All Forum Posts by: Jordan Callaway

@Ryan Bialczak

read every book about real estate ever written

find all the smart people active in your area doing RE investing

read and listen to every bigger pockets forum page and podcast

Nothing else will matter ! Haha cheers

@Stacy White If I were you, I would reach out to the realtors in your area who are consistently listing properties because these are the ones with the most frequent opportunities (you can see who the listing agent is on realtor.com). This way you can see all deals which are listed, but also non-listed deals they have as side/pocket listings. Since you're a buyer, it's not as important to have one realtor, as much as it's important to see all opportunities, and to be added to multiple realtors' e-mail distribution lists.  And in return, (as an incentive) you can tell the agent you'll list with them if you buy a deal they brought to you, when you go to sell it. 

@Russell Avery Happy to help you discuss and run the numbers on this... Your numbers above don't line up, is it $6,200 per month? or $62,000 with typo? Also 7 cap is quite low for mixed use but don't know which area either... But that can be discussed, what's more important is you know the seller, I agree with @Oleg Shalumov, ask her what she is thinking? What she plans to do with the proceeds when she sells? Why is she thinking about selling? Also ask what improvements she's made and what she would do with $50k worth of updates if she kept it for the next few years (just to figure out if she knows of any major issues)? Also important in IL to look at what the property's current assessed value is bc in IL the sale price could result in a double or triple of property taxes... Especially if they've owned a long time. Then your 7 cap turns into a 4 or 5 cap within the first year... Could be very challenging, not being negative just letting you know what landmines you need to look out for in our lovely state of illinois. 

Welcome to the community Jose, your ambition will catch on like wild fire and inspire others younger and older than you. Keep up the good work. Also Tec is a great school! Let me know if you ever need anything or if I can help. 

Many market dynamics and land ownership laws are slightly different in Monterrey/Mexico, but much of the attitude and lifestyle changes required to succeed in this business still hold true. I am familiar with some of the differences, feel free to reach out to me to discuss (for example, in the US you own the land and minerals under the surface, and the air above the property you "buy" (this is called the Allodial System), which is different from most other countries except a few. Most of the world, the land under the surface, (and all of the oil $$, soil, minerals, water, etc.), are owned by the government, so you only actually own the property on top of the land, this is called the Feudal System. Other differences include the structure of how investors purchase/finance and operate investment property. 

Good luck and read everything you can on this website! 

@Alex Nickla no worries! Sounds good! Also, you should watch the movie: Pacific Heights - a 1990 film about house hacking haha

Alex, I looked it over, and it looks like (with all due respect to the listing agents) the expenses are understated or unrealistic. Their expenses are in the 30s percentage range... They could be as high as 50 percent in my opinion. Specifically, I'd add into the underwriting a management fee of 5% (even if you're managing and paying/not paying yourself - any bank will add this in anyway in case something happens to you and they need to make sure the property stands on its own), a cleaning/decorating fee for turnover another $300 per unit, a miscellaneous/reserves fee of $300 per unit per year and maybe even consider adding a janitor fee, although this could be covered by manager since it's 8 units only... Also, vacancy is 5 percent, is that accurate for that market? Sometimes people are occupying showing 100 percent occupancy, but only 80-85 percent of the rents arrive, just make sure to double check the rent deposits are the same as the income shown in the marketing book. 

As for the question of buy this or buy 4-unit? House hack is great for you b/c you're still in 20s non-married (I think). Great way to get in with less money down, live in for a year if required by lender, refi to investment loan after improving condition and rents, move on to the next one... A good friend of mine has done this four times already and has 15 rents coming in now, lives in the 16th (though you can only claim residence in one, so be careful not to lie to the banks, they'll find out).

That being said, there is a reason 25 percent down payment is required for outright investment properties, may not be a bad call to just keep hustling until you can flip your way up to that down payment or bring in a partner as you mentioned. Many people are interested in real estate and have the money but don't have the time or know-how, so you could be a great partner for someone! Keep it up though! I know this didn't help you decide which route to take, but good luck!

@Meghan McCallum +1 on you previously being underpaid & thank you for your service! let's do a deal soon!

You have to create it yourself in reverse. For example, find the last 3 properties that sold, and compare each:

Example -

Property 1 Sale Price: $200,000

At sale, how many units were rented, what was their rent?: $500 per month x 4 units X 12 months = Gross Rent of $24,000 (you don't factor in vacancy here, gross would just be if all units were full. 

GRM: Sale Price divided by annual Gross Rents

$200,000 / $24,000 = 8.33 GRM , or 8.33 times the annual gross rents.

Repeat with two other similar sold properties and then average for market GRM.

The higher the GRM, the less the risk; the lower the GRM, the higher the risk.

If it's 2 times gross rents, that's either a great great deal, or a high risk deal with lots of potential vacancy or higher level of management requirement... 

@Alex Bok knows the business 

@Jeremy Woods that's a great way to go about it! When new tenants apply you can charge $40 for 1bd $50 for 2bd $60 for 3bd! On current tenants, I agree, that's harsh I never recommend implementing new foreign fees or changes to current, but on move-outs you could do it with the applicants... But either way all good strategies, like where your head is at!