All Forum Posts by: Kevin Dean

@John Hamilton

One thing I've noticed that the very successful, large syndicators do is that they use leverage properly. 

Assuming you are able to (1) find great deals, (2) structure deals properly in a way which attracts the capital needed to close and (3) operate a property properly, it seems as though the main differentiator between those who are around for a long time and those who are not, is leverage. 

Knowing when to go to 80% LTV (loan to value) in order to maximize returns, and when to dial it back to 65% LTV for example, resulting in a lower overall projected return, is a skill that the well established sponsors are able to manage on a deal by deal basis.

The antithesis to this would be a sponsor with the philosophy of "We do an 80% LTV loan on every deal no matter the market or the business plan."

@Travis Bresnahan

Thanks for introducing yourself. I am also from Northern Virginia and work in DC. It sounds like you are doing exactly the right things right now to hit the ground running when you graduate. Keep educating yourself, surrounding yourself with good people and start saving as much money as you can (not that you need a ton to get started investing in RE). Saving up that money will give you more options to take risk in a number of ways.

There are a ton of Meetups in the Northern Virginia and Washington, DC area. I would encourage you to attend as many as you possibly can while in college. Life may seem busy right now in college, but it gets even busier once you have a full-time job. If you can start building as many relationships as possible through attending these meetups, you will start moving in the right direction faster than you may expect.

I would throw out some meetups, but I would just download the  Meetup App, and then search for Real Estate in the NOVA/DC/Maryland Area, you will find a ton. If you are off at school somewhere else, it will still be useful to search for Meetups in that area. The skill of networking effectively needs to be learned and you will get more comfortable in these situations the more you attend.

@Eric Sipe

I would 100% agree with @Brandon Roof. Whatever you do don't give up that free immediate gain on your money with the employer match. I see my 401K and stock investments as my backup plan if all else fails in Real Estate. It also provides great diversification for your real estate holdings. When you are just starting off and are looking for financing from Banks, the more money you have in liquid investments, such as stocks in your 401K or IRA, the better.

Banks want to see that liquidity. One reason for the desired liquidity is that if something happens to your property throwing off operations, you can quickly sell stocks in order to generate the cash needed in order to offset whatever issues may be going on with your property.

@Richard Cole

One issue that you can run into pretty easily is accurately forecasting payroll. T-12 payroll numbers are almost useless if you are picking up a stable asset and executing a value add strategy. It's helpful to work with your Property Management Company in order to break down the exact amount of staff needed to service your property through the various stages of a value add strategy, to assign the appropriate estimated hours worked for each of those employees and lastly the estimated dollar per hour wage that each of those employees will receive throughout the hold period.

It's so easy to just take an average number for your market, such as $1,200 per door in Market X, but not actually figure out what makes up that $1,200 per door on an ongoing basis as it relates to your specific market and the specific type of project that you will be executing.  

@Alex Yi

A house hack is certainly a viable option in this market. Lets take this conversation off line, hopefully others in the Northern Virginia can add value to this thread and also share what they have done and where they have found success in this great market we live in.

@Alex Yi

Hey Alex, I live in Oakton, VA, work in DC and invest in a few different markets.

What is your goal with investing in Nova? Are you looking for cashflow or are you hoping to benefit from population growth, Amazon Effect, appreciation, etc.? Are you looking for single family, STR, Multifamily, something else?

Let me know and hopefully I can point you in the right direction or make an introduction to those I know who could potentially help you reach your goals.

@Dang Tran

I do not invest in Frederick, but live in Northern Virginia and have friends who own a small business in Frederick. Their business has exploded this last year. Based on conversations with them, it seems as though Frederick has a great small business community with a ton of new small businesses moving into town. 

Apparently they have a very active chamber of commerce as well as a number of small business networking groups. If you are interested in learning more about Frederick as you look at it as a potential investment opportunity, reaching out to those groups may be helpful in learning more about the market as well as potentially networking with the real estate professionals you will need in order to invest effectively in Frederick.

@Jim Goebel

Thanks for your input, I agree with your thoughts on both leverage and on the constant chatter regarding the coming recession as if it is a fact, regardless of what the data is saying. It seems as though these conversations have been going on for years now while others have been out there making things happen and growing their businesses. 

One easy way to find this data is to simply google search "Daily Economic Calendar". There are a ton of websites such as MarketWatch and FXStreet which put out this data on a daily basis as it is released. 

Tomorrow will be an action packed day for those who follow economic data on an ongoing basis. Here are the main items that will be released:

1. GDP Annualized Quarter over Quarter

2. Personal Consumption

3. GDP Price Index

4. Core Personal Consumption Expenditures Quarter over Quarter

5. Advance Goods Trade Balance

6. Retail Inventories Month over Month

7. Wholesale Inventories Month over Month

8. Initial Jobless Claims

9. Continuing Jobless Claims

10. Bloomberg Consumer Comfort

11. Pending Home Sales Month over Month

12. Pending Home Sales NSA Year over Year

Are you looking at this type of data on a regular basis? If so, how are you using it to drive your strategy for your Real Estate Business? Which of the data points above matter to your business and why? I would love to hear peoples thoughts on whether or not they find this economic data useful, and why or why not. Thanks!

@Anson Lau

I agree with @Greg Dickerson on this. Additionally, a professional property inspector will help you think about the quality of the current property manager, and will be able to point out areas of weakness and necessary improvement in the operations of the property. They will be able to go deeper than simply identifying issues with the structures themselves, and will be able to identify where management can improve maintenance on a regular and timely basis.  

Furthermore, an experienced and professional property inspector should be able to tell you what does and does not check the boxes for the large institutional banks/agencies. Based on the financing you plan on using, the inspector should be able to tell you up front what they believe the bank will require to be fixed or updated either before or after you close on the property. This will directly effect the capital you need to close, the CapEx budget and ultimately the returns you generate.