All Forum Posts by: Jason King

Hi Everyone,

Newbie investor working on getting my first deal put together. I had a question I'd like to ask to some of the more experienced investors - when looking at a potential property, what are some of the red flags you have/might encounter that make you walk away from the deal? I know generally people like to stay away from "structural" issues (while some investors are perfectly fine with fixing these), but I am looking for more specific answers. If you need to replace the roof do you walk away? Termite damage? I know it ultimately comes down to the cost of the project, if the seller is willing to fix/adjust price and if the deal still fits the 70% rule. I am just curious if there are certain things that are hard stops in the process and make you walk away without any further investigation. If you have any tips for things to look out for as a newbie investor, those are always welcome too!

Thanks!

Jason

@Anthony Thompson thanks for the tips and advice! Very informative, as it always is. I am hoping to start attending the monthly RIREIG meetings this month. Hopefully I will see you there!

Hi All,

I am looking for an investor-friendly real estate agent in the RI area. This agent will be a key team member as part of my newly established fix and flip investment team. I am going to be upfront in saying that I am likely going to be demanding in terms of information/data gathering as this is generally my nature of doing business. However, I am looking for a long-term partner that I believe will make decent returns on their time. If anyone has any recommendations they are welcome.

Thanks!

Jason

Hi All,

I am looking for recommendations for a Hard Money Lender in Rhode Island. I searched the BP HML database and only came up with 1 result (in CT). Does anyone have any (preferably positive) experience(s) working with a HML in RI?

I also did a quick Google search and found a few lenders that I will list below. If anyone has any experience with these lenders (even if you are not located in RI) please comment. There are a few other "Nationwide" lenders I found, but am a little weary of these guys.

Brookview Financial, Inc.

Endeavor Capital

Thanks everyone!

Jason

@Lior Solomon

Thanks for the links!

Hi Everyone,

I have been working on my business plan and have begun to do some market research. Through a quick Google search I was able to find some basic sales statistics (avg sales prices, days on market, etc.) However, I am hoping to find some more detailed information that I can use to track market performance and use to analyze deals. The type of data I am look for is sales by property type, Sq ft, layout, etc. Does anyone have any experience working with this type of data? Where do you source it from? Is there anything else I should be keeping a pulse on? (Economic trends, mortgage rate trends, etc) I may be going a title overboard here for a business plan - I get that. I am just a newbie and looking for some advice on what to pay attention to and how to get the data. Any advice is welcome and appreciated.

Jason

@Bill Gulley thanks again for the response. I feel like you have probably saved me a bunch of time fretting over details with this one simple post. I think for ease of use, I am going to stick mainly to the 2% and 50% rules when evaluating property. I am curious, however, how users experience with the 2% rule has been. From my (very) quick analysis of available properties in my area, there are virtually no properties that pass the 2% rule. I may be either under-estimating rental prices or over-estimating property values - I do try to stay pretty conservative. Is this a red flag that my market is not "ideal" for investment in multi-family rentals? My cash flow/cap rate calculations appear to be strong despite not passing the 2% rule, so I am still looking to move forward in this direction, just curious to see what others thoughts are. Also, when applying the 50% rule, should I use my best judgement for the expenses that I have a good grasp on and apply the remainder of the 50% to the other line items? Do I then take a look at those line items to see if they are reasonable in terms $ values? I know I am still probably fretting too much over the details, but after reading through the Ultimate Beginner's Guide I want to avoid one of the "newbie mistakes" of underestimating expenses.

Robert,

This is very helpful, thanks so much. If I reach out to any of your contacts I will be sure to let them know who sent me their way!

Jason

Bill,

Sorry, haven't gotten the @ functionality down yet, thinking it may be my browser (IE). Anyway, thanks a lot for your commentary about financial ratios and their application (or lack there of) in the RE world. I think I am slowly coming to some of the realizations that you highlighted; I am just naturally inclined to look for benchmarks as this is what I have learned in Finance. In regard to your point about comparing to past performance, do you mean the performance that previous owner(s) have experienced? Or do you mean compared to personal performance of other properties? I am new to the game so do not have any point of reference personally to compare against - I think this is where my problem lies. If you have any suggestions on how to compensate for this I would certainly be open to listening to your advice; you clearly know what you are talking about!

K. Marie,

You bring up some good points here. My primary focus is on long-term ownership, which seems slightly different from your own strategy. I know that capital expenditures, for example, are going to pop up from time to time, I am just struggling with how to allowcate enough funds on a monthly basis to cover these expenses in the long run. I don't want to overstate the profitability of a prospective property because I underestimated on one of these areas.

Another thing that I want to avoid, especially starting off, is running out of cash. I plan to establish an "emergency fund" for unexpected expenses, just not sure what is an adequate amount for this. Is it a sepcific % of the overall value of the property? Should I set aside a % of the monthly rent for this? My lack of experience in this area is what concerns me. Any advice you can provide would be greatly appreciated.

@JonHoldman thanks for the advice. I have become familiar with the 50% rule, and it is good to know that this is a time-tested rule to follow. I know that what I am asking will not be a guaranteed number, as each case is specific. I was more looking to see if anyone has had any general ranges of which I should target and take it from there. I definitely want to stay on the conservative side, as I am new to the game and am likely to not run as efficiently as someone with prior investment experience, but at the same time I do not want to rule out any properties because I am being overly conservative. For now I will try to stick with the 50% rule as a general rule of thumb, and work to find more specific line item details as time goes on. Thanks again!