All Forum Posts by: Jay Hinrichs

@Bao Nguyen   there is a saying that us pilots use and that is you just don't know what you don't know... and of course.. your experience bucket will fill up as you grow your business.. Just remember most of US myself included on BP are Blue sky the business is great etc etc.. the reality though its far different than what those who preach cash flow homes as an investment vehicle... the closer you are to the asset and the more involved with the asset especially in the beginning is important.. buying one rental 5 states away can be a real roller coaster if it does not go right.. and anyone who has owned rentals knows it NEVER goes perfect..  LOL... Most folks just don't post when bad things happen they only post on BP when good things happen...Your experience is normal for land lording just is

@Nathan J. that is a great question and as HML who specialized in funding turn key companies in the day... I have seen well over 2000 huds.. and in the day the TK company made their profit the day the investor bought the property pre rehab with the HML I provided so I saw exactly how much they made per deal... The answer is 5 to 10k back in the day... Now a days depending on market the guys I fund will make that and or much better.. Its the same thing as if your buying a rehab to sell to a home owner.. You can watch BP here and when someone hits a home run they post HEY I JUST MADE 150k on a FLIP then the BP followers start in with post after post of congratulating the rehabber for hitting home run.. YOu do not have Turn Key operators or any of the people that sit on the west coast marketing the product coming on BP and disclosing what they make... They make as much as they can like any other investor.. YOu need to work it backwards in a market to figure out profit margins for TK flippers... You can get much of this information on MLS.... take a market look at the cheapest properties in a neighborhood your interested in in my 20 plus years of funding SFR TK homes average rehabs are 5k for fluff and buff to 25k for replacing most major items and roof etc.. So add in that in.. you come to say all in in many markets is 50 to 60k and if the Tk operator has the same home for 79k or less probably pretty standard if its above that then there is a pretty big hit being made. Its Caveat Emptor ... ONe thing you should get is a scope of work on any turn key home and you can price that out.. Then get a third party inspection when the home is done to confirm that the work on the scope was actually done... And if you buying for long term rentals make sure the mechanicals and major components are either new or less than 10 years old . A 25 year old Hvac system that is serviced and working when you buy could crap out any day and cost you 3 to 5k to replace there by taking 2 to 3 years of your so called positive cash flow.

I wrote a book on the do's and don'ts of Tk for Australians. if your new to TK you may want to give it a read its basic but there are some pearls in there to get you thinking of what questions to ask.

As like with anything there are great TK companies and there are one's that are not good at all.. 

@Andy Collins   you give attorney your concerns and make sure they find those concerns in the policy you also then have their E and O behind you as well.. Most attorneys can review policy for 1 hour or 1.5 of billable time... so in our market 400 to 600 bucks but like you said your married to this policy for years... So its comforting to know that what you thought you have is what you have.

for cash flow you may want to consider duplex and or 4 plex.. the same mortgage slot you use up for a SFR can buy you 2 to 4 doors.. In addition those types of properties will cash flow far better than a SFR. Along with in many case's when you buy one you can get history on rental performance.. remember when you buy TK SFR out of state 99% of the homes have just been rehabbed ( you hope) and to different standards some do great some not so great.. But you don't have any TRUE history of rental performance only PROJECTIONS.. which can be accurate or they can be in accurate depending on who is delivering the marketing message to you. I had a beer yesterday in Oakland with a very successful Oakland investor and he makes the 1% rule with his Bay Area 4 plex's it can be done.. and he live's 10 minutes from them.. Can self manage if he wish's to. So don't give up on your immediate area.. Of course SFR's are not cash flow investments in the bay area they are appreciation investments.. so that if you can just stay neutral you will make money over time with the rise in values.

If you do decide to go out of state and buy SFR just try to buy the best in the market don't buy cheap cheap will kill you in the long run.. make sure whatever you buy has a rent of well above 1200 a month and is MARKET renter not HUD... I am down to 11 rentals now all in Mississippi ( well I have a few in Oregon but they are so passive I forget I even own them LOL) my rents on the MS properties are all 1400 to 1600 top of the line A class they don't hit the 1% rule but they also have no problems collecting rent and very few repairs and are never vacant. Of course I bought them brand new so that mitigates repairs and of course the reason I bought them was for GO ZONE tax benefits.. I am now selling them all off and will be out of the rental game for good...

@Dawn Anastasi   sorry Dawn on the West coast thats a small loan for a RE deal.. my average loan in PDX was closer to 300k and the average loan in SF is closer to a million so yes in my mind that is not a huge amount. to loan on RE.. but if its an unsecured buddy loan then I agree its a huge amount for sure.  so depends on context

@Jim Viens   how many letters did you send out to get 4 calls are they yellow letters and just shot gunned or are they targeted... ?  Letter campaigns need to have commitments that run into years.. and like anything in this bizz it is all about consistancy and hopefully one does not run out of money sending out mailers before they make a deal.. Not much different then paying for a guru class on your credit card. both have about the same success rate frankly

@Anna Shaver  HI Anna great Giants game NO.. I am in the Berkeley this weekend... what you need to realize is that NOTHING that you would think is standard in Livermore ( IE SF BAY AREA) will be standard out in the mid west.. at least as it relates to 90% of what these folks talk about in the way of cash flow rentals.. its apples and oranges.. your in a triple A market not even A.. and when you read on BP about no appliances etc. those are C D some think B  but its not a California B most of the homes and the RENTERS would  be a CA F plane and simple.. no way for you to rationalize what you would have in Livermore and what is standard in the mid west... Only way would be to be buying homes in the mid west that were 125 to 200k each then you will get the same demographic and quality of renter in Livermore for your 400 to 700k rental homes.

PS  I grew up in Cupertino before 680 was built we took Niles canyon to reach Livermore and the 2 lane road went all the way to walnut creek LOL

@Corey Demuth   the A B C D definition is directly related to the Hood and those issues you rasie so if the asset is in a high crime area and is brand new its still not A or B.

or it could be like our properties here in Oregon that are 70 years old just OK but are A's as they are rented by Hipsters paying top end rents and they pay on time everytime and do not trash the units

@? the best education you can get is to become a Real estate professional IE get your RE license in your state.. BP is nice but it is just free advice which you need to take with a grain of salt those on the pod cast are just regular folks that all have a seperate agenda to sell something , maybe not all but most, and they are not  Vetted in any way.. So its just free advice.. To take BP podcast and those on them as gospel is as some would opine here is no better than listening to Gurus the only difference is its free.

Getting a RE license will give you the true scoop you will learn the laws of the land you will network with TRUE professionals not those trying to advance their agenda on BP.. Not those who sell guru courses for 50k  which some may benefit from but pretty hard to get 50k worth of advice in a 4 day seminar..

What you want to do is take it all in .. Do not trust anyone.. be them guru or BP podcaster or anyone posting myself included.. go out and get your RE license work the bizz learn the bizz then make up your own mind as to how to make money in this industry.

@Pam J.   why would you need a RE attorney in CA... the only time we use attornies on the west coast is if we are being sued or suing someone. If its a simple RE transaciton title company handles and a good broker can lead you through it.  now if your doing complicated high dollar commercial transactions thats another story.