All Forum Posts by: Jer Yeung

It's been nuts to say the least.  I purchased my first from them in late 2018, and sold it a month and a half ago.  Purchased for $184k, sold for $256k, all while collecting solid cash flow in the interim.  In process of finishing a 1031 exchange into two more solid cash flowing properties.  

I did have a few things come up in the portfolio - minor repairs, one tenant had to move out because of COVID, and a few tenants needed rental assistance - but nothing near what the original concern was in mid 2020... REI Nation has been great at managing all the issues.

If anyone is on the fence still, and wants a passive asset, their model and setup is fantastic. 

 What info are you looking for?  The hands off model is pretty much what I was looking for as well.  What's been great is absolutely no hiccups on my end even with COVID.  I haven't had a single missed rent payment, which I'm ecstatic with.  I did have a tenant move out, but the unit was repaired / cleaned / leased in less than 45 days.  100% would recommend.

I don't know if there's anything for magic numbers, but getting 12% COC on turnkeys seems unlikely unless you're not counting what's allocated for vacancy, repairs and deferred maintenance.

at some point you have to make a decision regarding where your time and effort is best spent between being a real estate investor, or if working in real estate.  Where is your hustle best utilized?  For some it may be the former, for others it may be the latter... 

Percy - 

I've done a few with them - they do a great job on rehabs and they do a great job on the property management side, which is what you're really looking for.  Appraisals and valuations seem to be what get the most noise, but they've always stood by their guaranteed variance in the appraisals.  Sometimes they come in low, sometimes they come in high, but what appraisers don't take into account is that all the deferred maintenance is done up front. An appraiser won't take into account that the roof, water heater, hvac, garage door, flooring, etc are all new versus used per se.  It might not matter for most buyers that they are appraising for, but it should matter to a turnkey buyer, as those are the major items that will be the source of headaches in the future for a landlord.  The difference often ends up being that the deferred maintenance is done up front so you have a fresh start. 

Keep in mind the biggest piece of what you're buying is the property management side of what they do, and how they manage the tenants, vacancy, maintenance, etc.  It's way more than just collecting rent and sending it over to you as the owner.  I'd recommend chatting with them to go over how systematized everything is from their rehab to their property management.  I opted to visit in person and see their operations and properties early on in my investment with them, and I came away thoroughly impressed.  There's a reason they are considered the gold standard in this space.  

FWIW, throughout the pandemic, I haven't had a single tenant miss their rent.  Communication has been great (between me and them, and from what I can tell from them and the tenants).

Shoot me a message if you have any questions!

 Dan - Keep in mind that you have 10 loans that you can get that are backed by fannie / freddie (conventional / lower rates).  Once you get past that, you are looking at portfolio and/or commercial loans.  Plan accordingly while rates are low!

if you have the means and it makes sense to you, I'd recommend making moves in whichever direction you feel comfortable (assuming all else lines up).  That's a few years of returns that haven't been realized!

I would (just my opinion), work to scale the number of doors with a *reasonable* amount of leverage, and then work towards paying them down.  The number of doors greatly smooths out any fluctuations / issues that may come up.  4% vacancy is great, but you can't realize 4% with one door.  You either have 100% vacancy or you have 0% vacancy.

I also have properties with REI - one of the properties just appraised higher than what the sale price is, which I appreciate, but ultimately doesn't matter, as I don't intend to sell in the forseeable future =). Just an anecdotal point for those who are pointing out that the properties never appraise for what they sell for (again, not that it matters for my strategy).

Passive investors tend to be the least vocal by virtue of being passive investors :).  If it works, it works.  So long as we make a reasonable return, and the ship moves forward, there's not much to be vocal about!

I'm not a huge fan of appreciation, as the only way to realize it is to refinance or sell, both of which have frictional costs.  I also believe the market to be inflated as-is, so I'm hesitant to get into it.  It very well could be a much better play, it's just not my cup of tea.  Best of luck with it!

Doors are what you want with this. Trips are one thing, but doors are what actually gets you towards more useful / usable numbers. If you only have one door and you have a vacancy, you are at 100% vacancy. If you have ten and you have one vacancy, you are at 10%... REI Nation is at something like a 2 or 3% vacancy across 6000+ properties right now - which is great, but will never be realized if you only have a single door, so 110+%, find a way to scale!

As for investing in the IE... CA is not a landlord friendly state, whereas REI Nation not only is in landlord friendly states, they manage all the BS if and when it happens, which is great. They don't have Newsom out there saying that rent isn't due, or no evictions for however many months...!

I'm a big fan of what they're doing over there. I have a few properties myself. It's sometimes tough reading BP because many people here are IN real estate, so of course, there are going to be ways to do things differently or get better ROI. It sounds like the OP (similar to me) is not in the business of real estate, but rather have other things that preoccupy our time from an income perspective, and thus passive investments are attractive. There are many, many reasons to buy into what they are doing beyond just the numbers...!

@Greg M. that might be a bit of a generalization... there are times where a higher deductible just isn't worth the premium savings...

I imagine that would be ok as-is, but that may be something you want to shoot a quick email to your trust attorney about.  

There has to be an insurable interest in the property, meaning the entity buying the coverage needs to have some sort of relation to the property somehow.  An easy way to think of this is that I can't randomly buy insurance on your property in hopes that something happens to it so that I get an insurance payout.  I have to either be an owner, or have some sort of lease agreement (think triple net lease for a commercial lease) in order to have an insurable interest.  Without an insurable interest, the insurance company in theory could deny the claim.