All Forum Posts by: Jordan Wight

I’ve purchased two properties through R2R. They have helped me make connections I wouldn’t have otherwise as a passive investor. There have been hiccups just like any RE investment but R2R helps to smooth the process as best they can. Feel free to reach out to me with more specific questions. 

@Austin Shade - I just wanted to follow up again, I hope my previous comments didn't come across too negative towards R2R, because overall my experience with R2R is positive, and I would definitely recommend working with them. The main thing is just to use the pro forma as a starting point, and run your own numbers. You can download the rental calculator from the R2R website.

Like you, I live in California, where it's very difficult to be profitable on a rental property, due to such high purchase prices compared to rent. It's possible in some California towns, but overall very hard.

As a new investor, it's extremely difficult to invest long distance. It's hard to know which cities/neighborhoods are good - and when I say good, there are many factors, such as price/rent ratio, long-term potential, crime, etc. And even if you know a good area, it's hard to find the right properties. And even if you find a good property, there are likely tons of other people making offers. With R2R, they pretty much take care of all of that for you. They have already pre-researched good areas to target. When you want to choose a property, you basically just email them to reserve it, and you don't have to worry about a bidding war. 

Since R2R is both a provider and a marketing company, it means that you have a lot of choices across many states. You can choose to diversify across different areas, or purchase in just one area. You can look for single family homes, duplexes, twin homes, 2 bedroom, 3 bedroom, 4 bedroom, etc. They have stuff under 100k, over 200k, etc. New construction, existing homes, etc.

Both @Zach Lemaster and @Scott Lundgren have Calendly links where you can schedule time with them. But I've worked with Scott closely enough that I can text and call him directly. I'm a very particular and detail-oriented person, and Scott has been really patient to answer all my questions. For questions he doesn't know the answer to, he puts me in touch with the right person. Especially once you show you are serious about buying a property, R2R is very responsive and make themselves available to talk.

Once you "commit" or "reserve" a property, R2R will ask for a deposit, and then they give you plenty of time for due diligence. If for some reason you decide to back out, they are really flexible, so you can feel comfortable working with them on that.

@Zach Lemaster - Thanks for the response. I'm sorry if my comment was too negative. Overall I agree with you. Despite some of my critical feedback, many R2R offerings are attractive. I've had many calls with Scott and appreciate his patience in answering all my detailed questions. I hope to continue to work together. 

1. My experience with may R2R be limited, but I happen to be buying in the same area that @Austin Shade was looking, which is why I focused on that and wanted to share my experience so far in that specific area.

2. I don't expect the pro forma to forecast an accurate interest rate. I know it varies. But I do think that rounding a 3.5% interest rate to 4% is misleading, because it makes it seem profitable even at a higher interest rate. Meaning that the pro forma displays 4%, but in reality the ROI is calculating with 3.5% interest. It might be that your admin team just needs to update the Excel sheet to display more decimal points. I've given this feedback to Scott before.

3. I know you offer multiple options for new builds and aged properties in different areas, but in Florida, which Austin asked about, it's available only with a construction loan. Correct me if I'm wrong. 

4. I think it's fine if the Florida pro forma doesn't take into account the 6 month construction period, as long as the investor understands the opportunity cost of what that money could have been used for during that 6 month period. I don't think R2R is misleading at all on this, just wanted to help Austin weigh considerations of different purchases.

5. I did not say that R2R passes you off to someone without an ongoing relationship, I said there is no relationship history. I know that you are planning to have an ongoing relationship with developers and builders in Cape Coral, but thought it would be fair for Austin to know that the relationships are new. To my knowledge, there are not any completed properties yet in Florida with the developer and PM that R2R uses. Not necessarily a bad thing, I just think it's fair to understand the history and structure of all the players. I guess that's also why R2R has not been able to give me any referrals for customers in Florida.

6. I don't expect the property taxes on the pro forma to be perfect, I know that it varies. But I think R2R can do better. For both FL and MN, the estimate significantly off. In FL, it's not enough to kill the deal. In MN, I called the county tax assessor personally, and he is familiar with the property being built, and his estimate is more than double the R2R estimate, and that will probably kill the deal. 

7. I have not been sent any appraisals for properties in FL, I will email Scott now to ask for that.

@Austin Shade - I know this is a couple months old, what did you decide about Florida? I'm in process of buying my first two rental properties, both through R2R, one in Florida. Here are some pros/cons/considerations:

The R2R properties in Cape Coral require a construction loan. This means that you won't get any ROI for around 6 months. And the extra cost of the construction loan might not be accurately represented in the pro forma. And the six month gap is not accounted for in the R2R pro forma. They say that it will appraise for much higher once completed, but that is yet to be determined in 6 months.

The property taxes in the Cape Coral might be higher than what the R2R pro-forma says. I have found that a lot of R2R properties have unrealistic numbers. If you put sale price of $238k in this estimator, the county estimates taxes of $3,098, and R2R says $1,890. So as already mentioned, run your own numbers. 

https://www.leepa.org/taxestim...

R2R's bad pro formas don't necessarily stop me from investing through them, but you need to be skeptical and just use their pro forma as a starting point, not as truth. As feedback to @Zach Lemaster if he is reading, this is a big point of feedback, some pro formas I've seen are much worse than Florida. 

Also their pro formas have assumed a 4% mortgage rate, but that's rounded up in Excel from 3.5%, which is huge. When I run the numbers, I can replicate their numbers only by using 3.5%. And currently rates have increased to at least 3.875%.

As Ali mentioned, R2R is more of a marketing company than a turnkey provider. I saw Zach clarified a bit that they do provide some properties directly, but that's a minority and not what you are looking at. The good part about this is that you get access to a lot more options. The bad part is that Zach/Scott will basically just pass you off to a local developer in Florida, and a local PM in Florida, for which there is no relationship history. We don't know yet if the local teams in Florida will perform well. Potentially this could become a good thing, because you have more people on your team.

Feel free to message directly me if you want to talk. I'm not super experienced yet, but sometimes its helpful to talk to a peer.

I know this thread is a couple years old, but I don't think the Lee County Property Appraiser's tax estimator is that great. 

The site says, "Typically, real estate transactions include costs such as real estate agent fees. When sales are used as part of determining assessed values an adjustment is made for those fees. For this Estimator we used 90% of the entered sales price to establish an assessed value. Your actual assessed value to sales price ratio may be higher or lower than this amount."

The way I'm reading this, they are using 90% simply to exclude transaction costs. However, from properties I've looked at, and locals I've talked to, the tax assessment often comes at 60-70% of the market value.

@Richard Bastar - I didn't end up buying anything yet. Things got busy at my day job. But recently I've been looking into real estate again, and thinking about buying a turn key property out of state.

@Sherwin Gonzales - I love the idea of buying a home for myself, and then renting out the extra bedrooms. But I live in San Francisco, and housing prices are crazy here. 

@Ryan Zomorodi, @Dan H. - Thanks to both of you. 

My conclusion after feedback from both of you is that I shouldn't buy this property because:

1. It would be difficult to be cash flow positive

2. I'm brand new to real estate investing, and it's important to analyze lots of homes

3. Even though it might be good long term (10 years), I probably won't want to take that risk when I'm so new to real estate investing

4. There is no extra "carrot"

Thanks @Michael Mannina! I'll suggest 50/50, I think it's better if we have equal skin in the game.

@Ryan Zomorodi - Thanks for helping me think through this.

1. I am planning to finance with a mortgage. I could do 20% down, but I think I would rather keep more money in my pocket and put 15% down instead.

2. @Twana Rasoul - This is my first time calculating this type of thing. But based on Zillow and CL, $2,200 is on the high end for rent, most 3 bedrooms going for that much have more square footage. But I do think this one seems nicer than most rentals in the area. Anyway, if I'm conservative I think $1900 is more realistic.

2. PITI = $1539/mo (Principal/interest $1,225 + PMI $83 + Property taxes + $221 + Home insurance $93)

4. Expenses - I don't know how to estimate this, but I know the 50% rule says it's 50% of the rental income, so should I say $950? Or do I need to calculate more specifics? There is no HOA, but I would probably want a property manager ($150/month?). Otherwise just repairs/maintenance shouldn't add up to $950 should it?

5. So cash flow is $1900 - $1539 - $950 = -$589. That's a bad number. Have I calculated this reasonably? The 50% rule seems high.

6. Other homes on the same street are asking $350k, but they are brand new homes.

7. This home has Price/sqft:$244. Other homes that sold recently in the area: $293; 217; 281; 287; 224; average 260. So based on that this home seems like a good deal.