All Forum Posts by: Josh Feldman

@Rachel C. Sorry about the delayed response. Definitely agree with what @Layton Gilbraith mentioned. It's hard to conduct any project from out of state if you dont have a reliable and trustworthy team in place. I would network with as many people as you can in your area that you essentially could pay to oversee the rehab, or manage the project for you, and just make sure to take care of them financially and underwrite that cost into your calculations. If you have a family member or a good friend close to the property that is familiar with real estate and construction/contract work, that would be a good place to start!

Hey @Joseph Crunkilton, thanks so much for the kind words! Good luck with your investing, OOS is tough of course but can be rewarding with the right team and systems.

See the post above that I sent to @Jack Plantin, I answer your questions pretty specifically. You can also always PM me if you want to talk further.

Thanks!

@Jack Plantin we started by looking at areas where we could get high rents with low purchase price. We wanted to buy and rehab with cash (my partner and I split 50/50) and we were set on BRRRR technique to build our portfolio. We actually signed up with a lot of turnkey rental companies that sent us turnkey rentals in the midwest (again, best rents with lowest all in costs), and used the areas that they sent us as a starting place. we narrowed it down further by looking for residential areas outside of major cities, within 30 minute commuting distance, and then narrowed it down even further by only looking at city suburbs that have great school districts. After all that, we had 3 or 4 towns that we really liked, and just started networking with professionals in that specific area.

Ultimately we used the turnkey rental companies to show us where in the midwest that the rents were high and the costs were low and we just narrowed it down from there.

Our deal finder is different from our broker. our deal finder is also our project manager; our broker was there to help us with the remote closing and we were able to negotiate her commission. she also gave us connects to contractors that she likes. Our broker also runs a rehab oversight company that we used (she and her husband have construction background), which mediates the rehab with the contractors and follows up weekly to make sure the scope of work is actually achieved, sending us pictures and verifying everything is done correctly and timely. HIGHLY RECOMMEND THIS if you are doing out of state flipping/brrrring.

Also definitely recommend the long distance investing book. he gives you step by step instructions how to build a team at a distance and outlines exactly what to say to who in order to get the maximum results. 

Good luck and let me know if i can answer any other questions!

@Jonathan Tran thank you! My partner and I started by reading David Greene's Long Distance Real Estate Investing book. There are so many good pieces of information in there that we used directly from the book to begin networking and educating ourselves. We started with his "core 4," which are the deal finder, contractor, property manager, and lender. We first connected with our property manager through bigger pockets, simply searched for one in our target area, found her email and property group info, and reached out to her. she got right back to us and we started a conversation and really liked the system she had to offer. we vetted her company by asking her for references, some of which came from BP. She connected us to our deal finder and our broker (our deal finder ended up becoming our project manager and we established a cut that we would pay him to still be within our target numbers), and we set up a phone call with them to tell them our goals and strategy. they were on board and helped connect us to contractors, all of whom we talked to over the phone and got multiple references. The lender was just from me and my partner calling as many community banks in the area as we could find and asking them if they have worked with out of state investors, and also telling them our goals and strategy. we found one that we really like and have been in constant communication with him the whole way. the final step for us was to go to Indiana and meet with our team, take them all out to lunch/dinner, and get to know them on a more personal basis and motivate them to work hard with us and for us, that we werent a flash in the pan investor group, and we were in it for the long haul and really believed in our system and market. we also jumped on one of the first deals he brought us to show him we werent joking around. we made it happen and our deal finder got his cut and everyone was happy :). No issues with tenant so far, our Prop Manager has a system in place to deal with issues up to a certain cost, and contacts us for issues above that cost.

Investment Info:

Single-family residence buy & hold investment in Shelbyville.

Purchase price: $28,000
Cash invested: $72,000

Contributors:
Kwon Do Lee

Successfully built and managed a team to aid in the completion of our first BRRRR project located in Shelbyville, Indiana. Purchase price + rehab cost +Closing costs + Holding costs = $72,000 all in. Renting for $950 per month. Estimated ARV = $95,000 - $100,000. Estimated ROI after refinance >40%. All during a PANDEMIC! Huge credit to Jeff Wallenius (CEO of North Peak Investments and guest on Podcast #241) for mentoring us through the process.

What made you interested in investing in this type of deal?

We want to build our portfolio to 50 units in 5 years and create a long term wealth legacy for us and our families, using passive income to replace our current income down the line. We are starting with SFH's in the midwest because the price to rent ratio's are significantly more desirable than in our respective markets (Long Island, NY and Los Angeles, CA)

How did you find this deal and how did you negotiate it?

We narrowed down our target market and surrounded ourselves with the best of the best in that market that could help us find deals. We found this deal off-market from Jeff Wallenius, whom we built a relationship with during the generation of our business and team. He had a connection that allowed him to whole-sale the deal to us and helped walk us through our first BRRRR, giving us advice and mentorship along the way. We went out to Indiana and met up with the team that we built.

How did you finance this deal?

We funded it with our cash. Kwon Do and I opened an LLC and funded our bank account 50/50 with enough money to cover all expenses on these types of deals. We discovered what we wanted for our target market and demographic/property type and became very familiar with everything involved in making deals work out there. We then funded our account accordingly to make sure we had enough to do continuous BRRRR's.

How did you add value to the deal?

From discussing with our team members, we knew what would be necessary to get top dollar rent out in Shelbyville, Indiana without overpaying for rehab costs. We used fantastic contractors to give us guidance and rehab our interior/exterior accordingly to make sure the property was up to par with the up-and-coming surroundings. We networked with individuals in the neighborhood who were able to give us updates from the ground.

What was the outcome?

We are just waiting to refinance the property (obviously this may be the only cog in the wheel considering the pandemic) but so far our purchase+rehab+closing costs+holding costs were all exactly within our budget to ensure that our ROI was at least 15% and our monthly net cashflow was at least $100-150. We ended up renting for $50 per month higher than originally underwritten because of demand and quality of the rehab. We will be cash flowing even higher with a higher ROI than anticipated.

Lessons learned? Challenges?

We learned to make sure to continuously follow up on our contractors to ensure their original scope of work was completed. Part of the bid was to remove garbage in the crawl space but the interior contractor forgot to take care of it. Our Pest Control guy took pictures of the basement and asked if we knew there was still garbage down there. It is important to make sure everyone holds someone accountable and have multiple checks and balances of each step of the way.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We worked with Contractors, Property Managers, Agents, Lenders, Inspectors, and Attorneys. We would recommend using Elisha Drake from Vue Property Management Group (rock star!!) and her team of brokers to help get the ball rolling. She connected us to an awesome agent, to Jeff Wallenius, to our Attorneys, and everything kind of snowballed from there in terms of networking. We vetted every single person using multiple references.

Thank you @Armond Wright!

@Aaron Van Curen Thanks so much for the rec. I'll check them out!

Hi Bigger Pockets family,

Does anyone have a reliable home inspector that they have used and have had success with in the Shelbyville, Indiana area? Please let me know either on this post or DM!

Thanks so much -Josh Feldman

@Wayne Brooks that's a good tip. What if my partner and I have very different Debt to Income Ratios? I own my primary residence and he does not yet. Would we get approved for a higher loan if we went through his statements only? Or do we both have to show proof of everything?

@Aaron K. Thanks for the reply. We are investing within our state, just far away. So to be clear, we should expect the bank or lender to go through each of our finances individually for the pre-approval process? Do you know which documents a bank would generally request for pre-approval?