All Forum Posts by: Gary Dezoysa

Preamble: Real estate investment is less certain than paying down debts and the safest thing to do is get to 0 debt before investing.

With that out of the way, how would you advise a real estate investor holding non-REI debt but a good amount of savings to approach a potential investment? What is is a good savings cushion as a percent of the initial investment? How much higher of an ROI should be targeted to justify the added risk of buying an SFR instead of paying down debt?

In lower cost areas (in terms of median home value) I'm seeing IRRs north of 20% which seems like a good setup to invest provided the savings cushion is there.

Thanks

Hey Jeff, just doing my research on the process right now

I see getting the licensing requires many years of skill building an practical experience. On the other hand I read a home builder investor say he can build new homes for 30% less than ARV, which is enormous.

Any home builders here? Is it worth pursuing for real estate investors?

Makes perfect sense, thanks for the advice!

Being in person is ideal but when that can't be done, has anyone been able to vet contractors remotely? 

If so, how do you do it? 

If not, what is a fair price to pay a local manager? And how do you vet them?

Hi,

Any thoughts on my investing plan are appreciated:

--Invest out of area in a low COL area. Try to meet the 2% rent rule (or better). I'm thinking Cleveland at the moment. Target 3 bed 2 baths in working class neighborhoods. Test out direct mail against potential MLS deals. Send a regular newsletter to RE agents to stay top of mind.

--Pre purchase: Run a potential deal on spotcrime.com and call the local PD to get a sense of crime in the area. Avoid areas with drugs/gangs/violence. Run the numbers. Don't buy for appreciation, buy for cash flow in lower headache areas. Get a full inspection done with pictures. If everything looks good, buy sight unseen. 

-- Post purchase: Hand off the house to a PM after vetting several. Plan to switch to a good PM as necessary. Augment his efforts with online advertising of my own (to fill vacancies). Manage the manager and keep watch over all expense items.

Seems pretty straightforward to me. I know PMs will be a trial and error process, I'm committed to working through it. Are there any other major headaches I should seriously consider before pulling the trigger on my out of area plan?

Thanks!

Hi,

For an owner who is out of area sometimes and wishes to self manage when in town, would a property management company be comfortable managing only for a part of the year? Or would this be a significant hassle for them, to manage some months of the year but not others?

I hear lenders have a requirement that you must have 2 years as a landlord before rental income can be considered for additional non-owner occupant loans. I assume they ask for proof of rents ie rent receipts.

Can I chip away at this requirement now by renting some space in my current place, say a room? Or is that not enough to meet the criteria?

That sounds like a smart tip for keeping safe! I had to live in a D+ area during college and it did seem the folks who created issues were not awake before 2 or 3 pm :)

I also agree about not wanting to choose an area like this at least permanently. My thoughts are for the first 5 houses, cash flow is worth a bit of risk. After that, move to the middle income areas for a better balance of cash/wealth accumulation.

My main concern is how the local housing authority would view D area rentals. Do they have rules against placing tenants there? Or other similar issues? If so then that could scuttle the plan.

I am amazed just how low prices fall in war zones. Cash flow is my main focus right now and I'm thinking if I tenant-proof the property and stick with section 8, where there is a multi-year waiting list just to get on the program and incentive to behave, it might be doable.

In Long Beach for example, there are D+ and D-/F areas. The difference is that D+ is normally quiet, but "things happen" occasionally in the D+ area (not a place to roam around in on foot at night). D-/F is the active gang presence, chrome rimmed cars driving around constantly area. I would at least stick to D or D+ type of area (not in long beach though).

Is renting in warzones ever a sensible plan, or just plain best avoided due to the risks?