All Forum Posts by: Konstantin Ginzburg

@Steve Ogle

From personal experience, I think starting off in your own area is extremely beneficial as you have mentioned. When we started in real estate a few years ago, we eventually owned and self managed a SFH and a 4-plex by our area. By getting hands on practice and experience with management, we were able to learn what goes into managing a property which in turn gives us insight into how to manage a management company. I understand your concerns regarding the high prices in your area. I would also honestly be concerned about how favorable the CA laws are towards the tenants as opposed to landlords so investing out of state might be an option to consider. We have since moved and now manage 2 SFH from a distance so it is possible to do. The key though is having boots on the ground and people you really trust near those properties to watch over them for you. If you are able to build a quality and trust worthy team in a second location, then long distance investing is absolutely possible but if you choose this route, I would advise focusing on building a local team before you start looking into actual properties.

@Caitlin Bushong

Hello and welcome to BiggerPockets. You have come to the right place to learn about real estate investing. I actually learned about this forum from the same Brandon Turner book that you mentioned. There is so much information to absorb within this forum, the podcasts generated by BiggerPockets as well as a wealth of books that are available about real estate investing (several of which were written by members of BiggerPockets as well). This forum is very active in answering questions so please feel free to ask any and all questions you may have. We are all here to learn from one another. Best of luck on your real estate journey!

 We currently manage 10 rental units. The amount of time varies greatly. For example, we recently had 3 vacancies that we had to fill at once and some inquires slipped through the cracks since we advertise on multiple platforms. The primary reason I am looking into this option now, is to prepare for future scaling as well as prevent items from falling through the cracks. We could also use assistance in shopping around for home insurance quotes or other tasks such as this. These would also not take too much time except for my partner and I both still working full time jobs in addition to managing real estate so we are open to various ideas that might improve our efficiency. We had not yet decided whether we want to go this route or not, but are looking into it as an option and doing due diligence to see if this could help us with our goals. 

When you brought in a VA for admin work, what kind of hours have you typically given them. Since I am still starting off and only have 10 units total, I do not think I would be able to provide enough work for a full time VA. Have you had luck finding a VA that takes on a variety of clients (maybe handling 8 clients and giving each 1 hour per day type of scenario).

There is no harm in reaching out and asking for it but the previous buyer is under no obligation to provide it to you. You could try to ask your real estate agent to request it from the previous sellers agent. There is no guarantee this would work either but a good agent with a solid network may be well connected enough to pull some strings and do this on your behalf. 

I would like to share a success story that outlines the importance of networking and the careful selection of location for real estate investing. Two years ago; my wife and I made the choice to move to New Orleans in the hopes of creating an airBNB within that city. We had previously lived in the town of Lafayette, which was 2 hours away from New Orleans but we frequently visited that city. We had already started our real estate investors journey in Lafayette with 2 single family homes and 1 4-plex that were being used as long term rentals. Part of the reason for me wanting to move to New Orleans was because I missed living in a large, vibrant city with constant action and part of the reason was I saw more opportunity for real estate ventures within New Orleans as well. 

When we began looking for properties, we were very selective in our criteria regarding the location. While the most popular section of the city for tourists was the French Quarter, STRs are not allowed in that section of the city. As a result, we targeted the Uptown section of the city to make our move. We also wanted to ensure that any property we selected would be close to the street car line that connects Uptown and the French Quarter. By targeting Uptown, we knew we could appeal to our target clientele due to the fact that we would be located in the safest area of the city while still allowing for quick and easy transportation to and from the French Quarter due to the street car line. We eventually found the perfect property that was located 1 block from the street car. The property was a 3 story former Victorian mansion that had been converted into a 4-plex. In addition to being near the street car, we were surrounded by historic buildings such as the Anne Rice Estate House and a variety of the city's highest ranked restaurants that are regularly featured on travel channels such as Shaya. All of these were within walking distance of the property. We knew that this was a property that was worth our attention. After acquisition, we had gone on to discover that this property was even more ideally situated than we had previously realized. The property was located in the very heart of the city's annual Mardi Gras festivities; 1 block from the event's most revered parades. We were also situated near houses that were featured on magazines for their architecture and holiday decorations. We were even on the film set of The Crossover: a show made by Disney and can be seen on their streaming channel. The location of the property was so ideally placed, that we were able to charge substantial premiums per night for guests on airBNB. Not only did we have no issues booking the property during Mardi Gras once we listed, we had received Mardi Gras inquires for the property for the next 2 years on airBNB. 

While the property has demonstrated tremendous potential for us to this point; acquiring it came with many hurdles. The first hurdle was financing. At the time, our funding was limited so we had intended to use an FHA loan in order to acquire the property which would have allowed us to have a 3.5% down payment. Unfortunately, we found out that we could not use this option since the property used window units for A/C which was not accepted for FHA financing. This was the first instance where we demonstrate the importance of networking. We had began reaching out to our network, primarily through our real estate agent. We were fortunate enough to be in the hands of an amazing and well connected real estate agent who we were able to find from referrals from a Lafayette real estate agent we had developed a decade long partnership with. The New Orleans agent was able to connect us with a local lender. Although that lender was not able to provide a loan product for us, due to our connection with the real estate agent; she did want to find a way to help us and connected us with another lender who was able to find a portfolio loan that would suite our needs. Although we were not able to get 3.5% as a down payment, we were able to get a 10% loan requirement as well as financing for the property remodel rolled into the same loan. We were fortunate enough to have parents at this point who were willing and able to help with the down payment for the property as well. The remodel financing itself was an unexpected but extremely welcome windfall. One reason that the property was listed within our price range at all was due to the fact that the previous owners performed limited deferred maintenance on the property and were eager to unload the property due to a dissolving partnership. While we made sure that there was no structural damage in the property with a very in depth inspection; there was a lot of cosmetic issues with the properties curb appeal that was greatly dragging down the properties value. Examples included missing paint and rotting siding. The renovation budget from this loan allowed us to replace the siding of the property and repaint the property as well as make other changes to greatly enhance the curb appeal of the property.

Obtaining a general contractor that would be able to make these renovations was another hurdle that needed to be overcome as well. The requirements of the portfolio loan were for a general contractor to be assigned to the financing and be able to begin the renovations shortly after closing. Normally finding general contractors within a large city is not a difficult undertaking; however, we were trying to obtain this property shortly after Hurricane Ida had destroyed the city and the country was just coming out of the pandemic. The combination of hurricane damage, supply-side issues, and labor shortages at this time made finding a general contractor extremely difficult. We had made nearly 100 phone calls asking for estimates and had even walked the streets of the city and began to talk with every repair team we encountered. All of these effort resulted in only 3 returned phone calls, 2 estimates, and 1 who was willing and able to do the repairs in the time window we required. This proved to be another amazing turn of fortune since not only was this general contractor able to complete the work at a fair market value; the work itself was extremely high quality and we couldn't have been happier with the outcome. We have also been able to use his sub-contractors for additional work on the property in the time since. 

There have been many challenges that have needed to be over come since, including challenges we are still working to overcome. Chief among them is the soaring price of property insurance within the New Orleans market and the second obstacle is the city's political environment that does not favor STRs. Both of these are on-going issues we are battling but we are view these as more challenges for us to overcome to be able to reach our end goal and intend on meeting these challenges head on. It has gotten us involved in the city's government and has directly resulted in us quickly growing our network within New Orleans in a relatively short period of time. We had also been aware of the political environment of the city and had taken steps to protect ourself from the possibility of not being able to function as an STR. The prime defense that we used to hedge our bets was to ensure that any property we looked at would be able to function as a long term rental. This further showed why we performed so much research prior regarding selecting a location for this venture. Not only were we located in a prime tourist area, but we were also located in between three major hospitals and walking distance to two major university, including the extremely popular Tulane University. This allowed us to not only tap into the tourism market but also gave us access to traveling medical professionals and students as well that would provide long term tenants if we were prevented from continuing with the STR model.

Although we still have a long ways to go to meet our goals, we are excited for the foundations we had setup for this property to this point. We owe what have achieved so far to the careful research we conducted on the properties location as well as the network we had developed and have since expanded. I believe this story demonstrates that real estate is not an easy game. There will be challenges that need to be overcome throughout the process but with persistence, drive, and education; any obstacle can be overcome and the outcome will prove worth the effort. This last statement is what I really want to emphasize to anyone who has taken the time to read this story and I hope it provided you with some inspiration and encouragement for your own real estate journeys. 

This is a question that should be brought up directly with your local zoning board. Zoning and allowed property use varies greatly from city to city. There should be a local zoning office in your area that you can call and ask this question to directly. If you tell them your exact plans, they would be able to tell you whether or not you are able to go ahead as is; if not, they will be able to outline the exact steps you would need to take to become compliant first before continuing with your intended plan.

@Allan Tualla

That first real estate investment is without a doubt, the hardest one since it requires a leap of faith. If you feel like you are at the education level required to take that plunge, then sooner or later you will simply need to jump in. One strategy I used that helped ease some of the stress for me on my first property was selecting a property where I knew I would be able to pay the mortgage costs even if we were not getting rented. By ensuring I had the financial means to pay this expense in a worst case scenario, it allowed me to dip into real estate investing while limiting the stress I would be placing on myself if things did not go smoothly. Once I took this first step, I became far more comfortable with the process and was able to apply everything I had been reading and researching prior while at the same time, learned far more from actually taking that plunge. 

@Branden Miletta

The DTI would be a very large hurdle you will need to overcome. The two primary factors in determining financing terms with lenders is your DTI and credit score. If either of these are two low, you will most likely need to put work into correcting those if you want to move ahead with traditional financing. While portfolio loans or credit unions may have more wiggle room in their DTI requirements, they will still have their own qualifications. One option that you could look is begin positioning yourself for commercial lending by talking with commercial lending departments at financial institutions and take the steps they recommend. Since the financing of commercial properties is determined by the financials of the property rather than your personal financing; it could open up additional routes for you in the future. Aside from that, you might need to be patient and improve your DTI over an extended time period before looking into the next property. This can be done by paying off any current consumer debt that you have or work towards increasing your revenue over the next few years.

My general advice would be if you are not currently in a position to make a move you would like, find what steps you need to take to put yourself in a position to do so in the future and begin to consistently work on those steps. It might take time, but you will 100% get there with persistence. 

@Stephen Gibson Jr

I grew up in Philadelphia but moved away nearly 2 decades ago so I am not too familiar with the current state of neighborhoods. Especially not the neighborhoods closer to downtown since I spent the majority of my time in the Northeast. 

One thing that I may be able to help you with though, if you are interested is a referral for a real estate agent if you are currently in need of one. Feel free to reach out and I would be happy to prove you with their contact info. He is a traditional agent so you will likely have to run the numbers on your own to ensure you are getting an investment that meets your criteria but he may help point you in the right direction as far as properties and neighborhoods to look into. 

I do agree with what others have said regarding waiting out the market: my motto is "time in the market" is far better than "timing the market". There will always be obstacles that need to be over come in real estate investing. While the current obstacle is high interest rates; last year lower interest rates provided the obstacle of high competition. In the near future, there is no way to predict what the next obstacle that will need to be overcome will be but there will be some obstacle. Although this is my personal opinion regarding the future of prices, I do not see a large price drop occurring any time soon within real estate. This is due to several reasons, chief among them being the fact that housing inventory is still very low and there are currently more buyers on the market than available houses for sale by a wide margin. Regardless or interest rate, this will continue to put upwards pressure on housing prices that will need to be overcome before any price decrease may occur.