All Forum Posts by: James Gates

 Hey Ryan,

If I were to do it over again I would communicate more clearly with my general contractor and property management the expectations of the project. The properties rehab and management went for the most part pretty smooth, but there were some minor hiccups when it came to scheduling that slowed the project down 2 weeks longer than we thought. 

For example, after we removed the pool from the backyard and placed brand new lush Zyosia sod, the contractor went to water the grass and the water on the property was not turned on. I had asked the property management two weeks before to turn on the water in their name (this is customary for that utility company), and they had told me they had set it up but it fell through the cracks. I had brand new sod that needs to be watered multiple times a day just sitting there without water. It took the utility company three days to turn on the water. Ultimately I take full responsibility for this scheduling mishap, as I should have followed up with the PM after the request.

All in all, I am thankful for the mistakes I made because for the next project we will be better because of it.

We used a local credit union who lends to alumni of the UC college system. It took a while for me to find a bank that would offer a HELOC product for our specific situation. My best suggestion is to spend a morning calling every bank in the area.

 Hey Alexcia,

The decision to purchase your own home or invest in Real Estate is a personal one. For my wife and I, it was very important to have our own home first. It was a goal we had been saving for long before I found BP. I do not regret purchasing our primary residence first, even though if we did not we could have quite a few more rentals.

For a HELOC, the bank will give you a "2nd mortgage" based on the equity you have in your home minus the debt you owe on it. Most banks will generally loan on a HELOC up to 80% of the homes value, and then subtract the debt. For example, if you own a home worth $300,000, that has a $200,000 mortgage on it, you would be able to get a HELOC for $40,000 (80% of $300,000 is $240,000, minus the debt you owe).

Our lender was able to give us a HELOC after 3 months, most banks I talked to said we had to wait 1 year. Every bank has different criteria, call around!

Hey Michael!

Thanks! I went to school at UCLA and lived in Westwood for a few years, love that area. Nice job on the out of state rentals! We are looking to transition to multi-family in a few years.

Good luck as well! 

1) Learning to crunch the numbers in real estate is crucial. Have you checked out Biggerpockets webinars or youtube videos? I distinctly remember watching a youtube video over a year ago where crunching the numbers finally "clicked." In that video Brandon walks you through every step of running the numbers on a SFH and plugging them into the BP calculator.

2) I generally am not a fan of rules of thumb as they do not take into account the variables of the specific property (for example, Alabama has ridiculously low taxes, so using a general rule of thumb when comparing Alabama to Texas can get you hundreds of dollars off a month in cash-flow), however these are the two most common rules of thumbs I see on this website.

The 1% Rule: If a property can rent for 1% of the purchase price per month, it has a good possibility of being a good investment. For example a $100,000 property should rent for $1000 a month. 

The 50% Rule: If a property can cash-flow after assuming 50% for all expenses (not including financing costs), it has the possibility of being a good investment. So if a property can rent for $1000 a month and the mortgage is $490, the investment has potential if you assume expenses of $500 (50% of $1000).

Rules of thumb are just general guidelines for initial due diligence, run the actual numbers by getting insurance quotes, checking tax records, etc!

 When partnering I am looking for an individual I could see myself working multiple deals with. Putting together a partnership is like any relationship, the best ones take time to build and the best ones last. I would be looking for commonalities in attitudes, goals, and mindset, however I would be looking for differences in skill-sets. The best partners cover the gaps of the other partner. Something that has always resonated with me is what @Brandon Turner says on the podcast, you can bring 3 things to the deal:

1) Money

2) Time

3) Hustle/Experience

Find out what you can bring to the deal, and find a partner that if you were to work together you would be able to fill in all 3 gaps.

 Hey Jami,

1) No real estate attorney in Alabama, we closed with the title company.

2) We have purchased one of our properties off the MLS and are working with a local Realtor, but most of the properties we have purchased are off-market. We found our contractor through a BP referral.

3) Professional PM on every rental. This is a MUST.

Franklyn,

Thank you for the kind words and LOVE that quote! 

Thanks Hoang! We are in the middle of our biggest BRRRR yet so when its completed I'll type up an even more detailed wrap-up!

 All of our units are in the Huntsville Metro Area, 3 of them are in Huntsville itself, 1 in Decatur, and 2 in Madison.

I hired our GC based on an initial referral from a trusted and vetted source, as well as a phone and in-person interview. If you haven't had a chance to read David Green's book on long-distance investing, he has a chapter on managing contractors that I found extremely helpful.