All Forum Posts by: John Cassel

Hey Danielle,

Welcome to the real estate investing game.  There is no better time than now to start learning.  Deals are on the horizon!  

For learning, I would recommend podcasts & youtube because you can listen on the go.

Biggerpockets, Rod Khleif, Cash Flow Guys & Michael Blank are some of the ones that helped me get started years ago.

If you need any help, my DMs are open.  Good luck!
John

If you are looking at larger deals and generally anything maybe 30+, reaching out to the top brokers in the area frequently is the best way.  Some of those relationships take time but once you prove you're a good buyer, they will bring you more larger deals.

Direct Mail & Cold calling owners in the 10-60 or so range can work as well but once you get into larger deals the brokers are the go to way.

Networking on BP & other social media can help link you up with great contacts that lead to deals as well

If you're looking in the 3-maybe 20 space.  Do the traditional direct mail, cold calling marketing and just tell everyone you know what you're looking for.  Maybe a contact's grandpa is thinking of selling, you never know.

Right now it is finding contractors.  Thankfully I built a great relationship and friendship with one so I have one that helps me at the drop of the hat but there's a lot of work to be done and contractors seem thinner since the Pandemic.

@Eric Bilderback This is unfortunately how the system is designed, people with hard assets like Real Estate are just smartly using the system to their advantage.  Fiat money, money backed by nothing, like the US dollar is set to go to zero over time.  It is nothing more than math.  As the debt grows, the Fed will be forced to print more and more to have the same economic effect.  A huge majority of that money goes into assets like real estate.  Over time wages don't keep up which is why you see purchasing power of each generation getting worse over time.  The next gen will be worse off than the current, barring a complete global collapse and a reset.

Google James Lavish's article on the debt spiral

We do have a looming problem on our hands though.  With technology advancing by leaps and bounds we have a exponentially growing deflationary pressure.  Technology makes things easier and cheaper to produce and our system cant handle deflation due to the debt.  Governments will be forced to print more and more to keep some sort of inflation around as it erodes the debt.  Eventually the technological deflationary pressure will be too strong leading to collapse of currencies around the world.  The main currencies will most likely collapse as will but the top 2-3 will be around for a while.

Check out Jeff Booth's book The Price of Tomorrow

Real Estate will always be a great investment and it produces cash flow.  That's why I buy multifamily to increase my wealth and income in today's world while also investing in Hard Money aka Bitcoin (long time horizon) for tomorrows world

Welcome @Richard Sinclair!

I invest in PA but would love to link up and help you get started in any way I can.  I solely focus on Multifamily investing and would recommend getting started with a 3 or 4 unit House Hack IF possible.  I love the advice already put out there by other commenters.

-Join a local meetup
-Build your knowledge
-Determine your investing strategy
-Figure out where your funds will come from for deals, your money, other peoples money, hard money, etc
-Start analyzing deals to better understand your market
-Direct mail or Cold call owners to find off market deals
-Put some offers out there on potential deals
-Close/Land your first deal and get the investing itch
-Repeat with an equal or larger deal!

You'll always wish you started sooner so don't get stuck on the side lines or in analysis paralysis.  Current market can be scary but you can ease those worries by just being more selective in your deals!

Hope this helps!
John

If you are willing to live in one unit, investing in a 3-4 unit property as a house hack will almost certainly get you out of your job the soonest.  Most local lenders should be able to do 3-3.5%.  Here are some great benefits of MF house hacking.

-Get in with low money down
-Can slowly rehab the worst unit as you live in it
-It should eliminate all your living costs - other 2 or 3 tenants should cover the mortgage and all the utilities no problem.
-Saving living costs will allow you to get into your next property even sooner
-When you are ready to move out, the property should cashflow and you can just hold it at that point

When on the journey to Financial Freedom/Quitting your day job, it is always easier to just increase income instead of lowering expenses because most of the big ticket expenses are necessities.  However, if you are house hacking you CAN eliminate the biggest living expenses.

So if your monthly expenses right now are $4,000, you would need cash flow above and beyond that to become financially free.  If you start with a house hack, you could eliminate probably 50-70% of your living expenses.  Then maybe you only need $1,500-$2,000 in monthly cash flow to quit your job.  

Hope this helps!  I did a webinar on house hacking a multifamily property so if that would help you, message me and I can send it to you.
Sincerely,
John

I started out self managing my one 5 unit Multifamily Property and even with hardly any maintenance requests or issues during my time self managing I would still recommend a property manager 10/10 unless there really is a bunch of crap managers in your area.  I also see the advantage of self managing in the form of starting your own management division once you scale up large enough that it makes sense to have your own staff.  

Basically, the my time was way better spent doing more valuable tasks than the day to day property management tasks.  Especially in my case as I still have a full time job but own over 40+ units (apartments & mobile home lots).  You'll be able to scale a lot quicker doing larger value tasks like finding great deals and finding funding for your next deal.  

If it helps I am doing a Lunch & Learn on 7/27 @ 1230 PM EST to break down why you need a property manager to scale.  No promotion, just an informational webinar that is FREE.  I pinned it at the top of my FB page for "MultiFamily Roadmap" since we can't share links

@Rick Albert

You are pretty spot on.  Here are some additional thoughts.

1. If you are looking at the 5-10 apartment range, most of the financing I have seen is 5 year fixed, 20 year amortization.  7 & 10 year fixed rate most likely will only be possible with a lender you have a great reputation with.  As far as the balloon payment, I have seen the requirement to sell or refinance at that 5 year mark as well as it automatically going to an adjustable rate years 6-10.  As a tip, if you can refinance with the same lender you will generally get better terms or a smoother process, at least in my experience.

2. NOI & Cap rate should be the sole value calculation for anything 5+. Cap rate is sort of like a "comparables" factor but more so for "like" properties (age, tenant class, area) than just property next door.

3. Most do LLC for protection and because they cant take down a 10 or 15 unit by themselves. The costs may vary per state on the filing.

Another item might be the property management.  If you get large 50+ you have to start looking at more onsite employees.  For smaller 5+, the more you have the better rate youll likely get.  For a combo property we just did (31 total units, apartments/mobile home lots) our property management agreed to a fee 2% less due to the amount of units. 

All in all, if you can understand the numbers on a 3-4 unit, you'll be fine understanding a 15 unit. Hope some of this helps!

Sincerely,

John 

@Alicia Marks I think the first step you need to do is pick maybe the top 1 or top 2 pain points in real estate investing for you and then find a way to delegate those out.  Either automate them or train a Virtual Assistant to do them for you. 

As many have said before this will clear up a ton of your time to work on the stuff you enjoy and are likely better at in the business.

@Mike Kundla A small Multifamily property that you can BRRRR would be a good way to get started especially with your starting funds. The two best areas to try are where you live or a place you used to live and are familiar with. Not all areas will cashflow but in most states you should be able to find something that cashflows if you look a little outside the big cities.

The two keys to make sure you don't end your investing career with the first property is to find something that cash flows and has a value add component.

-Below market rents, mismanaged, deferred maintenance, high vacancy etc

Here is a quick plan you can use

1. Start doing quick analysis on listed deals around you, take the income, use a quick 50% factor for expenses, calculate the mortgage payment and see if the properties for that area cash flow (Income-Expenses-Mortgage=Cash flow)

2.  Once you find an area, start marketing for deals via direct mail.  Use something like listsource to pull 3-4 unit properties in that area and mail to those owners to get a deal flow coming.  I use personalized letters (email me and I can provide an example)

3.  Get lending lined up, you can get 30 year fixed for a 3-4 unit property.  Local banks and credit unions will offer the best terms.  Shop around.

4.  Line up a local property manager.  Self managing usually leads to burn out so I recommend a property management company.  Just factor the cost into expenses.

5.  Analyze the numbers for the leads you get from your direct mail.  With economy as it is, and it being your first deal it might be beneficial to be a little more conservative in your numbers.  Dont forget to include the following costs:  Vacancy, Property Mgmt, Maintenance Costs, Cap Ex Costs (big ticket items)

6.  Pull the trigger on a good deal.  Once you get the first one closed you will be hooked and looking for that second property.  Take what you learned from this one and apply it to your next deal.  Maybe even go bigger for your second deal.  If you added enough value, you should be able to pull your initial investment out and roll it into another property!

Hope this helps!  Reach out if you need more help.

John