the world and make good money doing it! Just a thought. Good luck :)

Farakh Zaman I would consider moving to New York. Real Estate here is incredible.

@Farakh Zaman I believe there was also a recent podcast or article here on BP about this very thing, out of state investing. 😄😄 probably worth a listen!

First of all, thank you for your service. Have you considered trying a few turnkey properties until your settled in CO? I was buying in my local area in PA but at some point prices and taxes overtook rents. Although I know there are still some deals at some point, for me, it became too time consuming. I now how have 2 turnkeys out of state and the lack of hassle has been a sanity saver as my day job has kept me busy. I know turnkey is not for everyone, hell not even for every deal for me, but so far I've been very happy with my choice. Just another angle to consider. Good luck!

Fort Collins and most of the Front Range is extremely hot! 

Have you attempted to get deals in markets with a bit less pressure? And have you availed your self of the services of any wholesalers? There are a ton of deals out there, esp if you have cash to close/rehab, and wholesalers do all the marketing necessary for you for an small fee. Just make sure you get some first hand knowledge of markets you want to invest in long distance and talk to other investors there! There are some whole salers who are extremely good at what they do and will even run comparables for you or make a package showing rents ROI etc.

Farakh Zaman

Hey Farakh,

As Ozzy Smith said a while back in this thread check out the Midwest a by more! I have heard many like Ozzy say Ohio is great. I also am able to find buy and holds very easily Cash on Cash returns around 20% using the same calculator you are using with the same expense terms as you replied earlier in the Chicagoland suburbs here in Illinois. My problem has been putting together the creative finance to get these deals closed fast enough. Look into it and let me know if you need any help with the area. I could send you some of my biggerpockets calculator reports I've already finished if you need as well. Let me know!

After reading though all of this I'm still unclear as to what your specific requirements/goals are for a deal.  Are your expectations realistic?