All Forum Posts by: Julie McCoy

@Account Closed I've definitely seen deals with better numbers, but as I'm hoping to build a portfolio of B+/A- properties I'm trying to be particular about the types of properties and neighborhoods I choose.  As mentioned to Joey, however, that's a double-edged sword!  

In general, my mindset about all of this is a work in progress - while I intellectually recognize that what renters in the Midwest want is different from what I in California think they want, changing my assumptions (and feeling that my new assumptions are accurate) is not easy!  So everyone's input is helping me with that.  And perhaps while I'm still a beginner I should focus more on keeping it simple.  

Thanks, @Jeff Sechrest.  My numbers actually reflect higher percentages for vacancy and capex - I like 10% and 7% respectively, but I know those are high percentages so I'll also run numbers for 7% vacancy and 5% capex, so I get a more standard pro forma calculation as well (I split the difference for my numbers in this thread).  I'm always assuming 10% PM fees.  Insurance quotes are something I'm working on right now - no hard numbers yet, so I use a placeholder number that should be in range.  Taxes I get from the county website when available (which it is for the house in question).

Thank you for the advice re: obtaining comps in the area, I'll see about reaching out to a major brokerage for them.  Obviously, if my amateur comp numbers are wrong, it changes the whole complexion of the deal (for better or worse)!

@Curt Davis, the comp numbers are from my own research, which admittedly has limited resources (i.e. Trulia and Zillow).  Agreed re: appraisal contingency, thank you for reminding me about that, I think that's a must in this circumstance.  I'll look into a desktop review too, thank you!

@Account Closed, the only "advertised" numbers are the property price and projected rent (which appears in line with the property/neighborhood). The rest is my own math and research. As for why this property, my comps are coming from the MLS and I have very little information on the condition of those homes; this one I know a lot of major CapEx items will be new. I'm definitely willing to pay a bit more for something I won't need to rehab at all, as I have literally no time for that. I'm just trying to determine how much more is reasonable while maintaining the upside of the investment.

Overall, I want my investments to cash flow but also have appreciation potential and appeal to future retail buyers.  I recognize that this often means paying a bit more for better properties, but of course don't want to overpay and lose years of potential appreciation in doing so.  I'm also still learning a lot about this process, which is why I'm here soliciting opinions and advice. :)  Thank you both for your input thus far!

Hey all, 

I've been in discussion with a reputable KCMO turnkey operator over a house they only closed on this week - love everything about the property, but just got the offer numbers and now I'm not so sure.  

Location: Raytown-adjacent, outside the 435 loop, 73% owner-occupied neighborhood, Raytown schools

Property specifics: built 1960, 3/2, 1200sqft, 2 car garage, large lot, quiet street

Planned renovations: New roof, HVAC, some new electric, finished basement, good cosmetic finishes (hardwood/tile, granite, etc)

NUMBERS:

Price: $99k (after renovations)

Projected rent: $1100/mo

Estimated monthly expenses: ~$400 (allowing for vacancy, maintenance, taxes, insurance, PM fees)

I'd use leverage to purchase, and with the payment factored in I project just under $300/mo cash flow and about 11% COC, Cap rate between 8-8.5% depending on how you crunch the numbers (I'm rounding them for the purposes of this post, but I calculate pretty conservatively).

The numbers are decent, and I like that this house is on the higher end of neighborhood normal - it should be a very desirable rental, and attractive to a potential future buyer (though I intend to hold).  My big concern: the price of $99k is well above the comps in the area (there aren't many, but similar properties are $70-85k). 

I welcome your input!

Thank you very much, @Cliff Harrison and @Gordon Cuffe!  This is definitely the kind of insight I'm looking for.  Online resources are great, but they can only tell me so much - local perception, as you mentioned, Cliff, is worth far more IMO.  

And yes, I will definitely continue to reach out to local property managers to get their opinions as well.  

Anyone else with experience in these neighborhoods?

Hey all, 

I'm an out-of-state investor very interested in the SFH market in Kansas City, and am hoping to purchase my first property by the end of the year, if the right thing comes along. I've seen a lot of discussion about Raytown and Grandview as solid B-grade cash-flowing working-class neighborhoods, which is my target area. However, I have some questions that I'm hoping those with local knowledge can help me with.

Crime - I've got a prospect I like in the 64129 zip (outside the 435, close to Eastwood Hills Elementary), and when I look at crime heat maps the area appears pretty good - a handful of thefts, but no violent crime or B&E in the immediate area.  However, reports from Rentfaxpro and City-Data show the crime rate in the area to be very high (disproportionately so, when compared to the actual incidents I've seen reported).  Can anyone shed light on this seeming discrepancy?  

School districts - It appears that, on the whole, public schools in KCMO are pretty terrible.  The only thing that's turning me off of Grandview as an area is the rock-bottom school ratings on GreatSchools and Education.com (Raytown doesn't seem to be much better). Can anybody comment on the impact this has on tenants/tenant duration, especially in regards to the KC market?  My mind says better school districts will encourage tenants with children to stay longer, but is that reflective of actual experience in these areas?

Thank you in advance for any insight you can lend!

Thank you, everyone, for your welcome and input thus far!

@Jay Hinrichs, the reason I like the idea of owning vs. other forms of investment is the option of being hands-on with something physical that I own.  True that currently, my schedule will not permit me to be personally involved in any sort of rehab or similar pursuits, but it (likely) won't always be true and ownership is simply something that I'm passionate about. 

That said, I hadn't really spent much time considering becoming part of an investment group, as it struck me as being essentially the same thing as my stock investments - profitable, but boring (to me).  However, you are correct that my current career demands that I take a passive role in whatever investing I do.  And, since my goal is cash flow, that is something I can achieve via a real estate investment group (more than with stocks).  Are there any particular resources you'd recommend for some overview research, especially geared towards non-accredicted investors?  You speak as if the rules re: non-accredited investors will change soon - is there a known timeframe for this?

@Yasmine Bisumber, @Bhekizwe M. thanks for the welcome!

@Cindy Bowman and @Jamie Robinson I appreciate your knowledge and advice regarding Charlotte!  I haven't settled on it yet, and it definitely presents some challenges, so I will keep your info in mind as I consider how to proceed.

@Matt R. While I'd like to buy locally, the cost of a home even in the IE or AV strikes me as more than I want to begin with, though admittedly I haven't explored it much. Perhaps the biggest issue I see with living in LA is how it (Southern California in general) isolates me from more affordable REI opportunities! However, I love it here and have no plans to leave. I'll poke around in the outskirts of town and see what's actually there, vs. what I think is there. And thank you for the words of caution - it's easy to get carried away with all these ideas, and the reason to actually engage on these forums vs. lurking is to give people like you and Jay the opportunity to express caution where it's needed.

Thank you all again, I'm looking forward to learning more!

Thanks for your replies, Brent and Steve. Steve, I'm interested in the REIA you mentioned - is there a name or website that you can direct me to? It would be great to meet local investors face-to-face and dialogue about the particular challenges living in Los Angeles creates.

Hello all!  My name is Julie, and after over a decade of wanting to be a real estate investor, I'm finally taking steps to do it.  Bigger Pockets has been a fantastic resource already, and has really been the push I needed to stop thinking and start doing.  Better yet, it's made me realize that I don't have to invest locally (so hard to do in Los Angeles!) or actively manage my tenants - which has made a dream into a possibility.

A little about me - I work in the film production industry, which I love but is extremely demanding of my time and not especially flexible.  I live in Los Angeles (Hollywood, specifically), which isn't exactly a cash-flowing city, and as much as I love it, it seems a poor choice for me to begin my investment career.  I have capital that is currently invested (and performing well) in the stock market - but I've experienced the rise and fall of markets, and would like to own something tangible that will also generate cash flow.  And at the end of the day?  I've always loved real estate - I love looking at houses, envisioning how they can be improved, and how one can make money off of them.

On Bigger Pockets I'm hoping to begin networking with people who have similar goals: cash-flowing out-of-town single-family or multi-family homes to buy and hold.  I want to learn how to research a market (on a city and neighborhood level), find a great team to work with me in my chosen city/cities, learn the tax implications of being a real estate owner and landlord, and more.  My goal is to purchase my first property before the end of 2015.

Current cities I'm researching are Nashville, TN (I lived there for a few years and loved it, and like that I'm familiar with it) and Charlotte, NC (Not as familiar as Nashville but another city I enjoy and close to a family home in Asheville).  I'm certainly willing to go beyond them, but that's where I'm starting my journey.

I'd love to hear from all of you!  @AliBoone, your posts/blogs in particular have been helpful and inspiring.  And I know I'm just scratching the surface here at BP, so I'm looking forward to all the knowledge everyone shares so willingly.