All Forum Posts by: Jill Addison

@Kenisha B. One thing to think about is that you can smooth out your cash flow if you do it in stages. Rather than ending everyone's lease at the same time, you could just do it one at a time over 6 months to a year. That way instead of you having to go into the negative to pay your own mortgage since you have no rent income for a month or two, you're cushioning that blow by doing it gradually. Seems a little less risky to do it gradually and rent out new units gradually rather than all at once. Plus you may have some repairs that need to be done before you can get a new tenant in there, and doing four at once could get pricey. On the other hand if you can double the rent, maybe you should do it as quickly as possible and just bite the bullet with no cash flow for a month or two. I think you just need to take into account that if you do it all at once you're going to have a huge nut to cover every month until you get them all rented out again. Do you have the kind of cash on hand you'll need to cover that?

@Jester Bobbity I agree with @Scott Trench. If you have the flexibility in your lifestyle to move frequently into new properties you buy with FHA loans, that's awesome. Low interest rates and low down payments is super smart and an extremely great advantage. 5 years might seem like a long time, but you'll be surprised how fast it goes by and you'll look up one

day and find that you're financially free, which is a great foundation from which to scale even more. Don't put too much pressure on yourself for speed, just get a plan and work the plan. Real estate is a long game by nature.

@Andrew Low I have the same question. I can understand how to get people to loan you money as a hard money loan or private money at a higher interest rate and only for a few months, but then you have to pay it back! I've heard people talk about refinancing for a higher appraised value than what you bought it for and then you take the spread and pay back your hard money loan. Are there other ways to quickly pay back that loan?

@Matt Wilson in my opinion, L.A. is probably not the best place to look for a cash flowing property. I live in San Diego, and it seems to me that California is just not a great place for buy and hold rentals, because the prices are so high they just won't cash flow well. Also this state is not landlord friendly at all. I would definitely recommend you start looking at investing out of state. Look for Red States because they are probably more landlord-friendly. And look for places with growing populations and a diverse and thriving economy. That's the key for appreciation and continued rental demand. Then look at home prices on Zillow under the Buy tab, and then look at those same types of homes under the Rent tab. If they meet the 1% rule you might have something. One percent rule means that you can rent them for 1% of the purchase price. That's a good rule of thumb to gauge whether they'll cash flow. Remember, the definition of insanity is doing the same thing over and over expecting different results. If it's not working in L.A., try somewhere else. Out of state investing really is not as scary as it sounds. It's just going where the opportunity is. I bought 7 properties without even seeing them, you just trust the numbers when you analyze it and also trust the team that you build on the ground with your realtor and property manager to tell you if they think it's a good deal.

I started learning about real estate about 10 years before I ever purchased a property. The whole reason I was even interested was because I read Rich Dad Poor Dad. So I started by attending some really excellent real estate meetups in San Diego and learned so much. At first absolutely everything was going over my head but as I kept sitting in the meetings I kept catching more and more of what was happening and being able to make connections. I also started listening to online courses about real estate. Around the same time my father-in-law passed away and we inherited a three bedroom two bath house in Austin, Texas. My husband was nervous about real estate investing so I convinced him to keep that free house as a rental so that we could just experiment with owning a rental property without any money down. It went well and I think that helped him be on board to try more. Then in 2011 we bought our first primary residence together since we were recently married. Turned out to be such a great buy since it was a short sale and it was the bottom of the market. We got it for $400,000 and now it's worth over $1,000,000. So that's providing a lot of equity that we can pull on for expanding the house with an addition now that we have children, or buying more real estate. I kept on attending the real estate meetups and talking with experienced investors I met there, and that was so helpful. At the same time I was building a business and had twins, so real estate was on the back burner. About 3 years ago I got access to some capital through family funds. So that solved the down payment issue. Then through the pandemic my husband and I had to split child care so I was only working 20 hours a week, since I was taking care of our kids the other 20 hours a week. Once they went to preschool then I actually had that extra time to invest in looking for deals. At the same time I was getting really burned out on my business and wanted to sell it very badly, but I needed some replacement income before I made that move. So I got extremely motivated and urgent about buying real estate. Long story short, I purchased my first single family home in October of 2020 and then I purchased seven more properties by August 2021, over a 10 month period. Sold my business in December 2021 and that provided more cash for future real estate investing. For the last year since then I've been stabilizing those properties and it turned out that I invested in areas that were underpriced but in huge demand and the rents have gone up astronomically. With my eight properties (5 SFHs and 3 duplexes) my projection was that I would cashflow $5,000/mo (this does not count repairs, maintenance, and make readys). Now on paper it's looking like it will be more like $7,000/mo. I feel very lucky that I invested when interest rates were low and also in an area that was on the rise so dramatically. I have had a lot of expenses lately, like replacing an hvac, buying a new stove, replacing some flooring, etc. But now that almost all the properties have turned and are renting for much more than they originally were, I'm hopeful that my cash flow will stabilize and I'll be in good shape. I also have an excellent team of property managers in place now who are doing a great job of managing these turns with very little vacancy time. I'm gearing up to start another round of investing which will be very different since the market has changed so much. But I definitely want to get another 8 to 10 properties and get my cash flow up to $10,000 a month AFTER repairs, maintenance, and make readys. I love real estate!

Thanks everyone for your input. Yes I definitely learned that about not introducing yourself as the owner. I went with my property managers and if the tenants asked I just said that I worked with the property manager. Regarding taking video and pictures, several property managers warned me that it's actually illegal to take pictures or video of the tenants' personal items. But you can take close-up pictures of appliances, flooring, fixtures, lighting, things that don't belong to the tenant. But video is kind of out if the tenant is there. If it's vacant of course you can do all that. And possibly if the tenant just isn't home as long as you're just going to use it for personal use. But apparently tenants freak out if you take pictures of their stuff. Which is understandable. I did take this opportunity to meet three different property managers that I had already interviewed by phone in order to replace a really bad property manager I had in one town. That was invaluable. All three looked about the same on paper, but when I met them in person it was very clear there was a low medium and high option, so I obviously went with the high option. you can get such a good feel for people just by meeting them in person. Another thing I did is before I went to the properties I put notes on my phone so that I could easily pull up data about each property. Here's the data I included: when the lease expires or if they're month to month, what they're currently paying in rent, what repairs have been done so I can double check that to make sure my property managers are being honest with me, any outstanding issues that I've had questions about that I needed to see the property for, and then after I viewed each property I asked the property manager what they thought it would rent for at current market rates, and strategized about whether to vacate tenants at the end of their leases. Also I wrote notes right after each property on everything I learned including a few details that could call up the full picture of that memory for me. I made sure to do this right after each property because they very quickly all blend together. Overall I was so pleasantly surprised at how great the properties were, how much the rent is increasing, and the really nice neighborhoods that they were in. I feel very fortunate that my out-of-state sight unseen investing turned out so well. One other thing I did was visit a nearby town since it was drivable from my other towns and I had heard good things about it. In retrospect I should have done more research before I made the trip. I couldn't get the cash flow I wanted in that town and I could have known that without even coming here. I made the trip with a friend from high school who's also a real estate investor, and having a friend along made it really fun. We went to some really nice restaurants at night and stayed at nice hotels that were a treat.

@David Lee Hall, III thanks, David!

@Jay Brand Congrats! Anything you learned from doing your trip that you could share?

I'm currently on a trip to see several properties I bought out of state for the first time. I'm also meeting my team of realtors and property managers in person for the first time. Any advice on what to be on the lookout for? Or things I should do while I'm here with boots on the ground?

@Joshua Sun one way to look at it is to decide if you want to have 1) more cash flow per property with fewer properties, or 2) more properties with smaller cash flow for each one. If you have more properties with smaller cash flow for each one, you may be able to build up a larger net worth over time because you're leveraging your money more and you have more properties to appreciate. But if your goal is cash flow and you want to limit your risk (by having less leverage), then it might be better to have fewer properties and each one have more cash flow. Having fewer properties with more cash flow per property will also get you to your cash flow goals faster. Another thing to take into account is how much cash you have available. If you have more cash available, then maybe it makes sense to put more down and go with the fewer properties more cash flow option. But if you don't have a lot of cash, then maybe it's better to leverage more with a lower down payment.