All Forum Posts by: Jon Catterson

@Leela Gutta, you asked about cash-flowing markets. I don't know if you already know what I'm going to write about now, but I'm just writing for the least experienced person reading this. 

A way to try to determine cash flow is the price to rent ratio. Price / gross annual rent = Price to rent ratio. Another way to try to determine cash flow is the 1% rule. One month's rent divided by the purchase price is 1% or greater. 

Now some simple math. If one months' rent being 1% cash flows, that means if the annual rent (12 months) is 12% the property would cash flow. The property price is 100% of the property price obviously. Price of 100% / gross annual rent of 12% = 8.33 price to rent ratio = 1% rule market/property. 

However, you're not going to find many markets with an 8.33 average price to rent ratio. Some that do are troubled markets. But if you try to stay somewhat near it, you can definitely find some and then screen the list down with other criteria to get to your chosen market.

I would go to the Zillow Home Values site to look up the median home price in many, many, many markets. I would get a $19 subscription to Rentometer (can be temporary) to look up the median rent in many markets. Take the Zillow number and divide it by the Rentometer number times 12 and you have your ratio. 

I did that about half a year ago for many markets. I also screened down with other criteria and ended up with this list. I don't know much about these markets. Their numbers on a couple of metrics looked attractive. This is very much a do your own research too situation. 

• Tuscaloosa
• South Bend
• Des Moines
• Kansas City KS
• Columbia SC

If you want a list of those with just the lowest price to rent ratios, here's some:

• Detroit
• Jackson MS
• Birmingham
• Cleveland
• Dayton
• Kansas City KS
• Akron
• Hartford

All the cities I listed should hopefully be more "target-rich environments" than the SF Bay Area unless my math was off or my analysis is wrong. 

Good luck!

@Jeremy Blevins It's a thing we picked up that happens every Thursday. I wouldn't want the day of the week to change since it already works for everyone else that comes. Besides, other weeknights aren't much better anyway. I just wanted to let the regulars know at once in the thread why we're not showing up anymore. Hope you guys have a great time and that the meetup grows! :)

Sad to say but @Delia Washington and I cannot attend the Thursday meetups for the foreseeable future. :( I hope everyone has a good time and hopefully we'll be able to meet up with y'all again someday. 

As was already stated, a big tip is to read Long-Distance Real Estate Investing by David Greene. If I could boil that book down to four words it would be "Utilize technology. Build teams."

Technology is, well, everyone's friend, but it is vital for the long-distance investor. Zillow, Redfin, and Trulia tap into the MLS's of many, many markets and allow you to scope out those markets before picking one to focus on (or a couple if you want to diversify). Then you'll get on the multiple listing service of your chosen market(s) with your agent(s) and that will go right to your smartphone too. Property tax records are online. You can get homeowner's insurance quotes (multiple) online. Schools are important to a property's value. You can find information on that for an area at greatschools.org and probably other sites. Increasingly, people like walkability metrics and walkscore.com covers that. Crime is important. Some or all the major MLS-pulling sites have crime stats as part of their platform. Rentometer.com does quick and dirty rent rates for you or you can comb through listings on Zillow and Craigslist and probably Facebook Marketplace and make your own estimate.

On teams, the Core Four was already mentioned - deal finder (realtor or wholesaler), lender, contractor, property manager. Investing long distance you would probably need all four and some others too, but they're not in the "core." You're training to be an officer in the U.S. Armed Services. You are well suited to leading a team you get to select. 

Read that book; it's great. I copied some stuff from an early chapter for my second paragraph but Greene goes into much more detail. The heart of the book is about working with the core four.  

I mostly base my estimate on Rentometer to do a quick screen. I think you get five free estimates then you have to pay $19/month which is a special deal that persists. After my quick screen, if I'm still interested in the property, I'll usually pull some comparable rentals from Zillow Rentals or Trulia to verify it for myself. Hope that helps. 

@Christopher Alan Rush

I went to Zillow for Columbus and selected multi-family limited to $200K. After looking at 5 properties and their projected rents on Rentometer, I found 3 that would cash flow, assuming the 1% Rule holds true (it usually does). I'm not sure what criteria you're stipulating but it must be something to pull nothing but $1M properties. 

If it's a "good" property, maybe they would. That means in good repair to me basically. However, maybe they don't want to pay realtor commissions, or do showings, or if it's grandma's house move all the junk out, or deal with a loan contingency from a risky buyer, or an appraisal contingency if it's going to go way above list and appraisal, or an inspection contingency if they might have some risky structural stuff in the background. Maybe they want a quick closing, maybe they need one if they're behind on taxes and time is truly of the essence. If it's in bad repair, they may not want to fix it up to the point where it's in good repair. 

Our sole rental is in North Linden off Weber Rd. I've seen some promising properties in other areas, but what do you think of North Linden and other neighborhoods in Columbus?

@Mel Adams Hey Mel, I invest in Columbus OH and I live in Elk Grove CA. My girlfriend and I bought our first single-family rental together with conventional financing but now hope to BRRRR some more properties.

I would read or listen to Long-Distance Real Estate Investing and Buy Rehab Rent Refinance Repeat, both by David Greene and published by BiggerPockets. Great books. 

There has been a meetup the last few months in Folsom at Out of Bounds brewery on the 3rd or 4th Tuesday. I don't know if it will happen this month but it probably will so look for it in the Real Estate Marketplace --> Real Estate Events and Happenings sub-forum. There is also a real estate meetup in West Sacramento every month. I think it is transitioning from Zoom to in-person or could be maintaining Zoom and re-opening in person as well. You could check with Sergey Tkachev as he facilitates them. 

Welcome!

@Ty Kashmiry On where to look, I utilized the property manager referrals my agent, Zeke Liston, gave me. The one we decided to work with is Donny Thompson of ERA Real Estate in Columbus. He has a large team and working with him has gone well so far though we just started in April. 

Here are the questions we asked (I think I got these from a David Greene book but I probably inserted some of my own so take it for what it's worth):

1. What experience they have managing rentals personally
2. How many doors their company manages
3. How long have they been in business
4. What they feel their company’s strengths are.
5. How they collect rent
6. What systems they have in place to make things efficient
7. How long they have worked for their current company.
8. What is the monthly percentage of rent they’ll take?
9. What other fees are assessed to owners? (Half of first month’s rent for new tenants, advertising fees, yearly walk-through fees, callout fees, and so on.)
10. How they enforce late fees
11. How often will the properties be inspected each year?
12. How will maintenance/repair calls be handled?
13. How will evictions be handled?
14. What is your average turnaround time for vacancies?
15. Can we run potential properties by one of your three leasing agents before we purchase?
16. Are there any neighborhoods you recommend avoiding?
    

Good luck. 

@Tyler Bolton I'm investing in Columbus OH. My girlfriend and I have one single-family rental there and hope to BRRRR more, either single-family or small multi-family. It's got a growing population, and the two biggest employers are Ohio State University and the State of Ohio. I doubt either one of those is getting smaller anytime soon and obviously, neither is leaving. The CompTIA Tech Town Index 2020 ranked Columbus 14th in the nation of their tech cities and #1 for the cost of living index. Columbus is pricier than some other cities in Ohio but there are still properties that cash flow well unlike where you and I live.

If you want to check out some other cities I would research 

• Tuscaloosa AL
• South Bend IN
• Des Moines IA
• Kansas City KS, and
• Columbia SC. 

When I ran some metrics a few months ago, they all had 

• Zillow median home value below $180,000
• Price to gross annual rent ratio below 12
• Property tax below 2%
• Positively growing population
• no lower than 20% growth in income between 2000 and 2017
• no lower than 40% growth in home value between 2000 and 2017