All Forum Posts by: Jon Kelly

Hi @Kate Barry you kind of answered your own question. You're investing in deals "that will require a PM." 

Sounds like your ultimate goals is achieving the highest value in 5-7 years. Banks are smart. They underwrite deals based on minimum expense thresholds. For 1-4 units most will underwrite deals assuming 0% property management fee (most investors can self-manage 1-4 units). However, there is typically a 5-10% management fee assumption for 5+ units. Whether you include this in your monthly/annual financials or not the banks will assume a PM fee. 

Another thing to consider is your personal taxes. There may be (and by "may be" I mean should be) tax advantages to charge a PM fee.

@Tony Davis off market deals are often more challenging than on market deals and they are cheaper... 

When I started investing I always tried to pay the bare minimums. I wanted the lowest: agent fees, property management fees, general contractor prices, etc. Over time you will realize "you get what you pay for." If you're serious about investing then you should consider overpaying people that bring you value. If an agent is bringing you a deal 20% below market with no competition then pay the agent accordingly. 

Think about it from a relationship perspective:  

if you are willing to pay the bare minimum (1%) two things will happen: 

1. the agent will likely not work as hard to help you on your first transaction. Why would they spend so much time on off market deals to make 1% when they can make 3% on standard on market deals? They will send the best off market deals to their better clients first and you will be left with the scraps. 

2. the agent will be discouraged from working with you in the future. Again, their time is better spent elsewhere

3% is a fair amount or a minimum $ amount (e.g. $2,500, $5,000, etc.) 

@Michael Lonsdale what hard money lender are you using? If someone is willing to offer 90% initial / 100% rehab budget for your first deal then you should jump all over that. 

I work for one of the largest private lenders in the country. We offer 70% initial / 100% construction holdback for first time rehabbers. We offer 90% initial / 100% rehab to rehabbers with 5+ rehabs on their track record. 

@Michael Lonsdale who told you you need 10% down for a BRRRR and how will you fund the rehab?

What's the value of properties you are looking at? $100k, $200k, $300k? So you only need $10-30k? 

If your W2 if $120k can you save $5-10k per month? If not, why are your expenses so high? 

If BRRRRing is truly what you want to do I would try A, B and D. Call any/all local banks. 

If you don't have the funds yourself your best bet is to network and partner with others. Can you go to a local meetup and find a hard money lender? Can you ask family, friends, etc? 

You've been reading for a few years. It's time to get started. 

@Isis Villalobos Avila cheap ones! 

But actually, @Pablo Avila nailed the response. 

@Henry Clark this is brilliant. Definitely counts as a business trip. 

Have you looked around Santorini, Naxos or the other Greek islands? I don't think there's much self storage there! I heard June is the perfect time to go. 

@Yuzi Stha you may want to sure up the framing and the foundation if you're concerned about "jumping" around. Noise is one thing, but a bit silly to offer an apartment where you cannot jump. 

Can you rent to someone 70+? 

@Asbery Rainey only 15 states??? Don't you think that is too limiting? As an investor in PA and MA I'm offended my states didn't make your top 15. :) 

In reality you need to better define your criteria with what you're hoping to accomplish. Narrow it down to a select few and then pose this question. 

@Dyami Pike saved money from my W-2 job. You should also consider ~6 months of reserves, so maybe have $15k to start. 

If saving $10-15k is a problem I would focus on that first before considering diving into real estate. You need to understand how to manage your personal cashflow before jumping into a business. Increase your income or reduce your expenses... 

@Michael Fung you fear is "it's too difficult to secure a contractor's time..." How do you face your fears? By taking action. 

How many contractors have you called this week? If it's less than 10 then your fear is baseless. 

If you're serious about this you should be calling contractors, agents and other local investors for recommendations. 

You looked at the property for a reason. Seems like you're looking to get started. Start now. It won't get any better later in 2023.