All Forum Posts by: Justin Owens

I have noticed more and more jumbo 3 story apartment complexes too around Chandler/Gilbert and the 202. I'm sure it will have some effect on multis and a lesser effect on SFRs.

@Shiloh Lundahl Thanks for the invite but I'll be out of town too. I'll be there if I'm in town. Looking to connect. You are the best.

I just had my offer accepted out of 7 offers because a) the seller just wanted out and didn't want to deal with multiple offers and responding to multiple people b) the agent had a gut feeling about my offer and c) my earnest deposit was much higher than the others.

I think I learned that high earnest deposit trick from a BP podcast. It was about 6.67% of the purchase price (thinking now I should have gone 10%). 

Then we toured the crack house with the squatters and tweekers there with no power and 100+ degree heat . . . it's going to get interesting.

Bringing down expenses and increasing rents. What are current rents? Is there room to bring them up (over time) to market rents? Is there anything that could be offered to justify a rent premium? Are utilities metered to the units and tenants pay utilities or does the owner? If owner, look into getting that changed through individual meters or sub metering. There are a lot of little things that will improve cash flow so try and identify that during the inspection period. If the tenants are paying top dollar for rent and their own utilities, then get creative to lower expenses and increase rents. Rehabs will bring more rent, better tenants etc. 

Find ways to add value and she will right herself. If there aren't ways to do so walk away. That is what the inspection period is for.

I didn't bother with the LLC until I had a property under contract. They are fairly easy to form in AZ and don't take too long. Depending on financing, you may or may it even be able to hold title in the LLc.

Sounds like a partnership discussion is in order

@John T. Debated this myself for months. Ultimately I settled on searching for local BRRR deals over out of state turnkey deals with the fantastic numbers they promise.

The main reason was that I want to grow somewhat quickly. Buying out of state turnkey I would need to come up with $20-50k down payments each time I want to purchase a property. Saving that much would take me a good while. By staying local and using the BRRR strategy, I will be able to move quicker in acquiring units. My goals drove my strategy.

Also, part of the consideration is that in AZ I am a licensed real estate agent with a background in construction. If I went turnkey and out of state I would not be able to put my experience to work to earn me money and pay someone else to do that. Deals don't fall from the sky in AZ but they can be found where the numbers make sense.

@CherTong Her A lot of people concern themselves with paying off a property. It's not a bad goal but it just means that more equity is tied up and unable to be utilized on other properties. If your goal is for conservative slow growth then paying them off may not be a bad idea.

If Option 2 is truly in a better neighborhood, and the rents are commensurate, I would do that. You can tie up a nicer, better property with the FHA next to nothing down loan (compared to having to put down 20 or 25% which would be 8-10k more down payment, if buying as an non-owner occupied investment).

Not mentioned the years of the properties, the rental rates, condition, etc. but based on what was provided B every time. The reason many new investors buy cheaper properties when starting out is because it's what we can afford. But if your numbers work and you can secure a better property do so.

@Matthew Pagelsdorf the joys of working with a partner. Does your partner know this person? Criteria exists to protect you not only from bad tenants and lawsuits. Everyone goes through the same process and there are no exceptions. Did the partner agree to the criteria? I could see if it was sitting for a while having a discussion but not right from the get go. Additionally, how is the partnership set up, who is the operating partner and who is the silent partner? Who has the ultimate say? Is there any division of responsibility?

@Stefanos Koursaris the hard thing about buying a home to be a primary residence and then convert to a rental is that as a couple generally you two will want something different to live in that what you would want as a good rental. If you can set aside what you want in a home (for the time being) and look at the acquisition purely as an investment that will soon be a rental then move forward with it. That's the ideal.

Some primary residences do end up being good rentals but most don't. A coworker of mine is renting out his previous primary residence and he is upside down $100 a month just on the mortgage/taxes/HOA. He pays CAPEX and maintenance out of pocket. That's no way to invest and even worse way to start an investment portfolio.

Our first two homes (condo and SFR) were both fixer uppers that we put a lot into and rented out for a bit until the boom drove prices up and we sold. We got lucky on timing but we definitely didn't run any rental numbers to see what we might be cashflowing after we moved out. If I could go back now I would do that. Since you are a pro member use the calculators here and run numbers as if it will be a rental and see how it looks. If the numbers work as a rental and you buy it to live in for a while, taking advantage of FHA or other low down payment programs all the better that you didn't have to accumulate 20% for an investment loan.

Just some thoughts.