All Forum Posts by: Kyle Dwyer

@Daniel Luedke

Partnering with a family member on a rental property can be a unique opportunity that comes with its own set of considerations. While some investors may be categorically against it due to the potential risks to the relationship, others may be open to it under certain conditions. Here are a few key considerations to keep in mind:

1. Applicable knowledge and skills: It's important that the family member you're partnering with brings relevant knowledge or skills to the table. For example, if they have experience as a contractor and are familiar with the target area, their expertise can add value to the partnership.

2. Treating it as a business: Both partners should be committed to treating the rental property as a business rather than a hobby. This means having clear expectations, establishing roles and responsibilities, and maintaining open and transparent communication about financial matters, decision-making, and property management.

3. Partnership agreement: It's crucial to have a professionally drafted partnership agreement that outlines the terms and conditions of the partnership. This agreement should cover aspects such as ownership percentages, decision-making processes, financial contributions, dispute resolution mechanisms, and exit strategies. Having a legally binding agreement in place can help mitigate potential conflicts and provide a framework for the partnership.

4. Clear roles and responsibilities: Defining and clarifying each partner's roles and responsibilities is essential. This helps avoid confusion and ensures that each partner understands their obligations within the partnership. By clearly delineating tasks and expectations, you can maintain a professional working relationship and minimize potential conflicts.

5. Viable exit strategies: It's important to have exit strategies in place in case circumstances change or either partner wants to exit the partnership. These strategies should outline the process for selling the property, buying out the other partner's share, or transferring ownership in a way that protects the interests of both parties.

While partnering with family members can be rewarding, it's crucial to approach it with a business mindset and take the necessary precautions to protect both your investment and your relationship. Seeking professional advice from an attorney experienced in real estate partnerships can help ensure that your partnership agreement is comprehensive and covers all necessary aspects.

Remember, every partnership is unique, and what works for one may not work for another. Assess your specific circumstances, have open discussions with your family member, and consider consulting professionals to guide you through the process.

Best of luck with your decision, and I hope your partnership proves to be a successful and fulfilling venture!

Hi Cory,

Congratulations on completing the renovation of your duplex and receiving multiple offers! It's unfortunate that the appraisal came back significantly lower than expected, causing a discrepancy between the offer price and the appraised value. Here are a few points to consider:

1. Appraisal disparities: Appraisal values can sometimes be subjective and depend on the availability of comparable properties, especially in rural areas with limited multi-family comps. It's possible that the appraiser struggled to find suitable comparables, leading to a lower valuation. However, it's important to review the appraisal report to understand the specific factors that influenced the low value.

2. Discrepancy between FHA and conventional loans: FHA appraisals have stricter guidelines compared to conventional loans, and they may be more conservative in their valuation approach. This could contribute to the disparity between the FHA appraisal and potential appraisals with conventional loans. It's worth considering whether a conventional loan appraisal might yield a different outcome.

3. Creative financing options: If you're open to exploring creative financing options to bridge the gap, you could consider seller financing or offering a second mortgage to the buyer. This would allow them to secure additional financing outside of the appraisal value, potentially enabling the deal to move forward.

4. Re-evaluation and dispute: Once you have access to the appraisal report, carefully review it with your agent to identify any inaccuracies or discrepancies. If you believe the appraisal was not fair or accurate, you may have the option to dispute it and request a re-evaluation. This could involve providing additional documentation, such as the list of improvements made and any unique features of your property.

It's crucial to discuss these options with your agent and potentially consult with a real estate attorney or financing professional to assess the best course of action based on your specific circumstances. Remember that each situation is unique, and finding the right solution may require a combination of strategies.

Best of luck in navigating this appraisal challenge, and I hope you find a resolution that aligns with your goals.

Hi Carmen,

I can understand your frustration with the appraisals coming back lower than expected. It's disheartening when you've put in the time and effort to remodel the properties and anticipate a higher value. Here are a couple of suggestions that may help:

1. Hire a real estate agent: Consider having a real estate agent meet the appraiser during the appraisal process. This can help ensure that the appraiser has all the necessary information about the property and the recent improvements you've made. The agent can provide updated comps in the area and support your case for a higher appraisal value.

2. Rebuttal and re-evaluation: If you believe that the appraiser didn't consider the most relevant and recent comps, you can request a rebuttal and ask for a re-evaluation. Work closely with your agent to gather the necessary data, such as recent sales in the area and the specific improvements you've made, to support your case. Presenting a well-documented and comprehensive appeal may lead to a more favorable outcome.

Remember that appraisals are subjective, and there can be variations in the valuation process. It's important to advocate for the value you believe is justified based on the market and the work you've done. Keep exploring your options and consider consulting with your agent and potentially seeking additional professional opinions if needed.

Don't lose hope. Real estate investing often comes with challenges, and finding creative solutions is part of the process. Best of luck with your refinance, and I hope you're able to achieve a more favorable appraisal value.

Hi Allen,

Congratulations on your second property venture! It's understandable that the process has been a roller coaster ride with unexpected challenges. Here are a few suggestions based on the community's input:

1. Refinance: Once you've closed on the property and completed the rehab, you can explore the option of refinancing. However, keep in mind that many lenders have seasoning requirements, which means you might need to wait at least six months before pursuing a cash-out refinance.

2. Payment for Rehab Work: Since you've already invested your time and money into rehabbing the property, you can invoice the seller (your friend) for the work completed. By documenting the expenses and providing proof of the improvements, you can request payment for the actual rehab costs through escrow. It's crucial to discuss this approach with your lender to ensure it complies with their guidelines.

3. Future Appraisal and Cash-Out Refinance: Once the seasoning period is over, you can pursue a cash-out refinance based on the property's appraised value at that time. If you anticipate an appraisal in the $170k-$180k range, you might be able to cash out around $127,500 (assuming a 75% loan-to-value ratio). Consider choosing a loan option with higher rates and lower fees for the initial loan, as it will be short-lived before the cash-out refinance.

Remember to consult with a local lender who specializes in investment properties and understands your specific situation. They can provide personalized guidance and help you navigate the lending requirements.

Stay positive and focused on the long-term potential of your real estate investment journey. Every experience is an opportunity to learn and grow. Best of luck with your closing, and don't hesitate to reach out if you have any further questions!

Hi Colleen,

I understand that you're facing a tough decision regarding your investment property in Ohio. It's always challenging when unexpected costs and appraisal discrepancies arise. Here are a few things to consider:

1. Refinancing: Refinancing could be a viable option to recoup some of your investment. If you can secure a $150k appraisal, you might be able to pull out a substantial amount of money, leaving only a small portion of your investment tied up in the property. The positive cash flow from the property can help offset this remaining amount over time.

2. Long-term Cash Flow: Your property seems to have solid cash flow potential, with other duplexes in the area generating $1800+ in rent each month. This, coupled with the fully renovated condition and proximity to a major hospital, adds value to your investment. Consider the long-term benefits of cash flow and potential appreciation in the area when evaluating your options.

3. Market Outlook: Assess the local market conditions and projections for the area. If there are positive indicators for future growth and appreciation, holding onto the property could be a wise choice. However, if you anticipate a stagnant or declining market, selling off-market might help you avoid further losses.

Ultimately, it's essential to weigh the financial and emotional aspects of your decision. If the property aligns with your overall investment strategy and long-term goals, staying the course and riding out the challenges might be the better option. But if the stress and potential financial loss outweigh the benefits, selling off-market could provide a clean exit.

Consider consulting with a local real estate professional or financial advisor who can provide insights specific to your situation and the local market conditions.

Best of luck with your decision, and don't hesitate to reach out if you have any further questions!

Congratulations on your investment property! It sounds like you've made some significant improvements to the property, and that's always a positive step towards increasing its value. However, estimating the refinance value can be tricky without considering all the variables involved.

One suggestion is to look at recent sales comps in your area that are similar to your improved home. Take note of properties that have recently sold and compare their condition, square footage, and location to yours. This will give you a better idea of what the market is currently supporting in terms of value.

It's also worth consulting with a local realtor or appraiser who is familiar with your market. They can provide valuable insights and help you gauge the potential increase in appraisal value based on the improvements you've made.

Keep in mind that while repairs like a new AC unit and fresh paint can add value, appraisers may also consider other factors such as the condition of the kitchen and bathroom when comparing your property to comps. Make sure these areas are in line with the expectations of the market in your area.

Best of luck with your refinance and future investments!

Hi Heather,

Congratulations on deciding to venture into wholesaling! It can be a rewarding and lucrative path in real estate investing. While mentorship programs can be beneficial, it's understandable that the high cost may not be feasible for everyone starting out. Here are a few tips to help you navigate your wholesaling journey:

1. Educate Yourself: Continue your learning journey by investing in books, podcasts, online courses, and free resources available on platforms like BiggerPockets. Learn about the fundamentals of wholesaling, including finding deals, building a buyers list, negotiating contracts, and marketing strategies.

2. Network: Connect with other wholesalers, investors, and real estate professionals in your local market. Attend real estate meetups, join online forums and social media groups, and seek opportunities to learn from experienced wholesalers. Building relationships with like-minded individuals can provide valuable insights, support, and potential partnership opportunities.

3. Choose a Market: Research different markets in Texas and identify areas with strong investor activity, population growth, job growth, and market demand. Look for areas where you can find distressed properties or motivated sellers, as these are often the target for wholesale deals. Consider factors such as affordability, rental demand, and potential for future growth.

4. Build a Reliable Team: As a wholesaler, you'll need a solid team to support your efforts. This may include real estate agents, contractors, title companies, and attorneys who are familiar with the wholesale process. Surround yourself with professionals who understand your goals and can provide guidance and expertise.

5. Marketing Strategies: Develop a marketing plan to find motivated sellers and attract cash buyers. Utilize both online and offline strategies, such as direct mail, online advertising, social media marketing, and networking events. Consistency is key in marketing, so create a system that allows you to consistently reach out to potential leads.

6. Stay Persistent: Wholesaling can be challenging, especially in a competitive market. Stay persistent and focused on your goals. Be prepared to face obstacles, rejection, and setbacks, but use them as learning opportunities to improve your skills and strategies.

Remember, wholesaling is a dynamic and ever-changing field. Adapt to market conditions, continue learning, and refine your strategies as you gain more experience. Best of luck in your wholesaling journey!

Hi Michelle,

Welcome to the world of real estate investing! It's great to see your interest in MTR/LTR and multifamily properties. When it comes to determining the best markets for investing in these property types, there are several factors to consider. While I can't provide an exhaustive list, here are a few key points to help you in your search:

1. Market fundamentals: Look for markets with strong economic growth, job opportunities, population growth, and favorable demographics. These factors contribute to increased demand for rental properties, making it easier to find tenants and achieve higher occupancy rates.

2. Affordability: Consider markets where property prices are relatively affordable compared to rental income potential. This is particularly important when you're looking to house hack or generate positive cash flow from your multifamily property.

3. Rental demand and market dynamics: Research the rental demand in the area and assess the market dynamics. Are there universities, colleges, or major employers that attract a steady stream of renters? Is the market experiencing population growth or an influx of young professionals who prefer renting over homeownership?

4. Rent-to-income ratio: Evaluate the rent-to-income ratio in a market to ensure that rental rates are sustainable and in line with local income levels. This helps attract tenants and reduces the risk of high vacancy rates.

5. Rental regulations and landlord-friendly laws: Familiarize yourself with the local rental regulations and landlord-tenant laws in any market you're considering. Look for areas that have landlord-friendly laws and regulations that provide a favorable environment for rental property owners.

6. Networking and local expertise: Connect with local real estate professionals, property managers, and investors in the markets you're interested in. They can provide valuable insights into the local market conditions, emerging neighborhoods, and investment opportunities.

Considering you reside near the Dallas, TX area, it may be beneficial to explore the local market as well. Dallas has a strong real estate market with a growing population and diverse economic sectors, which could present attractive opportunities for MTR/LTR and multifamily investments.

Remember, conducting thorough market research and due diligence is essential when investing in any market, whether it's in-state or out-of-state. Each market has its own unique characteristics, and what may work well in one area might not be as successful in another.

Best of luck as you embark on your real estate investing journey!

Hi Chris,

You're on the right track! When using a cap rate to derive a value for a property based on its net operating income (NOI), the cap rate you use will depend on the market and the specific property. Cap rates can vary across different areas and property types based on investor expectations, risk perceptions, and market conditions.

To determine what cap rate to use, you can consider the following approaches:

1. Market research: Look at recent sales and transactions of similar properties in the area. Analyze the cap rates at which those properties were bought and sold to get an idea of the prevailing rates in the market. This can help you gauge investor expectations and market trends.

2. Comparable property analysis: Identify properties similar to the one you're underwriting and analyze their cap rates. Look for properties with similar characteristics such as location, size, condition, and income potential. This can give you a benchmark for the cap rate you might expect for your property.

3. Investor preferences and risk assessment: Consider the risk appetite of investors in the area and the prevailing economic conditions. Factors such as local market stability, growth potential, demand for real estate, and interest rates can influence investor expectations and risk perceptions. This, in turn, can impact the cap rate investors are willing to accept.

4. Consultation with local experts: Seek advice from local real estate professionals, brokers, appraisers, or investors who are familiar with the market. They can provide insights into the cap rates commonly used in the area and help you understand the specific factors driving those rates.

Remember, cap rates are just one piece of the puzzle in valuing a property. They provide a snapshot of the property's income relative to its value but should be used in conjunction with other valuation methods and considerations.

Ultimately, conducting thorough market research and consulting with local experts will give you a better understanding of the appropriate cap rate to use when deriving a value for your property.

Best of luck with your property analysis and attracting investors!

Hey Murray,

It's great that you're considering investing in beach house properties and utilizing AirDNA for analysis. The numbers you've provided, such as annual revenue, occupancy rate, and cap rate, definitely look promising. However, it's always a good idea to dig deeper and verify the accuracy of the data before making a final investment decision.

While AirDNA can provide valuable insights, it's important to remember that their data is based on historical and aggregated information from vacation rental listings. The accuracy of the numbers can vary based on factors such as seasonality, local market conditions, and individual property performance.

To confirm the accuracy and evaluate the investment potential further, here are a few steps you can take:

1. Conduct your own due diligence: Look into comparable properties in the area, even if they are not specifically 3:1 configurations. Evaluate their rental performance, rates, and occupancy to get a better understanding of the market dynamics.

2. Talk to local property managers or real estate agents: They have firsthand knowledge of the market and can provide insights on the potential rental income, occupancy rates, and demand in the specific location. They may also have access to more detailed data and market trends.

3. Consider other sources of data: While AirDNA is a useful tool, it's not the only source of information. Look for other vacation rental platforms, local tourism websites, and industry reports to gather additional data points and validate the numbers provided by AirDNA.

4. Perform a thorough property analysis: Evaluate the property itself, including its location, amenities, condition, and potential for future growth. Consider factors like proximity to the beach, local attractions, and any upcoming developments that could impact demand.

5. Create a detailed financial projection: Utilize the information you gather to create your own financial projection and perform a sensitivity analysis. Consider factors like expenses, maintenance costs, management fees, and any potential risks or fluctuations in the market.

By combining these steps with the data provided by AirDNA, you'll be able to make a more informed investment decision. Remember, it's essential to conduct your own research and analysis to ensure the accuracy and suitability of the numbers for your specific investment goals.

Best of luck with your beach house property investment!