All Forum Posts by: Kevin Dean

Hey @Trevor Klaus I think a House Hack could be the perfect entry point. Here's why...

1. It will get you in the game, you will officially own real estate.

2. You will own an asset and not a liability.

3. You will dramatically decrease your living expenses, enabling you to save money more rapidly than you would if you were renting, or bought a house in which you lived alone.

4. This will enable you to move more quickly towards you second investment property, which could be another house hack, a straight rental or a number of other investment strategies as you continue to live in your house hack.

5. It is hard to mess up a house hack. So if this is your first investment, you will create a time buffer which allows you to continue to learn, build your network, save money and figure out what your strategy will be without jumping into your next investment before you are ready and able. 

Go get that House Hack!

Hey @Ben Morrow I think this a very interesting point which I am seeing first hand in my current role in commercial real estate. One of the appeals of commercial real estate is how inefficient of a market it is as compared to the stock market for example. This allows for out sized returns to be achieved through using a number of tactics, which can no longer be achieved as easily in a market such as the stock market. 

As functions in real estate become more automated, AND democratized, competition will continue to increase, arbitrage opportunities will shrink, and there will be less opportunities to generate "positive alpha", or above average returns.

20 years from now, I can see the real estate market operating a lot more like the stock market does.

Some examples of automation: Underwriting, Pricing, Lead Generation, Making Offers, just to name a few of hundreds, many of which I'm sure I am not even aware of.   

Some examples of democratizing Real Estate: online listing sites, online fundraising sites, online bidding, crowdfunding, anything else that lowers the barrier to entry.

As technology continues to improve and be utilized in the real estate industry, prices will become more efficient, or closer to the true intrinsic value. As a result out sized returns will not be as easy to generate. That's just my opinion, we'll see how it plays out!

Hey @Zariyan S. I had this same question!  I asked myself the following question....

Can I generate a higher return on investment than the interest rate on my Student Loan?

If yes > Invest in Real Estate

If no > Pay off your Student Loan

This simple equation however does not account for the feeling that you might receive from being debt free. If it is hanging over your head, then maybe the incremental return is not worth it to you. If you are like me, and are okay with the debt, then put that money into a house hack, reduce your living expenses, and then evaluate whether you want to pay off that debt quickly or not.

@Zariyan S.

Hey @Drew A Roque I had this same question! For me it was easy. I asked myself the following question....

Can I generate a higher return on investment than the interest rate on my Student Loan?

If yes > Invest in Real Estate

If no > Pay off your Student Loan

This simple equation however does not account for the feeling that you might receive from being debt free. If it is hanging over your head, then maybe the incremental return is not worth it to you. If you are like me, and are okay with the debt, then put that money into a house hack, reduce your living expenses, and then evaluate whether you want to pay off that debt quickly or not.

@Jacob Baldensperger congrats on owning the 6 unit! I'm an investor out of Washington DC and am not familiar with Erie, PA. I however am also 24 years old and am also trying to prepare as best as possible for a great life with my fiancé.

I have experience in Multifamily Real Estate and would love to be a resource to you! While I was lucky enough to receive a formal education through the CFA program as well as an undergraduate degree in Finance and Investments, most of my post-grad learning has come through putting myself in challenging situations surrounded by experienced professionals with far more knowledgable than myself. These situations have forced me to learn the business. 

Additionally I listen to a number of great podcasts on a consistent basis (including Bigger Pockets) on my way to and from work everyday as well as in the gym. They are listed below.

1. Old Capital Real Estate Investing

2. Real Estate Investing For Cash Flow with Kevin Bupp

3. Jake and Gino Wheelbarrow Pockets

4. We Study Billionaires

5. Invest Like the Best 

6. Bloomberg - Masters In Business

7. How I Built This with Guy Raz

These have been instrumental in my learning and growth over the last few years. Knowledge with action is power!

Hey @Kevin Sonday, as others have mentioned, if you can do a House Hack that would be ideal.

If however you can't at this moment I would do two things. 

1. Save as much money as possible.

2. Learn as much about real estate, business, finance and yourself as possible.

When you are young (as I am as well), I would argue that knowledge is far more valuable then the amount of money you make. If you can work for free or cheap for an experienced investor or professional and in the process acquire tons of knowledge, you will build the foundation needed to grow in the future. If you follow this strategy, odds are you will work your way into a deal in the process. 

At the same time, you need to meet your living expenses and hopefully build up some cash which will enable you to take risks when you are ready and capable. 

Hope this helps!

Hey @Nick Pisano, I too am from the Washington, DC area and invest outside of the state. When looking for markets these are a few of the things I considered before jumping in.

1. Population Growth

2. Job Growth

3. Rent Growth

4. Tenant/Landlord Laws

5. Competition in the market

6. Do I have any connections and established relationships in this market?

For me, positive rent, job and population growth are non-negotiable's! You can find data on this at www.bls.gov

as well as at www.city-data.com .

With that said, I wasted a lot of time looking at markets where I had no connections and there was a ton of competition. Competition in these markets were a result of me following the heard to top markets with tons of rent growth, job growth and population growth. These markets are great for those with experience and connections, if you have neither, it may be tough to find your first deal.

After this realization, I decided to focus on markets with positive rent, job and population growth where I could either build upon already established relationship, or make relationships with a lack of competition as compared to some other markets. While the markets I have chosen may not have as much rent growth or cap rate compression as other top growth markets, I believe the lack of competition makes up for that.

Just as investing in the stock market, or bitcoin, or anything, you want to be ahead of the heard as best as possible. Once everyone starts screaming about how great a market is, you are probably too late (unless you have solid experience and relationships that can compensate for increased competition).

It may take some time, but think about what is most important to you (some of mine were the 6 I listed above). After you figure out those non-negotiables, you will start to notice trends and will narrow in on a market or two. 

@Tyler Erickson those are all great points. Based on the data you have provided my thoughts are that at a high level, it's a good time to be an investor!

On the Single Family Side: The market may become less fractured as large institutional investors see opportunity to scoop up single family homes and rent to millennial families who want to live in a single family home without being tied down by the large down payment and a mortgage. While these Institutional investors may have a lower cost of capital and can buy in bulk, they can be less efficient. Leaving room for smaller operators to provide superior service and returns.

On the Multifamily Side: This trend supports continued growth in renters looking for affordable housing coupled with amenities and community. I am interested to see if millennials at large will stay in apartment complexes, or if there will be an increased demand for single family rentals, making multifamily comparatively less valuable. 

https://www.weareapartments.org/ makes some interesting points on this topic. 

@Zach Barber before deciding to go into business with your brother, I would also evaluate other options. Having family in your business could add another layer of complexity you may not want.

While I have not personally had any issues partnering with family, I did have an issue with a partner on my first deal. While he was not a bad person, he simply did not uphold his side of the bargain. He over promised and under delivered. I thought that I had properly vetted him, however after being in business together for a few months I realized that our values were simply not in alignment. 

Looking back however, I'm very thankful for this experience as I've learned how important it is to choose your partners wisely! My current partners and I are working very well together and it has encouraged me to work harder for them and their families in addition to my own. 

Couldn't agree more with @Kevin Romines. In multifamily real estate, lenders know when a borrower is shopping around. Depending on the strength of the borrower, this tactic either results in a lower rate, or a bad reputation. Need to be very careful, 10 bps is not worth ruining your reputation.