All Forum Posts by: John R.

@Tom Schmoetzer   I would love for you to post a follow up on what you are working on now, and if you have taken any action.

I'm about the same age as you and just got started a few years ago myself.  I figured my worst case scenario on my first property would cost me about as much as a semester at business school and might be just as educational.  When I thought of it that way after years of being interested but not taking serious action, I decided to buckle down and try it. It went much better than worst case and we have moved forward with more projects since then.

The team for me was key, as I am busy with my job.  My banker interestingly gave a good cross reference on the management team I had selected...she had other clients working with them.  Anyhow, it has been very educational, fun, and so far the numbers are working well.  

Best wishes as you dig in!

John

Welcome Dustin!  You are in a great place to start learning.  The density of information available here on the site and in the podcasts is amazing. 

John

Cody, I have seen several articles about drug problems and an HIV epidemic in southern IN.  Apparently Austin has been hard hit by the HIV problem.  Full disclosure, I do not live or work around Austin, so I don't know how it really looks on the ground there.  I have friends who live in Lexington, IN...just SE of Austin.  In that area there is a mix of nicely kept and very run down properties. I would consider living in the Lexington area myself if my wife would accept country living. I am not worried about catching HIV.    

I don't know anyone working the Austin area.

I don't tell you this to stoke any hysteria about the area.  S. Indiana is beautiful.  But you just need to be careful you don't end up with some toxic waste clean up problem.

Hey @Joshua Nobile,

Welcome to BP and good for you to be thinking about investing and real estate while you are still in school.  I think between the podcast and the forum you have a very amazing group of 'mentors' in the BP community.  I've been soaking up the podcasts for a couple months and wish I had found BP earlier. So much of what took me multiple books and lots of piecemeal conversations is even more readily available for you here on BP.  

It took me 20 years to finally take the plunge and buy a rental property...after years and years of being amazed at little old ladies I met who were living on rental income from properties they had bought with their husbands decades before.  I just couldn't figure out how to make it work for me, how to network, how to start, and frankly I was working on my career and not focused on RE.  After enjoying a fancy car lease for 3 years, 19,000 miles, and $27,000, the lessons I read previously in Richest Man in Babylon and The Millionaire Next Door started to sink in a bit more. Doh!  That coulda been a nice down payment!!  I finally got serious about RE investing a couple years ago and I love it.  I only wish I had started when I was your age!  

Check out @Brandon Turner 's book on investing with  little/no money.  That should have some points that are of interest for you.

Anyhow, it is a bit of a lame suggestion as I have not yet been. But I recently learned that there is a REIA in Louisville. www.kreia.com  I'm planning to go check it out asap, I just haven't been able to yet.  

You will be amazed at the sort of response you will get to a question posted on the forums.  That will far exceed anything I could tell you.  But, I'm happy to be in touch!  

Best regards,

John

Thanks!  And I don't mean to understate the importance of knowing your market well, even if it is not smoking hot! Either way knowledge and a good team of advisors/mentors seems pretty important as you get started.  

I've been hearing so much about Dallas.  Good luck to you!

Rivy,

You will find that there is a lively and thought provoking line of discussion and thought on financing vs. paying cash, with smart people making well reasoned arguments for both methods. Personally I love the power leverage provides, but as with all powerful tools it can be dangerous. And you will also hear/find Brandon Turner talking about the buy, rehab, rent, refi (BRRR) protocol.

You should sit down with your banker, explain your goals,  and then you will probably have more concrete numbers and  the course will become clear.  (except the part about just being an all cash investor...I don't imagine most banks would encourage this route, as they make money by making loans, not by counselling you to pay with cash. So dig into BP on that topic yourself.)  You may need to shop around for a lender.   Your lender is a key member of your team and should be screened and treated as such. This topic has been frequently discussed on the podcast and there are probably a number of forum posts on finding a lender.  Perhaps you pay an extra point for the loan on refinance of a cash deal, but this may be better than never being able to land a deal!

You can still compete with all cash buyers if you finance, but it will of course depend on the motivation of the seller and what your offer looks like in comparison to the cash offer.  Price, time, hassle, certainty of closure are all points of motivation to consider, among others.  

You will probably look at a number of deals before you find one where the motivations align.  And, I think you should set your parameters and be willing to lose deals if they don't fit your parameters.  If you can never find anything that fits your parameters, then perhaps you need to either look at a different market/submarket, consider if your parameters need to be modified, or consider if there is anything about your business plan that you can modify to help you reach your parameter goals.  Or maybe you just need to be patient and keep looking.

If your market is really so hot that everything is selling quickly to cash buyers, you really need to do your homework and get a good idea of values so you know how aggressive it makes sense for you to be with your offers.  Or perhaps you might start smaller or engage a partner so you can make a cash offer of your own and then later refinance.  

I started with the lender before I identified my first target property.  This allowed me to more confidently run my numbers in assessing the deal. Sort of like starting a trip with a full tank of gas...it gives you a better idea of how far you can go before you even start!  

Hope this helps.  Good luck!

John

William, you might consider contacting the folks at Investment Property Group in Louisville.  I talked to quite a few brokers and managers before I connected with them, and started acquiring properties.  They broker/manage/renovate...essentially a turn key provider.  And they are investors.  I've been very pleased and impressed with their service and professionalism.

I have been working with Janet and David at IPG Louisville for several years and I'm really happy with them.  

@Barbara Goodman- Thanks Barbara.  I have been really happy with my manager, and I also am just very curious so I try to learn all I can from her without getting in her way. She seems to be on top of the issue with this dirty unit, and 'we' (she!) are going to re-inspect the unit in question before we make a final decision on the renewal.  

Thanks again for all the great input.  

Thank you all for your many insights!  How amazing and wonderful to get such a response in less than 12 hours after posting my question.  So many good points for my follow up.  

I spoke with my manager today, and we are planning to let him stay on a month to month lease.  After all the above comments I'm going to follow up with my manager about sending in cleaners.  And I'll also confirm that the lease has a clause about cleanliness.  I certainly do not want to have a health or pest issue in the building.  While I am happy to enjoy a rent increase, I also feel compelled to provide value if I'm raising the rent more than simply bringing it to market rate for its non-renovated state.  In this case, perhaps that value for the client is in not having to relocate.  But the building character is changing.  As the units are vacated they are getting pre-leased before the renovations even start.   

All your suggestions should allow for a win/win in this situation.  Thanks to you all!

A couple points just in case anyone is interested or the thread continues...The mess is confined to his personal space, and is not related to a water leak.  It is just a situation where I think the shower, toilet and all the rest haven't been cleaned in perhaps a decade!  Nothing seems dangerous, but it is just very dirty and inconsistent with the quality we are seeking to bring to the building.  Lastly, this investment is planned as a long term hold.