All Forum Posts by: Jared Smith

 Definitely start with local meet-ups and as you go along you will find people and maybe companies that align with your vision and goals. 

I think it really depends on if you are able to increase that cap rate with value-adds post acquisition. We typically look for decent properties that are likely at the bottom of some bigger investor's portfolio. Signs of this are poor lease quality, maybe M2M tenants, high expenses (unnecessary things like high trash bills, internet, cleaning, security). Not that these aren't needed but you can shop around. An example of this is I had one trash company that collected the same three containers for $90 less than the in place trash removal company. $90/month X 12 = $1080 increase in NOI, at a 10% cap rate that small change increases the value of that property by a whopping (1080/10%=$10,800)!

As you know, most residential doesn't work on cap rates, but if you are in those MF like you have then this is applicable. 

The short answer is I look for 9% min and try to press it to 11% with those strategies along with rental increases once improvements are made and the tenants know you actually care about the property.

@Ryan Daulton a great place to start is to find a local meetup. I would bet there are several around where you are. Once you find that group find some folks you resonate with that are 2-3 steps ahead of you and figure out how to get there!

Best of luck getting started!

Jared

@Jordan Ray thanks! I am excited to be with this new team and pumped to see where 2025 takes us!

Welcome to BP! @Jed Butikofer you are in the right place to start getting the next level of education. Highly recommend you start listening to any of the BiggerPockets Podcasts and pick some various topics you may be interested in and see how you may be able to take action, the most important thing you can do!

Best, 

Jared

@Markus Samuel here are my thoughts. With this being your first property it could be a big bite to take. However, if you know and have a relationship with the person/team that will be doing the rehab for you in your absence and trust they have your vision in mind then you are in a better place to start. 

We have properties in the Memphis Metro area, Lakeland/ Cordova, which are much different than other parts of Memphis and North Mississippi. I am not familiar with Horn Lake and the economic conditions you mentioned as a CON, but if you already have those concerns, on top of a large rehab, which typically don't shrink as you get started, and being OOS and needing a PM team, you may want to consider other options as you get started. 

Other options could look like a property closer to you or in an area you are more familiar with, could be turnkey options with an established company, could be partnering with someone to gain some experience. 

Let me know if you want to hear more about some areas that we work with buyers on through the mid-south. Areas like Memphis, Little Rock, Dallas/FTW, Houston, OKC, Tulsa, St. Louis, and various cities in AL. 

As a note, residential properties typically are not evaluated with cap rates, but I think you may have been saying a 7.5% cash on cash return or ROI. Usually only commercial properties with established operational expenses histories are evaluated by cap rates and then those cap rates can also be applied to buildings in certain areas representing higher or lower risk areas. The higher risk an area is the higher the cal rate would be. Good for your account in theory, but you really need to understand what is driving that cal rate for that area before purchasing a property.

@Rae Chris sounds like you are off to a good start. Some things you may want to consider is how active you are looking to be in your investing. Sounds like you are already on the path to being an out of state investor and with the right team that can be powerful. 
 
there are multiple cities across the Midsouth that make for solid investments and you are still able to even see some cashflow even in today's environment without buying just straight up high risk properties. 

If you want to learn more about the markets in Memphis, Dallas, Houston, Little Rock, OKC, Tulsa or various locations in AL, I would be happy to share what I know about those locations and what types of price points and returns you may be able to find on quality rental properties!

Best of Luck!

Not at this point, and to keep it equitable between the two we actually average the cash flows for the two homes and that is what their payouts are based on each month.

We actually started when we bought a property to buy and hold but it ended up not being a good fit for our portfolio so we sold it. We were fortunate to make a nice little return and their $500 turned into $750 in a matter of 6 months. At that point we tested the waters and gave them the option to keep the money or to reinvest it in another property. They chose wisely and have been growing it slowly for almost 2 years now. 

 @Joe S. we do something with our kids that helps them get the discipline and investing mindset. Our kids are 9 and 14 and let them invest in two properties (both long term rentals). We took the down payment and divided that by 100 to get what a % of the home would have cost against the down payment. So for $400 they can buy 1% and depending on the rental rate of those homes, they receive the applicable % of the monthly cashflow as passive income. We have been doing this for 2 years and my 9 year old is at $63/month and my 14 year old is now over $100/month. It's bedtime for them now but my son just came down and asked if he could buy another % of the house. #winningmindset 

@Abel Curiel, indeed. That is my now 14 year old daughter. Both her and my 9 year old son are passive investors in our long-term rentals. We have created an investment plan for them to buy shares of a property, against what we put down for an initial down payment, so it accelerates there returns. Our children are at $100 and $63/month passive income on the homes that will eventually be their first rental properties!