All Forum Posts by: Jonathan Oh

@Bridget Pasternak I'm conservative so I try to have at least $4-5k in reserves on day 1. Always be prepared for issues in year 1 despite how unlikely you think it is.

@David Chappell

You can make money in any market, but just beware of what the macros tell you. Connect with property managers and local investors to see where they're investing. Also, avoid the common newbie mistake of investing in cheap properties in low end neighborhoods. Cash flow make look awesome, but it's never that great in reality.

@Ryan Lauretta

I invested in both. The main thing with with owning SF is you have full control and syndications you don't. It sounds like you're also wanting to gain some experience, but don't want to commit to this full-time given your situation. For this, you may want to consider turnkey for you first deal. You don't necessarily have to build your own team from scratch and you don't have to worry about managing a rehab project remotely. But you do get a taste on the acquisition process, how to analyze deals, and what to expect on the management side. I got my start with turnkeys before becoming comfortable going out on my own.

@Kathryn Schauer Inspection reports should always have a list of issues. Otherwise, the inspector isn't doing their job. The issues don't seem like deal breakers, but next time always have the seller fix them and re-inspect the work. Most inspectors offer re-inspections for a fraction of the original price. 

@KB Bjerk I am not the type to discourage anyone, but if you're trying to weigh out the risks, I would say trying to do a full rehab is much riskier than buying retail or turnkey. One requires minimal work and the other is going to be a massive project. Also, the risk of "disasters" coming up and eating your cash-flow is there regardless of a full gut rehab or not. Sure, the rehab gives you the comfort of knowing that everything is new. But one bad tenant can still wipe out your cash flow. I think an important thing that a lot of new investors forget is "location, location, location". The fact that you want to invest in a neighborhood where prices max out at 75k, while Milwaukee's median home price is around 130k tells me you may be looking at a low end area that have more problematic tenants. Before you dive in, research what types of tenants you're going to be renting to. And read up on the pros and cons of investing in these areas. You can absolutely make money, but I found that these types of areas are not best for new investors. But if you're confident in what you know, go for it! I don't know too much about your market, so read my comment with a grain of salt.

@Evan Liu Most property management companies also provide buying/selling services. It may be a good thing because as a PM, they will have the best idea on what rents you can get. On the flip side, I would question how much experience they have on both services. I haven't used an agent/PM so hopefully others that have can chime in and offer their thoughts.

@Maria Burks

I got my start with turnkeys as well. The catch is that you're buying at market price. Forget about adding value. And it's not 100% passive. It's not like owning stocks or investing in REITs and Syndications where you can forget about it after you purchase. When things come up like a vacancy or repair, you have to make decisions. If your PM starts performing bad, you need to know when to make the decision to replace them. But there are a lot of benefits of turnkeys that I'm sure you're already aware of. So it really comes down to what your goals are and what type of investor you want to be (active or passive). Hope this helps!

@Premesh Purayil That's right, if you're planning on buying turnkey, plan to hold for a minimum 5 years and always be conservative with budgeting. But a lot of the actual costs will come down to your property manager and what type of property and area you invest in.

@Robert Myjak The biggest reason is that turnkeys have no room to add value. For an active investor who has the right team and experience, turnkeys make no sense. Most turnkey investors are retail investors. But i'd agree with @James Wise that turnkeys sell quickly. There are a ton of investors who makes their money in another industry, but want to include real estate in their portfolio via turnkeys. I invest in turnkeys as well so let me know if you want some more insights. Good luck!

@Lauren Olson
I always tell investors that if you can afford investing locally do that because investing OOS presents a new set of hurtles that you have to over come. On the flip side, your money goes a lot further. Based on your response, it seems like you are in the same boat as a lot of us OOS investors. We live in expensive markets where rentals make no sense. Since you haven't done your first deal yet, I'd strongly advise against attempting BRRRRs or doing any major rehab remotely unless you have people you can really trust. If I were you, I'd either find a sold agent to work with or buy turnkeys.