All Forum Posts by: Jared McCullough

 Erik

Are you suggesting 3500 watt single unit or 3500 watts spread across say a few 750 1000 or 1500 units. I noted that the utitity company you suggested gave you a rebate I assume this is the gas company? Are you using the baseboards as supplemental heat.

If not are you running these units in the north at all and do you feel the provide sufficient heat alone during the dead of winter.

 Pat sorry for the delayed response on this but was hoping to gain some insight from you. I noted you suggested you upgraded to a 100 AMP. Did you mean you added an additional hundred AMP service or you upgraded your 100 AMP to a 200 AMP or am I interpreting this wrong.

Also would you recommend baseboard or the recessed wall heaters (i.e. I think the wall units look cleaner but were not sure if they were as effective as the baseboard).

On top of that was wondering if you would recommend the hydronic baseboard units or the standard convection heaters.

I also noted your in NY are you using these to solely heat a house or as supplemental and do you feel they could adequately provide heat to a house in the NE during the dead of winter.

It's all market based and what you want your investment strategy to look like. If you have a very narrow focused scope (i.e. investment area, purchase price range, condition of property requirements) then your "pool" is small to start with. 

For my potential liking (i.e. semi rural small towns, $20-$40k, close enough to self manage) I have found that although the MLS is not full of deals there is always at least 1 to 2 that I am interested in at any given time. I could be potentially getting better deals off market or some other method but I have not found out yet how others are accomplishing this although I have bought (1) at a county tax sale.

I will say that there has seemed to be an uptick in how quickly these houses move. It seems with current inventories at least in my area that any good deal whether $20k or $100k gets picked up pretty quick.

Not to expand on the "family dynamics" but I would personally be concerned about having to deal with family requesting access to the property for periods of time as well. Being that it has been in the family for sometime I would think that some may still get the desire to use the property if it stays in the family. This is one thing I would think you would want to set clear expectations around well before purchasing so that you don't have to give up profits or vice versa feel like the bad guy down the road for telling relatives they can't use your beach house.

All in all though I am in agreeance with others try to find anyway possible to make this happen as I have strong feeling you will never regret it.

I think for those of us who don't have aspirations of taking over whole cities or owning 1,000's of units that there is a balance of cash versus cashflow units. Some are just going to sit here an preach about lost potential but it is all in what you want. 

My goal is to in the short term balance about a 1 to 2 ratio until my portfolio gets larger and I can figure out what makes more sense. This meaning that I will have 1 full paid property for every 2 financed properties. I have run some done some numbers and yes although this limits my growth to an extent it is I think where my risk tolerance threshold is at the moment. This being said my 2 finance properties will be under $50k/each and will still have decent cash flow on 15 year mortgages so it is not apples to apples as some people have more than that on one property.

Thanks for the awesome reply Marc. Do you have whole SFR running on baseboard and if so do you have an estimated cost for what something like that may be to install in your experience? What kind of power do they pull are you usually having to upgrade your service to 200 AMP?

 This is very well said and has a lot of truth. The underlying notion that every "cheap" house is a dump in the middle of a war zone is far from the truth. My personal strategy is look for foreclosures in what I would consider low to middle blue collar income neighborhoods. I am closing on a house next week for $24,000. I will have probably $1,000 in new carpets and a replacement of 1 window. This is not the ghetto or anything close just a small blue collar town outside of the Pittsburgh region. The house while old is in nice condition and has quite a bit of new components (roof, boiler, hot water tank) and should make for a great rental so be we do a good job of screening tenants.

By no means am I saying it is A or B class renting and the tenants are top notch citizens but it is not at the other end of the spectrum that some are imposing is all doom and gloom. There is all walks of life and plenty of decent people who rent in the middle class realm. As far as "strategies" everyone has one and you just need to find one that gets you in the game. The longer you sit and wait trying to analyze every scenario the less time you have to actually make progress. 

That is another nice thing about lower purchase price properites though is you can get your feet wet without exposing yourself to quite a bit of risk. In the end its an asset and you can always sell and sure you might take a few thousand dollar hit here or there but I would rather carry that then $100k+ in debt at the beginning of your journey.

Marc,

I noted you are from PA which will serve as a good comparison as that is where I am as well. I am on board with this thought process and have currently been evaluating heating on a rental unit I purchased and I am currently doing a 100% "gut" renovation on.

Its a SFR that has a forced air oil furnace. The unit is unknown if it works and as well I have no current assessment of the 275 gal tanks although my gut feeling is the tanks are fine. The main issue with this is the chimney was in disrepair and needed torn down (i.e. well it has been torn down). Our options are

1. $2500 for furnace repair and installation of a double wall flue pipe. 

2. $3500 for electric furnace (i.e. not heat pump)

3. $6000 to run gas pipe and install gas furnace

I saw you were suggesting baseboard heaters would you recommend these over a electric forced air furnace and do you have any experience with electric forced air furnaces. We were leaning towards trying to find some electric solution to avoid the pitfall of having the tenant manage the oil delivery/payment. Gas is really not a desired option just because the cost. Would love any insight you have. Our biggest fear was the bill being so high that we struggle to keep tenants.

 Thanks Brian I will reach out to Lazor as I have never quoted them before. I as well am a Indiana native so have a lot of background with the larger contract companies in the area. I have got a few quotes from Don Huey but I think their name and demand keeps their quotes a little higher than what I am looking for just starting out. I was hoping to find maybe a few small outfits that hopefully I could get some decent pricing on but still get decent quality work.

We are trying to find someone to partner with as we expand in Indiana County so have really trying to sell the fact that there may be additional work down the road as long as the numbers look reasonable. This being said we are having trouble locating local companies.

Jared

I think the question always falls to "How big do you want to be". Obviously if you are fine with the income generated from the houses you own then being paid off is probably the better approach. Some people seem to have a misconception that you have to go full bore or nothing at all. 

We all have boundaries on what we want our portfolio to look like. I am personally more in line with Dan Moore in that it's not always about how big you can build your empire. I want to get to a point that I am comfortable with the units I have (i.e. they are the right ones, in the right quantity, and will provide sufficient income when paid off) then work on paying them off. 

It sounds as if you are at a gate point in your "path" that you have determined you have a desire to grow bigger. To do that you need capital and so that is either going to be your cash or a lenders cash. Refinancing your properties would be a great option to get that cash if you don't personally have it and benefit from some of the great real estate models. 

This being said I would reflect on how big you want this next step to be. You could obviously probably refinance all the properties you mentioned giving you the largest sum of money to reinvest and done right this could probably work out very well. Although if all your looking for is maybe one or two more units the simpler method maybe to just try it on one of your properties so you get a flavor for what it is like before you commit your whole portfolio to being refinanced.