All Forum Posts by: Brant Richardson

I have never worked with a turn key company nor bought out of state but I do intend to buy out of state.

From my research, most turn key companies buy distressed properties, rehab and sell to make a profit. Like any seller, the more they sell for the bigger their profit so it is in their interest to sell at market value. Hopefully you get a great company in it for the long haul, trying to build a excellent reputation and get repeat customers/referrals. That company will buy carefully in the good areas, sell at a reasonable price and carefully screen excellent tenants. There are a lot of ways to take advantage of out of state people and new investors though. Tell them the AVR is high and comp it to properties it is not really comparable too, buy it for dirt in a war zone and tell them its a great neighborhood, subsidize the rent so it looks like it commands a high rent, lipstick rehab, etc.
If you are looking to own a investment property or two then you are best off with researching an excellent turnkey company and buying from them.
If you plan on real estate being your thing and owning a lot of property you should research a market and build a team. This is a much bigger investment of time but the rewards are much higher too. You can find that distressed property, rehab it and have equity right away, refinance and pull that equity out for new acquisitions. Ultimately end up with more properties and feel more secure because you know your market.

Adam beat me to it.

I'm a newb too but here's my 2 cents. The 50% rule is a quick screening tool, you would like to see $100 cash flow per unit. If the property passes then you move on to taking the time to get the exact figures. Your property does not look great by the 50% rule but if you look at your cash on cash $124 x 12 months / $5500 money down = 27% ...that is good money. Some would say the headache of running 2 units for $124 isn't worth it. You need to sit down and plug in the real expenses to see where you stand. If you are handy then maybe your repair costs will be lower than the 50% rule would predict. If you pick the right tenant then lower vacancy.

At the end of the podcasts there are book rec's. Some of them come up over and over so they made my list. I just finished The ABC's of Real Estate Investing by Ken McElroy which was excellent, part or the rich dad series. The 4 Hour Work Week and Millionaire Real Estate Investor are on their way from Amazon

I'm reading Think and Grow Rich right now. It is pretty verbose. People wrote a lot different back then, wordy. Although it has great content, I am having a hard time getting through it.

unemployed, no cash, little or no credit history...leaves little for you to work with. I would talk with friends and family to see if you can get someone who has some cash to invest in on the deal.

"low lifes" is a little harsh. If I got hit by a car and my back and legs were crushed I could end up section 8. Are you saying they are picky or can't find anywhere else to rent and cant be picky?

From Wikipedia

This town has a declining population which is not good but some of that is people moving to the suburbs. Appreciation will be very stagnant, definitely a play for the cash flow.

I ran across this same portfolio because I was looking in this area of the country. The cost to rent ratio is good. Realtor.com lists 63 houses in that town for under $30k so I figured I could probably do better by picking and choosing one at a time. If they were truly rehabbed it would be very enticing to get a whole turnkey portfolio in one swoop. How rehabbed could they be though? A roof and a kitchen cost more than those properties. Did the investor pick these houses carefully or were they just cheap? Section 8 does seem like a good deal for an out of state investor with the rent paid automatically. The tenants usually don't treat the house real well but these are 100 year old beaters anyway. As you point out, the exit could be tough but where else are you going to put your money and get that kind of cash flow anyway?

The 70% rule is to pay 70% of ARV MINUS repair costs.

2 at time already sounds ambitious for somebody just getting started. I'd still pay attention to the market but only jump on something if it is an amazing deal that you can't pass up.