All Forum Posts by: Jonathan R.

I have a handful of 30k properties that rent for $695-$795 a month range. No need to think they can only bring $500-$600. The rental demand is strong here. Keep those rents high. I also am seeing the appreciation in the lower end properties. Some might not be selling because they are 15k more expensive than they were two years ago. I used to be able to buy a property for 18k and put about 12k into it, now those deals are much harder to find.

I’m in the hold forever camp. After managing a rehab on my first deal a few years back I decided I don’t care what the property will sell for, it isn’t worth it. Now we have a handful of properties and keep grinding. The cashflow is my liquidity. Instead of selling, consider a cash out refinance and use that money to buy more properties, it’s tax free. Rinse and repeat.

You want to get into real estate? Oh my. Real estate gets easier when you have money, but starting out is extremely hard. You’ll have to deal with a contractor who has little or no vested interest in the success of your company. How will you get them vested?
You’ll have to deal with tenant phone calls in which they expect you to fix issues as soon as possible. How will you forge a relationship with handymen to have them prioritize your maintenance calls?
You’ll have tenant turnover. How are you going to reduce that turnover? How quickly do you think you can get a handyman that has little or no vested interest in the success of your company to the property to bring the property back up to a rentable status?
Do you know how to evict someone?
Maybe you think you’ll hire a property manager... 
How do you control your costs? Do you just blindly trust the numbers they provide you? Do you think you’ll cashflow when you let others manage your investment?

I’m glad to see you are buying books. It’s kind of like the guys that got rich selling shovels to the gold miners.

Now for my advice. I have a handful of properties and think I’m qualified. Manage your own properties, at least till you have 20 or so doors. Ask around right now for handymen/contractors. Cheap, reliable and quality-pick two because you can’t have all three. I chose cheap and quality. I found a guy that could rehab an entire house, who was down on his luck, and I paid him minimally on the first deal. I spotted talent. I buy cheap houses for less than 20k on average, so I told him for every 10 houses he does for me I’ll change his life and give him one as long as he continues charging me very little to rehab the houses (3-4k for complete rehabs). I pay his phone bill. I make sure he has transportation to the jobsites. That’s how I got him vested in my business. After several deals I could afford to do a contract for deed with him to live in one of my properties, I pay that living expense in exchange for labor every month (rehabs on properties and maintenance on existing properties). So now I control his living situation, hence I pretty much control 100% of my overhead. Now I have a guy who is willing to fix anything I ask for a minimal amount of money, in a timely manner, allowing me to scale to as many properties as he can fully rehab in a year (3 or so per year roughly).  He’s now more reliable. We have an interdependent relationship with one another. I’m his retirement plan. He’ll get a new rental for every 10 houses, something he would never have been able to achieve without me.

Good luck! You’ve now read what I’m up to. I’m sure you can see why many fail, give up, or never get started. A book that did change my life, aside from Rich Dad Poor Dad was from T. Harv Eker called The Secrets of the Millionaire Mind. I quote, “You want problems. Problems are good. Problems mean you have a tenant. You’ve got to be bigger than your problems.”

Wichita has a great market for cash flow. As far as for appreciation, I can certainly feel the appreciation in the market over the last few years. Much of the appreciation is taking place in the suburbs with great schools, but I’m feeling it on the low end of the market in the city also. As for the future, don’t know. I’m not sure Wichita has diversified enough from aircraft, and aircraft is taking a beating for sure. But, cashflow is certainly strong. Properties are cheap, though not as cheap as they were three years ago.  Central and West street is a good blue collar area. If the numbers make sense I’d say go for it. 

Can a real estate agent put a seller under contract for substantially less than market value and then mark it up a few grand, so I have a ton of equity in the deal and have happy? No. Their job is to get sellers top dollar. Don’t get me wrong, I use realtors to sell and buy, but wholesalers have the best deals, at least in my market. 

I'm also not a big fan of the NAR getting rid of pocket listings. Sometimes as an investor you want a realtor to market a property as an "off market" property to investors and buyers. Pocket listings and the realtors that represent them are cool.

Investing is often a transfer of wealth from the weak hands to the strong hands. Same is true with stocks and other assets. One man's trash is another man's treasure. I'm not a wholesaler, but I am an investor, I think there is a place for wholesaling. Sellers that don't want to fix up their properties and need fast cash don't need to use realtors. Most realtors have zero business dealing with investors in the first place. Investors and realtors speak different languages. Realtors know retail, most wouldn't know the first thing about turning a profit for an investor. I'd rather work with a scrappy kid on the buying side like the OP than a realtor who doesn't own a property outside of their overpriced primary home. The NAR needs to stop trying to monopolize real estate. Just because someone passes two exams and gets a shiny pin that says NAR doesn't mean they are better than a wholesaler trying to feed his/her family too.

The difference between an OOS landlord and a boots on the ground Section 8 landlord like myself is my handyman would do the above work for me for a few hundred dollars and a 12 pack if I buy the materials because he’s readily already working on my next property. It’s all about the team you’ve built. I get cheap labor because he’s living in one of my properties, I bonus him a cheap house for every ten full rehabs he does for me at an insanely cheap price (4-5k or so in labor). I’ve created a business, it’s not just numbers and an investment. I created an interdependent relationship. This has set myself up early on to grow by controlling his living situation, I also pay the phone bill and he drives my cheap truck. So, to have him turn a property over for me for a new Section 8 tenant is another day at the office. Just my .02.

BA in Speech Communication and a Master’s of Business Administration degree. I have a small handful of rental properties and know my degrees helped. I gained insight and intellect. I got smarter. I gained confidence. I learned how to communicate with others. I was inspired. I gleaned the importance of treating people well.

There will always be a need for affordable housing. These properties you are buying cannot be built for 40k, I see no way they won’t have to appreciate as time goes on. Some don’t think these properties will appreciate much; I think they’re wrong.
I’m in a similar place it sounds as you, with a few Section 8 rentals owned in cash for less than 40k all in (mine rent for around $700-$800). I was thinking leverage would be fun, but that is lazy. Keep working your butt off and find the cash to buy the next one. I’ve been using partners to grow. It’s easier to come up with $15k than $30k. Keep asking yourself, “How can I?” Let your mind strategize and go buy another one. It’s a marathon grind. Good luck!