All Forum Posts by: Jared Prevost

Hi @Nicolas A. Scaron, I'm doing syndication as well. We're always looking for capital and operating partners, I can shoot you a DM

Looking forward to it! This is gonna be fun

 As you can see, reaching out with a really broad question about the best markets is going to get you all sorts of answers from the BP community. It seems to me that most investors think the market they know is the best market. It seems to me that you already have some clear criteria, why not start by narrowing down your list to metros that meet your weather criteria? Then you can further narrow your list by doing quick research into the projected job growth and top 10 employers. Finally, you can do a population check - odds are you'll have just a few markets that really stand out to you.

I saw some Minnesota folks here, and I'll be honest, I don't like that market at all. Politically, it's similar to East Coast with taxation and tenant rights. Additionally, the winter is up there with North Dakota for being brutally cold while summers are hot and humid. I'm skeptical of a lot of the primary markets in the Midwest (Detroit, Milwaukee, Chicago) but there are a ton of fantastic secondary cities in Michigan, Wisconsin and Ohio. Markets such as Madison, Grand Rapids, Columbus, etc - essentially markets small enough to avoid a lot of corporate real estate investment and competition that have low crime, strong population growth, amenities, and great high-income job growth

 I will second that buying off Amazon and IKEA does make a huge difference in your listing (guests can tell right away). Also, it will increase the headache factor when furniture breaks and guests complain and lead to higher maintenance costs over time for replacement. I've always looked on estatesales.net and Craigslist for big-ticket statement items that will get a lot of use. I can frequently get very high-quality furniture and statement pieces for 10-20 cents on the dollar if I shoot out enough messages and this stuff will last decades.

However, there's a tradeoff for time and convenience. I would imagine that might be difficult to do successfully while investing long-distance. As many investors have discovered doing STR in Florida, there's not much of a moat for your business model. Unless you're taking the risk to put up an Airbnb in a restricted area, the only way I've found to exceed average market returns is to have a very unique property or experience or having impressive interior design and attention to detail.

I've always found there to be three types of Airbnb investors who make money:

1) The second-home investor - has a second vacation property that is very nice and furnished elegantly where the owner lists it on Airbnb when they aren't there. Typically underpriced and always booked with glowing reviews

2) The passionate investor - Has a duplex, ADU, or small SFR listed that is immaculate and listed for a high price. The host pulls out all the stops and makes sure the guest has a great experience, but the host does nearly everything themselves and never looks to scale.

3) The 'drag and drop' investor - Looks at Airbnb solely through the lense of generating cash flow and scales the portfolio through a management company and using the same Amazon products at all the rentals. Focuses on making the listing look good and frequently skips the details to '80/20' their investment. Typically commands median prices and occupancy and in my opinion can get hurt by bad reviews or increased competition.

Although not easily, if an investor can manage to be both #2 & #3 (a lot of time husband/wife teams) these are the people that seem to have incredible, rather than marginal, success with Airbnb.

 Matt, this is almost the equivalent of asking, "Is the United States a good country?"

On what parameters? For who?

Investors buy in EVERY SINGLE MARKET and make money. In my opinion, so long as there are good institutions in the state and country, there is no such thing as a bad market. There are good and bad markets for YOU to invest in given where you're at and what your goals are.

Perhaps better questions to ask are; "What strategies are good for multifamily in Tampa?", "What area am I most likely to get a good deal, find good tenants, and get good long-term appreciation in Tampa multifamily?", "Given someone in my XYZ experience/situation, how would you recommend finding success in multifamily in the Tampa area?"

Ask good questions and get helpful answers :)

I believe what @Josh Green is referring to here is the strong underlying macroeconomic conditions for both the state of Florida and the Tampa Bay market. There are 'levers' that raise and lower supply and demand for housing - where supply and demand meet determines the quantity of product demanded and the price buyers are willing to pay for the product.

Let us consider the Florida housing market, we can start first with supply.

Supply: One half of the equation for prices to rise is for supply to decrease, remain the same, or grow at a rate slower than the demand growth. I don't have the statistics in front of me, but from my experience, I would be quite surprised if Tampa was not a top 10 market nationwide for new construction of both residential and apartments. Undoubtedly supply is increasing. However, there is limited area to build and the majority of the time building requires tearing down existing inventory which means a lower net contribution to supply. Further, due to increased construction costs, non-dependable financing from skittish lenders, and overwhelmingly luxury new development, supply for housing faces a lot of friction that is likely to persist for the foreseeable future.

Demand: To put it more simply, housing demand can be stated as, "do people want to live here and why? Will that continue to be the case?" Therefore, factors such as job growth, desirable weather, things to do, low crime, and affordability have an important impact on demand. For most people, Florida weather is a huge plus, and for many, it's a more affordable market than other places they may consider living. Unless you're in Ybor or a select few rough neighborhoods, crime is not a concern here either. Further, job growth for high-income, salary work is among the strongest in the country in Tampa due to the available skilled and educated labor force here and the business-friendly nature of the state of Florida. However, Tampa led the nation in inflation and cost of living over the previous 12 months making Tampa much less affordable than it was a few years ago (try finding an apartment here where rent doesn't make you want to cry lol). Additionally, the cost and availability of capital through traditional sources is more expensive and harder to come buy making the supply for capital lower which can negatively impact the price of housing.

 To summarize: Tampa is one of the most fundamentally sound markets in one of the most fundamentally sound states in the country for housing. There isn't any surprise as to why housing has appreciated rapidly here, however, changes in the market suggest that 'Wild West' type appreciation is gone. People selling junk as FSBO are seeing their properties sit on the market and realtors who have poured honey into the ears of the sellers are seeing their properties become stale. If you're looking to speculate, you'll have better luck in the stock market haha.

1) Build a list of wholesalers and wholesale companies, ideally folks doing at least one deal every month

2) Ask if you could be of service to any of their regular fix and flip buyers. If they aren't willing to share their buyers' list, you could offer to pay something like $50 for the list and most wholesalers would say yes

3) Call these buyers and mention you have a relationship with a wholesaler who has brought them good deals before in the past. See if they would be interested in trying you out as a junk removal company

You could just post on FB groups, but the problem there is that 90% of people will just be wasting your time. Also, you could see if any wholesalers do junk removal before assigning their contracts.

Hope this is helpful for you!

 Hi Daniel,

In my opinion, the choice you should make is entirely dependent on your goals. I'll list the goals you would need to have for each option to have that choice be the one that makes the most sense for you:

1) To choose to continue renting out the property and retaining your HELOC, your goals would need to be focused on having real estate be a diversified investment for you that contributes to your net worth, however you don't plan to make all of your money through real estate. You want to keep rolling with a good situation and keep things as simple as possible while supporting your monthly budget.

2) For option #2 to be your best bet, your goals would need to be focusing on scaling your real estate business through single-family and focusing on additional smaller acquisitions. You would effectively need to be a BRRRR investor who wants to continue to build their portfolio and increase the amount of time dedicated to their real estate business.

3) You don't want to focus on scaling the typical single-family rental. You're looking to get a good deal on a larger/luxury property by offering all or mostly cash (hopefully off-market) and are more interested in higher cash flow strategies such as rent-by-the-room, Airbnb, or sober houses.

I hope this provides you with clarity, always start with the CCC :)

Hi Joel,

It's unfortunate your agent suggested that pricing strategy. I have two suggestions for you that may help, one to help you in the future and one to help you get the highest possible purchase price now.

How to find success in a property listing in the future: When an agent suggests a selling price, ask to see the comparable sales. A good agent will base your sales price on comps that have sold within the previous 6 months and ideally pending sales. They will also adjust for some of the following: type of build, year built, pool / no pool, if there's an ADU, business of the street, lot quality, etc. Jamil Damji has a really good 'Straight Outta Compin' series that's a great resource on how to comp. I would also scrutinize a realtor's strategy if they don't intend on finding ways to get buyers very excited about a property. Retail buyers don't want to pay for a property they don't fall in love with.

How to get the highest purchase price for your home now: If you're looking to sell cash, interest rates are working against you. A huge portion of retail buyers no longer qualify based on their debt-to-income ratio. However, you can leverage higher interest rates to get more for your property. If you're willing to carry a note on the property (allow someone to make you payments over time) you can ask significantly more for the property, receive interest on the payments, and dramatically increase your buyer pool. If you don't own the home outright, a wrap could make a lot of sense if the loan you have in place is at 4% or less. Pace Morby has great videos on YouTube about wraps if you're curious. This type of strategy isn't for everyone, but it will typically get you the most money for the property and can be among the most tax efficient strategies

Hi Tyler,

I can tell you when I first started thinking about buying a house, I got way too focused on doing advanced underwriting on potential deals. Looking back, I realize that was unnecessary. Here is my step-by-step advice for you.

1) Get your income as high as possible with your W2 and pay off any 'bad' debt (unnecessary credit card, auto, personal loans). The goal is to increase your monthly income by as much as possible and decrease your monthly debt payments by as much as possible. This will allow you to have a stronger debt/income ratio and allow you to get lending on a more expensive property (read better area and better long-term appreciation)

2) Speaking of prequalification, find the best mortgage broker in town. If you have a good investor-friendly agent, they will know who this company is. This is critical because a seller's agent is much more likely to accept an offer from the #1 mortgage broker as they will be able to find you, the buyer, the best rates and the lenders most likely to close

3) For FHA you need to buy a place that's in good shape - even flaky exterior paint can cause lenders to back out. So, if you want the best deal, find a place with all major capital expenditures (roof, AC, furnace, siding, foundation) taken care of, but could use new flooring, interior paint, cabinets, and bathroom finishes. Essentially a move-in-ready place that has room for cosmetic upgrades. Use this model for your 'crystal clear criteria'. I would also highly recommend going after a small multifamily as you can get more rent for your lending capacity as previous rental income on the property can improve your debt/income ratio.

4) When you start looking at properties, use simple rules of thumb to see if it makes sense. Your agent should be able to quickly tell you if the deal makes sense on a cash-flow standpoint. From then, focus on the 'art' of real estate. Is the property in a neighborhood that's getting better? Is it a floorplan you'd like to live in? Are there any emotional aspects of the home that are highly appealing such as beautiful windows or beautiful old hardwood floors? These features will get people excited to rent and will make you happy to live in the home yourself. It's not all about the hard numbers, you need to get a property people will love to live in.

5) Set alerts on Zillow or Redfin for properties that fit your criteria and be prepared to write a lot of offers and look at houses as soon as they get listed.

That's it in a nutshell! I had a really good agent teach me all of these things, so let that be your focus. Find an excellent agent and get your financials in line and you'll get your first place in good time.