All Forum Posts by: Kevin S.

You asked excellent questions, and I agree with Kevin that they call for long answers. I will do my best to be helpful and keep my post reasonable in length.

Selecting a good investment city and property is straightforward. I will explain the process below. Reach out if you have questions.

Let me first share my key assumptions:

Tenants, not properties, pay rent. A reliable tenant is invaluable—they stay many years, pay the rent on schedule, and care for the property.
Renters are diverse. Each tenant segment has specific housing requirements and will not rent properties that don't meet those requirements.
Real estate investing is about long-term financial freedom. Your rental income must outpace inflation, last your lifetime, replace your current income, and continue even when the economy dips.

If we agree on that, here’s how I approach location and property selection:

Location is King

Where you invest dictates your long-term income potential. Look for cities with:

Strong, consistent population growth: More people needing housing drive up rental demand.
Rapid property appreciation of existing properties: This lets you acquire more properties with less cash.
Job growth: Your tenants need jobs to pay rent. Focus on cities that attract new companies. When companies choose a location, they consider:
- Metro population over 1 million: A large, skilled workforce and robust infrastructure. Wikipedia's Metropolitan Statistical Area page
- Low Crime Rates: High crime deters businesses and residents. Do not invest in any city on this list.
- Low Operating Costs: Companies seek locations that allow them to remain competitive, avoiding areas with high taxes and regulations. Property taxes are a good indicator of overall operating costs. LendingTree
- Low Risk of Natural Disasters: Companies are wary of areas prone to natural disasters. The best indicator of natural disaster risk is homeowners insurance costs. Do not invest in cities with high insurance rates.

Property Selection: Target Your Tenant

Instead of buying a property and hoping for reliable tenants, flip the script: identify a tenant segment with a high concentration of reliable people. Talk to local property managers to determine the right segment (reach out if you want specific questions to ask). Once you've identified your target segment, observe what and where they're renting. Then, buy similar properties. The key is meeting the housing requirements of the people you want as tenants, not guessing. Depending on the city and the tenant group, this approach is adaptable—it could be condos, single-family homes, or townhouses. And the principle applies universally to in-state or out-of-state investments.

I hope this helps.

Thanks for the mention. You gave a good response to the OP. I always read whenever you post here and my mentor on BP has worked with you in the past.

1 Vote

Quote from @Nathan Gesner:

Quote from @Kevin S.:

Doing business with friends and family is dangerous. If someone screws up, it destroys the investment and the relationship. Most business experts will tell you that it's very difficult to partner with family and be successful, because family is more likely to see it as a familial relationship and not a business relationship.

If you want to help him get started, maybe provide a small loan with a robust repayment plan, drawn up by an attorney, then provide education / mentorship for free.

Thank you, Nathan. Appreciate your response.

1 Vote

Vancouver, Washington

Quote from @Nathan Gesner:

I would be very careful about partnering this early in your career. Get some experience yourself before you bring someone else into the mix, especially a 50/50 partner. Really dig into partnerships and how to structure them, to include how to exit when things get rough or one of you wants to move on to something different.

As for starting, the market isn't ideal, but you can't continue sitting on the sidelines. You missed out in 2020. What's to say you won't have the same feeling in 2028? Buy one property with up to four units and start managing it. Figure out the next step after that.

Jumping in here Nathan, what is your opinion if partnering is between father and son? I want to get my 23 y.o started with REI. I could provide 50% down and help him jump start. What are the pros and cons? How would you go about it? Thanks.

0 Votes

Vancouver, Washington

@Allen Zhu

After reading your post and being relatively new on BP and as REI myself I can help you not to answer your questions but help in a different way. You haven't gotten any response probably because the questions are too many and each question requires an entire page response. This could be a reason.

Many members here are helpful but likely don't have time to write 6 chapters of answers to your 6 questions. I suggest you breakdown your questions into one or two at a time. Just my opinion. I may be wrong. I could answer some of the questions myself but don't know where to begin. The response can be vast. Hope this helps as a fellow new investor. You could also search the 'search bar' for questions posted by others as an alternative. Good luck.

1 Vote

@David Hedges

Whatever works for you and the mentee. I am fortunate to have one who don't expect a return. Once I gain my experience, I intent to pay that forward in future to someone in need without expecting a 'return'. Thanks for your comment.

0 Votes

@ty

@Ty Coutts Interesting points. You mentioned things I haven't thought of. Thanks.

0 Votes

@ty

@Ty Coutts. Thanks for your input. Even though my question was framed leaning towards my son not being too exposed, is there benefit otherwise? I would like to hear both pros and cons.

0 Votes

I am new to REI and started late in my life. But I have been thinking to involve my son sooner. He is 23 y.o and about to start full time job. He is interested in REI, has good basic knowledge on REI and has more than enough saved up for down but hesitate because of current market, interest rate, rental demand, capex, first investment jitters, draw of stock market, etc, etc. My thought is to help him out by going in 50-50 partnership for many reasons: half down payment, half capex expense, strong co-signer on loan, me being local to investment property to take care of little things that need attentions (he will be out of state for his job/I will have PM), etc.

1. What's the best way to do this legally? Do we need an attorney to draft a legal agreement? Do we just have a written agreement between father-son (is there a viable legally recognized agreement online to use)?

2. Should he be on the loan, the title of property, insurance coverage? Should he be exposed to all liabilities that comes with it such as lawsuit, history of insurance claims(I believe insurance have a data base of past claims that can affect future coverage), credit and what not at an early age? Or can he be just a silent partner with his money and I have a separate agreement (legally drafted of course) without him on the loan, credit, insurance policy etc. He will benefit 50% from cash flow(if any), mortgage paydown and appreciation without all the exposure.

I would like to hear from investors who have their kids involved, accountants, CPAs, attorneys, realtors and all. Thanks in advance.

1 Vote

@Christian Artuso

Some mentors 'expect' things in return, which is how they want to operate. They have a right. But I don't see them as mentor. I consider them 'traders'. They are simply trading one thing for another. I did find a mentor on BP who expediated my experience with REI and continue to mentor me in my journey...all for nothing in return!

True story about my mentor- On one occasion I asked him why does he contribute so much of his time and knowledge to my journey. His answer: "He is living vicariously thru this journey of mine".

I hope you and everyone new find their real mentor.

0 Votes

@Josh Smith

Why not just ask for $4200 from the first party and narrow the gap between the two and rent to party #1. Tell party #1 that you have others wanting it, which is true. Eviction headache and cost is something you definitely don't have to worry about with party #1, not to mention wear and tear.

0 Votes

San Jose, California

All Forum Posts by: Kevin S.

Kevin S. has started 23 posts and replied 390 times.

Post: What Are Your Real Estate Buying Criteria When Looking to Purchase a Rental?

Location is King

Property Selection: Target Your Tenant

Post: How would you start if you were me?

Post: How would you start if you were me?

Post: What Are Your Real Estate Buying Criteria When Looking to Purchase a Rental?

Post: I Almost Gave Up Real Estate Investing

Post: How best to start kids to invest in RE.

Post: How best to start kids to invest in RE.

Post: How best to start kids to invest in RE.

Post: I Almost Gave Up Real Estate Investing

Post: Help me choose amongst 2 SFH tenants!