All Forum Posts by: Justin Carmack

Southport is a great area of town for investors.  Schools are pretty good and the home prices are still affordable compared to Carmel, Westfield, Avon, Brownsburg, Zionsville, etc.  

Most properties there should cashflow well, but still offer you some appreciation.  Unfortunately houses tend to either be a great asset for appreciation r they cashflow well, but rarely both. 

If you're interested in Indianapolis DM me info and I will reach out with opportunities when we open our wholesaling division at the beginning of 2021.

I'm lucky and happen to live in one of the places that I would have selected if I was an out of state investory.  Here are a couple things I would look for...

1. Population Growth - Find a place that people are moving toward.  Better opportunities exist.

2. Find a Place that is "Pro Landlord" - Needs to favor landlord over the tenant (e.g. easier to evict people that don't pay, expedited times to get people out of the properties).

3. Low Taxes - e.g. Indiana has a constitutional cap on our taxes.  1% for homestead exemption houses and 2% for non-owner occupied homes (rentals and secondary homes).

After I select the state I would start dialing in on specific counties, cities, and ultimately neighborhoods.  

Indianapolis (Marion County) is known for being a city that you have to know inside-out.  The quality of rental and housing jumps drastically from block-to-block and neighborhood by neighborhood.  It's much safer to invest in areas outside Interstate 465, minus areas such as Lawrence which is a beast different from any other.

If you want to attract good renters buy in good school districts too.  

You have multiple old furnaces that need replaced.  Personally I would allot the money to swap those furnaces immediately so I could avoid the headache of dealing with a down furnace a/c unit in the middle of a snow storm. 

I recommend adding an expense for capital expenditures in your estimates until you get a reserve set aside.

The real questions are... how much money do you want to cashflow? Are you happy with the cash-on-cash return? 

We all know what opinions are like, but when I'm buying I look to cashflow $200 per door after expenses.  $250 per door I would be thrilled.

Is the 1031 covering all of your down payment?

Why do you prefer that area?  Do you live close to there? What's your goal, appreciation or cashflow?  I recommend going where the numbers make sense and don't recreate the wheel.  You have a blank slate and can go anywhere.  Possibly check out population growth of cities.  The midwest is great for cashflow.  I live in Indianapolis and wouldn't hesitate to invest here or in someplace like Kansas City (which I see a lot of people doing).  

Regardless of where you go the BRRRR strategy will help you hedge against the seller's market, but the key is finding good deals, typically off market deals.

I would read the books in order #2, #3, #1.  All good books and the order doesn't matter that much.  Either way you will profit greatly from reading all of them.

In regards to #5, basically the owner acts as the bank in the transaction.  You see this "creative financing" option when a seller has lot of equity in the house.  

Example...

House Value: $65k

Owner Owes: $5k on the house

Owner's Equity: $60k.

You draw up a promissory note and mortgage document (can typically obtain through a title company or lawyer) where the owner is acting as the bank.  You give $5k as down payment which pays off his/her note to their mortgage company.  The owner of the house acts as the bank and holds a mortgage (which you pay) to the owner for $60k.  Make sure all of this goes through a title company and/or an attorney and you don't give money directly to the owner of the house.  It goes into an escrow account through the title company.

Yes, I would work ahead in getting a team together.  No necessarily a solid structure, but give a "warning order" to everyone involved and start vetting people on your team.

Once you look at the various databases and website and get a good idea of what you think it will rent for, I recommend running test ads on Facebook or Craigslist for a "like property" at that price point.  See how many responses you get for the property.  This used to be done in newspaper classifieds, but you can do it online for free now.  If I remember right I got this from "80/20 Sales and Marketing" by Perry Marshall.  Either way this book is a good read. No matter what don't do anything unethical or illegal when testing the market.

Not all real estate agents play that same game.  I look for an agent that understands investing strategies, not retail sales/purchasing. When you find an agent that understands the game investors play the agent can become a force multiplier for your operation.

You're right where you want to be, enthusiastic about real estate, and getting paid for a full-time job.  Although your job will take time away from your real estate ventures it will also allow you to qualify for loans, financing, etc. which is needed to start acquiring properties.

Sounds like you need to throw some coal on the fire in regards to your real estate education.  I recommend reading as many BP (and other real estate related books) as possible.  BP really is the best resource out there for information and helps in surrounding yourself with people that are positive and action oriented.

Read a lot of books and listen to podcasts.  I recommend these books (that changed my life) to start out...

1. Brandon Turner's "The Book on Investing in Real Estate with No (and Low) Money Down".

2. Gary Keller and Jay Papasan's "The One Thing".

3. Gary Keller and Jay Papasan's "Millionaire Real Estate Investor". 

Your education in regards to creative financing, construction, and shear hustle will contribute to your success.

Get your financing worked out.

1. Talk with a loan officer and find out what's required for obtaining loans.

2. Find other means of obtaining money such as a friend with a self-directed IRA that's willing to loan you money at a specific interest rate.

3. I recommend split disbursement of wages from your W-2 job.  Start a savings account specifically for real estate and every paycheck have your HR department deposit 10%-20% of your wages in the account.  This money can be used for down payments, construction, etc. Don't touch the money for anything other than real estate.

4. Call hard money lenders and find out more about their requirements.  Make sure your estimates on the construction projects are accurate when working with hard money.  If your numbers are off your deal could go bad quickly and you could be upside down on the loan. Be careful on hard money loans.

5. If you find a deal ask if the owner will hold a note on the house (or land contract) and put a minimum down payment on the property.

6. Find a partner willing to float the bill if you do the leg work.

Find a deal. There are a lot of FREE methods of finding deals.  Most of these take little times too.  Make sure you run numbers on deals daily so you know the area and you know a deal when you find it.

1. Scour the MLS daily.

2. Look for ads on Facebook and post ads in real estate forums.

3. Create a Craigslist account and post ads searching for houses.

4. Attend networking events.

5. Contact family members and put them to work finding properties.

6. Visit the forms section of BP and find the forms to put a house under contract.

Put a team together.

1. Talk with all of your friends in the construction industry and find out who they recommend as contractors for projects on houses.

2. Ask other contractors who they like working with on projects.

3. Call these contractors and let them know what your doing, get them on board.

4. Find an agent in your area that focuses on real estate investing.  Not all Realtors know this game and they are not created equal.

Once you're educated, have everything together, and the numbers workout... TAKE ACTION! 

Message me or call if I can help in any way.  GOOD LUCK!!!

As @Jon K. said, it's best to have the purchase agreement say the property will be vacant when you take possession.  Obviously this puts the responsibility back on the current owner of the property and will make your life much, much easier in the long run.  If the tenants are in the house when you take possession you may have to go through the eviction process which could add months (and added expenses) to your project.  I'm not sure how landlord friendly your state is, but some states make it extremely difficult to get a tenant out regardless of the situation.  Best of luck!

Money, experience, and credit... It's not hard to live without one of these three, but having at least two of these makes life much easier. Obviously there are always exceptions.

If you need cash you could get HELOC on the house.

My advice would be to start smaller and build some experience and your credit.  Possibly work (or even volunteer) for an experienced person that's an active player in real estate.  Learn the ropes from them, especially if you're going to do new construction.  

From what I've seen even hard money lenders and investors won't lend money unless you have experience with multiple properties in the last year or two.  They typically want experience rehabbing two or three properties before they will think about loaning money.  Additionally, they require at least 10%-20% down on the property.

Might see if you can do some creative seller financing deals.  These don't require credit because the seller holds the note.  Additionally, they might require little money as a down payment.