All Forum Posts by: Ian Murray

 Nicholas, 

Congrats on being way ahead of your peer group!  Here are my thoughts based on things I wish I would have done at your age.

First, on top of networking, find a group of mentors who are at various points of you preferred journey. That could be a very successful agent with five years of experience, an investor with a small portfolio who still has another job/business, a large investor whose business is managing the investments, and a semi-retired investor who lives off of cash flow, seller financing properties, and investments in other businesses without active participation, or something like that.

Second, really take a look at what you're studying and why. Finance could be the right thing for you. You could use it to learn how to raise capital, structure syndications, and value companies for acquisition. Or, you could studying construction or project management if you want to go into flipping or development. You could also take some accounting and tax classes to have a better understanding of that side of the business. Whatever you choose, just make sure it will have some tangible benefit. Remember, you are paying for the class, so make sure it has an ROI (even if you are on scholarship, you're paying with your time)!

Third, learn your market and out-hustle everyone else. You’re 19, so time and energy are two commodities that you possess. Put that to use by sitting in open houses for other agents (great way to network with potential clients and other agents), assist with putting on local real estate investment meet-ups and then put on your own, and attend any training or learning opportunity you can, especially if your brokerage pays for it.

Lastly, build your referral network by being someone who refers.  Get to know some local CPAs/tax strategists who specialize in real estate. Talk to insurance agents in the area to find out who specializes in landlords and who has the best service for property owners. Build your own contractor list that prospective home-buyers could use for renovations. Meet the bankers/loan officers at the local credit unions and learn about their products. Become the guy who always can say, “Oh, I know someone that can help with that.” Pretty soon, all of those people will think of you when someone asks them about real estate or mentions that they have a property that they want to sell.  

Congrats on putting your energy into something that will build a fantastic life for you in the future! 

Ian

 Gevin,

Don’t pass up on looking further south by Elizabethtown.  There are some good opportunities in Hardin County.  It’s one of the fastest growing counties in the state, and there is a lot of growth planned in the area.

@Kellyn Cameron, I wouldn't call that $600 free cash flow if you haven't already budgeted for repairs, capex, etc.  In fact, I would say that you are in a negative cash flow situation.  That being said, take a look at appreciation in the area, any value-add you may have in the properties, and the tax benefit.  If you can qualify as a REP, then you can wipe out a lot of income from depreciation.  Even if you can't qualify as a REP, the depreciation, the interest payment deductions, maintenance expenses, and other business expenses may prove big enough to make it worth your while.  Run the numbers and talk to your accountant.  Hope that helps.

Dylan,

I would need more information to be able to give you an answer. What is your repayment strategy? Meaning, do you desire to amortize the down payment loan over 2, 10, 20, or 30 years, or do you plan to repay it upon closing or in 12 months? Also, how much will you have invested in the deal upon closing? Does the property need rehab, or is it turnkey? What would the LTV be of the property between the two notes?

You are likely looking at 12-15 percent interest, at a minimum, for a second-position, down payment loan, especially if the LTV will exceed 80 percent. You may also want to look at some kind of equity split to get better terms from the PML.

 If you listen to the episode, you will have a better understanding of the 1031 process and what you can/cannot do.  That will help you when you talk to a professional about what you want to do.

The BiggerPockets Real Estate podcast just did an episode on 1031 exchanges.  I recommend listening to it.  It's a bit more complicated than just using the capital gains.  There are price and debt requirements, as well.

You could also ask the seller to cover the rental gap for the year as a concession.  So, if you believe it is $300 per month under market rate, have the seller give you $3600.  That may help with the bank, as well.

@Cindy Joseph You can still PM and use software like Innago and Rent Redi to help you.  Both platforms, as well as Avail and others, offer screening services charged to the potential renter.  Some of them also allow you to post directly to a number of sites to advertise your property for rent.  You can have the potential tenants pre-screen based on your criteria and then conduct their background checks all on the platform before signing the lease, also something that can be done on the platforms.  Personally, I also like having the payments done through the software platform.  That way, the money goes straight to my account, and there is no discussion about whether it was paid on time or not due to my accessibility.   

@Reya Ripet I think you need to relax.  Most FL counties require some type of permit to rent out property.  It's the same thing as a business license, and it can be used to make sure that you don't run a dangerous place. The same goes with the code compliance. Not sure if you recall the condo collapsing in Miami, but that's why the code compliance rules exist. 

A rental property is a business. Businesses have a requirement to not pose a threat to the safety of those utilizing the business (tenants).  I wouldn't worry about having inspectors going to your property every week to check for faulty wallpapering.  At best, they would likely only show up if the county or city received complaints.

It's not a big conspiracy to remove people's property rights.

Is the security deposit enough to cover the November's rent?  I am explicit that the security deposit is not last month's rent in our leases, so make sure that your lease says the same thing.  

If the tenant has vacated the property, shifted the utilities to you, and turned in all keys, you may be able to put new tenants in as soon as the property is ready.  If the tenant is still in the unit, you should be able to go after them for both the rent and the utility costs.  You'll definitely want to speak to your attorney about that, though, as I am not one.