All Forum Posts by: Joseph Cacciapaglia

I am comfortable continuing to use loans for investing, with a couple of caveats: 1. You want to be sure you will break even in the case of a significant reduction in rental rates. For example, if rents go down 5-10%, would you start taking money out of your pocket each month? If so, can you afford that? I don't expect a big dip in rental rates in Texas in general, but I wouldn't want that to put me out of business. 2. You want your rate fixed to be fixed for a long period of time. The people that really got in trouble last time had "teaser rates" and couldn't afford their rentals when their rates reset.

Last time around in my market, wholesaling wasn't as popular as it is today, but the people I know doing it were basically out of business. It was so easy to find good deals, that no one really needed a third party to make that happen. The hard part was finding investors and capital to make those deals happen. I don't know if that will be the same in the next downturn. The creation of the CFPB really screwed up the capital markets last time. Hopefully the gov't learned from their mistakes... hopefully.

I always get a little worried when people talk about investing with "no money". I've put together a few no money down deals for myself over the years, but they're certainly not easy. However, you did mention OPM as well, so that's a great start. There are plenty of lenders that would like to make loans on solid investment properties here in San Antonio. However, you'll have to figure out where you're going to get your down payment and closing costs. Even if you are planning to use a BRRR strategy, you still will need income and credit to refinance, and most of the HML will want to see that you have some level of cash reserves.

Do you have friends and family, or other potential investors in mind for your deals? If not, you should start networking hard to find people who will put money into deals with you. You probably won't get a real commitment until you have a real deal on the table, but you want to have at least several people that have showed some level of interest before you go out shopping for properties. I struggles when I first started in real estate. I wasn't able to close on the first several deals I got under contract. I thought I had investors on board with my plans, but they all fell through. Today it's much easier to find people with capital, because everyone is online, but you still have to put that work in ahead of time.

A lot of markets have gotten pricey, and more difficult to make deals work. You basically have two options: 

1. Hustle to find the deals that do exist in your market. Even the priciest markets have some hidden gems. There are a lot of ways to find these deals, from networking, to cold calling, to direct mail, internet marketing, etc. These require some time, and sometimes some money, but they all work if you work at them.

2. Look at other markets. If you're a buy and hold investor, it's pretty simple to work remotely with all the technology out there today. Find a great property manager in a market that has better potential, and you are off to the races. I also find that it's easier to raise money from local investors, if you become their go to person for investing in some far off land. This is especially true once you've closed a deal or two in that remote market.

A lot of towns in NJ will issue something like a CO waiver (or at least they did when I was there several years ago). I can't think of what they call it at the moment, sorry. Essentially you sign something saying no one will occupy the home until you get a real CO. I've been involved in several deals that closed with one of these waivers. It's been several years now though, and it will vary by municipality, so you just need to call and ask them about this. Of course, your lender needs to be on board with this solution as well.

Sounds like a great deal. How did you analyze your potential income as an STR? Did you use AirDNA or another product? I find that getting comfortable on the income side of these investments is tough for a lot of first time vacation rental investors.

I find a good first step is to assess what your goals are with real estate investing. Is it to make cash flow now, or to build wealth for retirement? Do you want it to be side income, or are you looking for a new career? Second, you should assess what your resources are. Do you have a big chunk of cash and great credit, or are you starting on a shoestring budget? Are you knowledgeable in construction, design, or marketing?

Without knowing your situation, it's very difficult to send you in any specific direction. If you have money and credit, but not much time, then turn-key properties might be an avenue to explore. If you're short on funds, but have real construction expertise, you might be able to get into flipping or BRRR with the help of money partner. If you're a great marketer, it's possible that wholesaling is an appropriate tactic (although I would consult an attorney on the legalities of this strategy in your particular market), or maybe even get your real estate license.

If you want to provide additional context, I'm sure people will be happy to give you suggestions on next steps. 

This is definitely a question for your tax professional, as each person's tax situation will vary greatly. In my experience, my rental properties actually decrease my income taxes, despite positive cash flow, due to the "phantom expense" depreciation. This may or may not be true for you.

The answer to this question is going to vary from one market to the next, and even within each market down to a neighborhood level. For example, in a lot of neighborhoods closer to downtown San Antonio, I would go with the 1 BR, but near any of the local universities, I would choose the 2 BR option.  If it were me, I would just pull some rental comps in the area. If you don't have access to comps, I'm sure you can find an agent that will share that info.

If you are going to use a property manager, have them walk the property before you do your renovations. A good property manager will be happy to do this, and will make suggestions on things to add/change/remove to make them better rentals. I've seen lots of investors over or under improve a property for the area, and then either not get enough rent for the work they did or have a hard time to attract tenants. When I bought my first duplex, I did a lot myself, and I wish I had gotten some local professional advice ahead of time.

As antiquated as it sounds, I still have good results with direct mail. I use a letter with a real stamp and a hand written address. I use mail merge so each letter is actually addressed to the owner and mentions the specific property address. This makes it very personalized. I usually target properties that have an owner address that's different from the physical address. Where I work, you can find this info online on the public records. I pay a VA overseas $3.50/hour to compile lists of these properties. I give her streets and blocks, and she's able to put these together herself. Then I pay my niece to hand address and stuff them. It's comparable in price to what it costs me per lead on Facebook, but figuring it out was a whole lot easier.