All Forum Posts by: Jiri B.

I've been investing in real estate for over 10 years. I love working with banks but when it comes to scaling, there is just too much red tape. 

It is very flustrauting when it comes to funding new deals. They would rather lend money to a new investor purchasing a first rental property who has fulltime job as a bar attender and making 50k a year then to a real state investor who has a portfolio and lives off their self made income. Equity, experience and vision means nothing to them.

Im thinking about perhaps starting to look for private money lenders who might be better align with my vision but unfortunately have no experience with that and don't even know what to expect.

Does anyone work with a private lenders? I'm taking family style lenders. What type of terms can I expect from that and is that even something worth persuing?

I'm not even sure if they would let you join if you are out of state. My view of credit union is more of a local / community thing. I love working with them, they typically have some type of investment loans for new investors but they prefer to keep it simple. Eg. they might be fine doing 1 or maybe 2 properties for you, but once you have a portfolio or multiple investments, then I have been told, it's usually too complex for them to handle that. You might be better of looking for a commercial lender.

@Nicolas Celle just in general, buyers market (where there are many properties for sale and not enough buyers) just tells you the location is not as desirable. More people want to leave, then to move there. 

However people rent everywhere for the right price. Sanford is not 30 mins from Raleigh. Most likely a commute to work in Raleigh will likely be 45-60mins depending on where the job exactly is. If you are a renter, I don't see any reason why you would rent an hour drive from your work. So you might find a renter who's job is in Sanford. If you work in Raleigh, it is very easy to rent in Raleigh. 

If you are buyer, the situation is different. You will likely accept longer drive time in exchange for more affordable house, more space, etc especially, if you get priced out in Raleigh. But even that, Sanford is quite far for that. Wendell, Fuquay Varina etc would likely be the closer options to Raleigh and still affordable.

If you want to a place that appreciate well and is easy to rent, then purchase something close to where all the work / entertainment / shopping is.

I'm not sure where you got the numbers from, but most new construction starts from 270k+ for base model with no upgrades, etc. But will likely be over 300k unless you go very far out from Raleigh.

And for that reason, 0.75 is not realistic. If you get 0.5 - 0.6 on new construction, you will be very lucky. Most renters don't care about new build, shiny kitchen, etc. Most long term renters will prefer value. You could get 0.75 on resale homes though.

As for the new construction sellers, they don't really care who the buyer is as long as they get to sell their inventory. But you will need to check the HOA covenants, many of them that I see have something like 80% of properties needs to be owner occupied. But that is usually not an issue in that case.

Nothing wrong to buy new build but it wont be as profitable as if you do small rehab in comparison. Everyone has their own reason..

I would double check your numbers. They seem to be too good, too optimistic. Assuming you are doing 200k loan, 50k down, 5k closing etc.. That would be around 1,000/mo loan + interest. HOA, i doubt it would be less then 100/mo more like 150-200. Taxes another maybe 150-200/mo. Insurance about 100/mo.

So that's around $1,500/mo and as you said no vacancies. Repairs will be likely very small since its new construction. But also another 150/mo management fee unless you are looking doing it yourself.

Rent at $1600/mo seems quit high for townhome in Garner / Clayton.

Any time you purchase new construction, your margins go down. I would guess you will be loosing money most likely with this every month.

You can probably get 3bed town home in that location for 100k+ cheaper and only loose about 150/mo on rent because it would be older property.. So just based on that, new constructions are hard on cashflow..

And appreciation will be horrible on this type of purchase. So I would say, check on other options..

I had the same problem @Jason Coleman. I don't like when someone else is controlling my hard earned money or penalize you for using it when you need them.

But here was my issue. With those retirement funds, you can't just take them out and buy properties. I think the gov only lets you use something like 10k for your primary home downpayment without paying penalty. 

Personally my view was, only contribute what the employer matches (free money). Then take the rest and buy properties. Yes, doing 401k lowers your taxable income, but so does the investment properties depreciation and all the write off for rehab etc. And you have full control over the funds. You can use them as you need them. You stay in control. 

Retirements funds are great, if you are not good with money or don't know any better way to invest them on your own. That is my philosophy. 

I think it comes down to what you can afford. I would recommend talking to a lender firs, going over your finances / income and getting a better idea of what your budget is. That will greatly narrow down your options / choices.

Some lenders mind not like a new job or might require longer employment history. You will also need some cash for downpayment so trying to figure this out first, will save you time and effort.

Having roommates might be great for paying down your mortgage, but it does not help you get the mortgage in the first place.

If you can't get a house, consider a townhome as an alternative. 

Good luck and hope you will enjoy it here!

I would think either flat or slightly up maybe 0-4% over the next year. Rents are hard to measure as there is no centralize location with that data. Many small privately owned homes with no official rental history etc. Rents here don't move as much as the housing market and it takes longer for the trends to show.

But for comparison, the sales price for small residential properties is up around 9% over the last year. I don't think anyone has really expected that kind of return during this pandemic so I don't really think anyone really knows what it's going to be next year. 

Overall housing market is very stable here and we don't see anything like that is going on in NYC for example with people moving out. And the demand is still high so i would not expect much negative numbers if any.

As for the commercial, i don't really know. Mainly focus on residential. But hope this helps.

Yeah as @John Blanton said, the numbers are tough here right now. I mean, nothing as bad as comparing to CA, NY or CO. But it's not like you can find a property that will cash flow right after the purchase.

I think if you find something around 0.7-0.8%, i would consider that pretty good.

You can find some distressed properties occasionally, but you might not be able to get them. Most of those sells for all cash and you pretty much need to know what you are doing to make that work. So probably as a new investor, that might be hard.

I would say start with what you can and try to make it work. It won't be perfect but it will get you started. So many new investor get's hang up on details and never start their journey. They think everything needs to be perfect, every thing needs to be the rules. But that is not how that works.

If you cannot afford to invest in prime locations, there is nothing wrong with looking in more affordable places. It's very common as prices go up in major cities, that people start looking into surrounding towns and start bringing those prices up as well. You might not get the same appreciation or return on your investment but that does not mean that you should not invest in those places. I believe every investor have to start somewhere.

There is opportunity in every market, you just have to find it and make it work.

But do not look at the rent as the only key to invest. In my opinion, cheap properties are just not as lucrative. You still need to upkeep the property and the money you have to put in, you might never recover on the property price appreciation. 

I always want to make sure, that if i need to sell property, that i wont loose money on it. So just because you get extra $100 on cashflow, it might not be the best deal if you decide to sell 5 years later.

BRRRR strategy is great if you don't have unlimited source of income and want to grow your portfolio on its own. In that case, appreciation is more valuable than cashflow.