All Forum Posts by: Jared Smith

@Zhansaya Sarmanova you are in good company, lots of investors choose the Dallas area to get started. There are some exciting things happening all around Dallas and one thing you can look for to position yourself is finding a home in the path of progress may just outside the city that in the next 3-5 years will be right in the mix of it. An example of this is finding homes that are between Dallas and the large 5,200 acre land development in South Creek Ranch (believe that is the right name for it) to the S/SE of the city. This area is going to be developed with Data Centers and homes, but my prediction is that it will bring up the values of the homes in the surrounding areas as it brings more and more businesses to the area. 

Happy to connect to discuss this or other factors we are looking at! 

Quote from @Valerie Peabody:

Quote from @Jared Smith:

@Valerie Peabody congrats on post # 1.  There are lots of ways in real estate to make passive income but it comes down to if you are willing to exchange up your money for someone else's time? If you find a home on your own and place it with a Property Management company you will need to determine how much to rent it for, how to get it rented, etc. You can have the company do this for you after you purchase but that introduces some additional risk into your investment.

Another way to do this is to find a partner/company that renovates and places the residents in the home before you purchase. Are you going to give up some portion of return for this service, potentially, but you also just took all of your major unknown variables out of the rental equation. If you go this path, I recommend you purchase in solid performing area with the median price point. Too low of price point looks great on paper but typically ends up being a headache and money pit. Too high of price point may be good for appreciation but there is an inflection point that rents no longer track linearly with home price. In my experience that is around $275-$300k. Over that price in the markets I work with your rent/price ratio starts dropping.

Hope that was helpful! Happy to chat anytime 

 Hi Jared,

Thanks for your response. We have homes in North Alabama, and I'd be interested to hear your take on Tennessee. We have relatives in AL, so we can figure out the renovation aspect if needed in that area. We also have management out there. If we go to a different area though, we would need someone to manage and work on any new properties. I am willing to look out of our area to find deals. 

I appreciate you reaching out. I felt very much like I was all on my own until I found BiggerPockets and you and so many others have reached out to guide me.

Thank you,

Valerie Peabody

I would love to share some perspective and you are exactly right that there are lots of folks here to help. I like all of the BP authored books that I have read as well. Hit me up on my link to connect. 

@Ryan Neuman make sure you find the right lender that can provide you with options for non-recourse loans within your SoloK, unless you will be purchasing cash. The turnkey company will likely help guide you through this process but also likely isn't specialized in actually handling the SoloK, that will be through another company/part of your team.

We have seen non-recourse rates as low as 7.5% recently from a lender we have worked with.

@Valerie Peabody congrats on post # 1.  There are lots of ways in real estate to make passive income but it comes down to if you are willing to exchange up your money for someone else's time? If you find a home on your own and place it with a Property Management company you will need to determine how much to rent it for, how to get it rented, etc. You can have the company do this for you after you purchase but that introduces some additional risk into your investment.

Another way to do this is to find a partner/company that renovates and places the residents in the home before you purchase. Are you going to give up some portion of return for this service, potentially, but you also just took all of your major unknown variables out of the rental equation. If you go this path, I recommend you purchase in solid performing area with the median price point. Too low of price point looks great on paper but typically ends up being a headache and money pit. Too high of price point may be good for appreciation but there is an inflection point that rents no longer track linearly with home price. In my experience that is around $275-$300k. Over that price in the markets I work with your rent/price ratio starts dropping.

Hope that was helpful! Happy to chat anytime 

Quote from @Vivek Srinivas:

@Jared Smith, thank you so much for the response and pleasure meeting you as well. I am not really worried about cash flow initially, as long as yearly property tax hikes wont put a dent in my reserves. Being a prior home owner in TX, my taxes went up from 6k to 13k in 9 years on a SFH. So I wonder how I cover that being a landlord without losing clients by passing onto them. Or should I? Will that be a concern? I would like to target Denton, TX since that's an area with job growth and rental potential.

Long term goal is definitely financial independence by scaling up. Just haven't quite figured out a location yet that has decent appreciation but not really high taxes like in TX. Any tips or insights about other locations will be greatly appreciated.

 You always have to remember that you can only charge your resident what the market supports. The fact that property values and home prices are increasing is a leading indicator that rents will continue to rise to balance the marketplace. 

There are definitely other markets that have growth with less tax implications. The one that is harder to overcome is insurance. If your area has rising insurance costs, that doesn't necessarily correlate to the desirability of an area, but speaks more towards the risk of ownership in that area.

@Vivek Srinivas, glad to Meet you and welcome! One thing I would ask is what is your long term goal or goals? If you are looking to start and ultimately expand your portfolio through leveraging appreciation/equity in the future, I would not be really concerned with taxes as long as the rental rates support the price and you are ultimately cashflow positive. Cashflow neutral in some cases is ok, but I recommend starting with a solid base hit, get some passive income, in a home in a boring area with jobs, schools, low crime and has had major systems updated recently or new (AC, Furnace, Water Heater, Roof). 

If you repeat this a few times in 4-6 years you'll be in a position to leverage your equity (up to 75% LTV as long as interest rates support it and that is when you will see your portfolio take off.

If you partner with someone, make sure you are comfortable with them and they aren't just trying to push some junk homes on you that look awesome on paper but are in the bad parts of town and will ultimately be a headache.

Quote from @Bryan Widenhouse:

Quote from @Jared Smith:

@Bryan Widenhouse for your first deal, just know that you are likely going to make some decisions that in the future, looking back, you probably would have made differently. This is ok, it's how most investors learn. If you want to minimize this cycle, link up with an experienced investor or company for your first investment and closely follow the steps they are doing and ask tons of questions. 

We have all been in your shoes at some point, eventually you will need to do the real estate "trust fall" but you can mitigate your risk by not guessing. Here if you have questions or want to talk through processes to get started.

 Thank you so much. The "trust fall" analogy is exactly where I'm at. This community has really been encouraging.

 Totally understand. Happy to help with any advice or service, let me know!

@Dave Foster, Thanks for the correction, exactly why I looped you in. @Keith Miller Please disregard my previous posted info, I was working on mis-information. 

absolutely. Weather you own 100 % of a property or 10% of a property if you are looking to do a "likekind exchange" of property, i.e. 1031 exchange, you can use this process for that.

I would be happy to recommend someone for you that I have used personally a few times if you want to ask additional questions.  I am sure guys like @Dave Foster can provide some additional insight here as well.

@Bryan Widenhouse for your first deal, just know that you are likely going to make some decisions that in the future, looking back, you probably would have made differently. This is ok, it's how most investors learn. If you want to minimize this cycle, link up with an experienced investor or company for your first investment and closely follow the steps they are doing and ask tons of questions. 

We have all been in your shoes at some point, eventually you will need to do the real estate "trust fall" but you can mitigate your risk by not guessing. Here if you have questions or want to talk through processes to get started.