All Forum Posts by: Jon Catterson

@Calvin Schmeling Based on your reply, my advice for you is to jump into action. If you've read multiple books on overviews of real estate, LLCs, property management and other topics, it's time to get a buyer's agent or connect with wholesalers (I recommend getting a licensed buyer's agent for your first property), look at a bunch of properties, analyze the ones that look promising, and offer on the ones that look good after your analysis. 

The right team is important but the team members you mentioned (CPA, attorney, bookkeeper) are secondary. I would find a good buyer's agent from using BP's agent finder tool and cross-referencing the people you find with Zillow's Agent Search database. Your agent(s) should have recommendations for hard money lenders, property managers, and general contractors. Those are the team members you need to concern yourself with right now by the way. As someone else said, the work of a CPA and bookkeeper is doable on your own for your first property. I don't think an LLC is terribly necessary early on and therefore an attorney is not necessary either. Your mileage may vary on that (as well as the mileage of others).

Bottom line, it's time to briefly refer to your books and take the actions those books tell you to take. 

@Avinash Dongarwar, I second reading that book by J. Scott. Even if you don't know construction, you should be able to get a ballpark figure. Then you can give that to your contractor who will walk the property and see where you got it wrong. It will be good practice in any event and you should be able to ask good questions on why the contractor thinks this or that is such and such price. 

I have a good friend who knows everything there is to know about construction. Retired former contractor. He reviewed our own estimates on three properties using that book. We were low by about 10% on the first and second then just about right on the third. 

I use Donny Thompson of ERA Real Solutions Realty in Columbus. He has a big business, managing 1,500+ doors. He has a lot of people working for him. In house maintenance guy and in house contractor. He's done pretty well by us. If you can't find his number on the internet, message me. 

Hi @Zander Deckinga,

It's awesome that you're intentionally pursuing FI at 19 years old. Keep at it!

You said you are in a comfortable spot with regard to your income. That's great. However, I understand that Austin is a very expensive market as far as raw price points. You probably like Austin and want to househack there. I'd just float the idea of doing that for the first one, but for some future properties maybe go 1 hour and 15 minutes down the road to San Antonio for some more affordable properties. Just something to consider. 

Best of luck!

Hi @Daniel Sanchez,

I am not sure what you mean by data even though you provided an example. I used very simple data to help me determine my out of state market. 

I went through all markets listed in the BP forums networking sections and narrowed it down to those that had $180K or less median home price on Zillow. Then I looked up Rentometer average rent for a 3 bed 1 bath for each general market. From that I calculated the price to rent ratio. I eliminated markets above 12 P/R. For the remainder I googled their property tax. I eliminated those above 2%. I googled the change in income from 2000 to 2017. I eliminated any that were below 20%. I googled change in home value from 2000 to 2020. I eliminated those lower than 40%. That left me with my markets to choose from. 

City-Data.com is a good place to find some of this info and other info. 

Hope that helps. 

Hi @John Mucilli

My first and so far only buy and hold is in Columbus OH. I live in the Sacramento area and lived there when I purchased it last April. 

I read Long Term Real Estate Investing by David Greene. That is the LDREI bible imo. But you asked how we got over analysis paralysis. I'm afraid I can't help much except to say know your destination: a long distance rental. Then go ahead and imagine the steps but realize it's a destination you're going to but the journey may take you on very variable routes. Then, most importantly, focus on the very next step you need to take. Once you've been paralyzed for a while, that last step is exceedingly important. 

If you've already read LDREI, that may mean go to BP Agent Search and find three agents to write an email to. Then the next step is to draft your email you will just mail to all three agents changing the agent's name. Then respond to each agent as they respond. Etc. etc. etc. Focus on the very next step. One step is not that hard. 100 steps is. 1000 is impossible. 

Hope that helps. 

Hi @Taylor Steenburgen

In response to your first post, you may want to consider short term rentals or a traveling nurses rental. The income potential is higher of course. I do not know the laws on short term rentals in CA or Sacramento as that is not my strategy, but I do know that is is hard to find a Sacramento purchase that will cash flow as a traditional rental. 

Capital expenditures should depend more on the property I would imagine. Sacramento has somewhat favorable weather (no winter), so it may be better than the national percentage. For vacancy, I would consult your property manager. 

In response to your second post, I would go to Google and search for "Sell my Sacramento home now." The search results will be websites saying they buy houses. Most of these people are wholesalers. So you can start with a Google search. I would also attend REI meetups and ask for referrals.

I invest in Columbus, and my agent @Zeke Liston is with Reafco. They seem to be on the Columbus real estate investor market like white on rice. You may want to check them out. 

@Drew Clayton

I have one single family purchased with conventional financing and am looking to do my first BRRRR so I'm fairly new too. But here's what I see.

For my down and dirty quick BRRRR calculations, I take the time to estimate ARV. Then I take 70% of ARV which is the cash out refinance for a duplex. In your case it's 75%. I take that number and subtract the purchase price. The remainder is what is left for rehab and financing costs. If it goes right to zero, that's a good to great BRRRRR. With the leads I'm seeing, it looks like I'll be leaving some money in my first BRRRR. So I have to balance the money left in the deal with what it would take to acquire a similar property that was already rehabbed. In other words, what it would take to buy a property with that ARV.

In your case, assuming the ARV of $145K is accurate, your 75% is the $108,750 you have toward the bottom. You subtract your $85K purchase price, you'd need rehab and financing to be $23,750 for a good to great BRRRR. Obviously that's probably not realistic, so the question is comparing the money you're leaving in the deal to what it would take to buy a rehabbed property with your projected ARV for this one. $145K times 0.25 + $5,000 in closing is $41,250. So, going to the trouble of rehabbing a property, you would leave over half of what it would cost to just buy a similar property with conventional financing. I don't know much yet, but I think I'd pass on that opportunity.

@Delia Washington and I will be there! I actually do have something every Wednesday at 7 pm but if you'll be changing the meet-up day for only one month we can make it out this time. Looking forward to it!