All Forum Posts by: Erik Hitzelberger

Welcome Jacque!  I hope to see you around.  I'd encourage you to join KREIA.  It's a great place to network and to learn.  Feel free to call or text if you have any questions as you get started here.

I must say that I am disgusted by the title of this thread.  This was a tragedy that occurred because at least one (and by some accounts two) person/people mishandled a situation and it escalated.  There are many things to be learned here.  Investors can and should take heed.  This could happen ANYWHERE.  There was no need for the landlord to be at that door.  It's not his fault that he got shot, but had the proper systems been in place, he would still be alive.  To stereotype a market and disregard these lessons is foolish and dangerous.  To do so on a site that advocates eductation, is irresponsible at best. 

@Deryk Kennedy  In Kentucky, unless you meet one of the exceptions, you have to be a licensed real estate agent to manage properties for others.  (You can work as an assistant to an agent someone without a license).  The guidelines for getting a license in KY are on the KREC website.  KREC (dot) KY (dot) gov.  Since IN/KY licenses are reciprocal, I imagine the criteria is similar.

My Rule of Thumb is that Rules of Thumb are foolish and should be avoided at all costs.  You buy a property because it meets your goals.  Your goals are likely different from mine or anyone else's.  They may even change as you age and experience different life events.  There is no Rule of Thumb for Life.

If you have a full-time job that you don't intend on leaving and you are acquiring homes for retirement in 20-30 years, you may take less cash-flow now in exchange for fewer management issues and/or better 'expected' rent and property appreciation in the future.  If you are going to manage the properties yourself and you value your time, you may choose to buy in an area that's closer rather than across town.  If you are looking to maximize cash flow and don't care about the extra management or property appreciation, you can find that too.

The first step (if you haven't done this already) is to determine your goals. Ask yourself, "why am I doing this?" "Are my needs immediate or for some time in the future?" "How much time can I really devote to REI?" and so on. Second, you can set targets for 1) number of homes owned, 2) monthly profit now and in the future, and 3) the amount of time you want to put towards this. Once you understand this, the type of property / location will naturally fall-out.

At that point, the only thing left to do is make sure you are analyzing the deal properly.  For buy and hold properties, this means including debt service, taxes, insurance, management, and reserves for vacancy/maintenance/repairs.  Simply take the rent subtract these factors and see if the remainder meets your profit target.  If it does, it's a deal!  If not, it isn't.

In no particular order....  Borders and Borders. Mattingly Ford.  Rawn Law Firm. Henry Schildnecht Attorney.  

@Joseph King Thanks for asking, but I only do single-family. 

You need to find an agent in your area and develop a good relationship with him/her. In the last 12 month, 466 single-family homes have sold in Hardin County via the GLAR MLS. Of these, 76 were cash buyers.

I won't speak for all Jefferson County investors, but most have no interest in investing in E-Town.  There are plenty of deals here.  You'd be better focusing on the fundamentals in Hardin County.  Network.  Look at land records and see who is actively buying.  Use the PVA to find non-owner occupants around properties you put under contract.  Use craigslist, etc to advertise deals.

@Michael KennedyKREIA is the 4th Thursday of every month at Woodhaven Country Club from 5:30-9.  (That's tonight).  I host a small networking/training group (no selling) on the 3rd Thursday of every month at Wildwood.  I encourage you to attend both.

@Andrew FazzoneMy very short answer is "Immediately! NOW! Today!"  Maybe that's 3 answers, but pick whichever you like best.

If for some reason you are ignoring the above answer and still reading, here's a longer version.  I am assuming your definition of "investment properties" is buy-and-hold.  I also assume we are talking about the Louisville market. Given this, there are 3 critical aspects to my answer.

1) We had little to no appreciation from 2008-2014.  Even last year was fairly modest.  As a result, the gap between new construction prices and existing inventory prices is huge.  Until that narrows, demand for existing inventory will be higher.  This will force appreciation until builders can profitably get back in the game.  Buying today will allow you to get in before prices creep up.

2) Interest rates are still at a historic low.  A 1% increase drops your buying power by nearly 10 percent.  As an example, a $110,000 rental property financed (20% down) at 5% over 25 years has a PI payment of $514.44.  If interest rates go up by 1% and you want to keep the same payment, you would have to buy that same house for $100,000. 

To not be buying today, you need to believe that either prices are going to drop or interest rates are going to drop.  I don't think either of those options are true.  Additionally, this is a long-term strategy.  During the next 10, 20, or 30 years we will see positive and negative market fluctuations.  You can't wait until conditions are absolutely perfect to jump in.  (That being said, I think we are pretty damn close to perfect). 

More importantly...

3) The numbers work.  This may be the only thing that really matters.  For $110,000 you can get a completely updated house with a new roof, new HVAC, new water heater, new kitchen, etc.  And, you can rent it for $1000+.  After taxes, ins, and PM you still cashflow (>$220/month) very well and you don't have to do anything.  You can find this deal all day long.  Obviously, if you get a 4%/30-year loan or if you want to trade your time for dollars, you can do better. 

In conclusion, GO BUY A HOUSE!

Regards,

Erik

@Kurt G. There is much to be impressed with in this post.  I am particularly inspired by the fact you identified the reasons for investing, made goals to support those reasons, and acted quickly upon said goals.   Everyone should do this and yet so few do.  People will decide to be wholesalers, rehabbers, house hackers, etc with no comprehension of whether the investment methodology supports their nonexistent goals or current lifestyle.  

To answer your question, flipping is a great way to raise chunks of cash, so keep that up for goal one.  I'd suggest spending a little time working on systems that will help you execute this part of the plan with less and less effort.  

BRRR and turnkey properties may each satisfy your long-term goals. The appropriate step here is to decide 1) what income stream do you need, 2) determine the number and type of houses/tenants you need to support this income stream, and 3) how much management you want to do / have time for both now and in retirement. The answers to these 3 questions should guide your purchase decisions moving forward. Finally, given current market conditions, I'd start buying asap.