All Forum Posts by: Marshall Leipprandt

@Michael Avillion Good advice from @Bryce Jamison and I agree. Take that first year to really understand that area. Not only do you want to know if it is a place that you'd like to live, but you should also conduct extensive research while living there to determine if it is a market suitable for real estate investment in accordance with your family's goals. 

Yes, Texas is growing as a whole, but you can't assume the growth in those large metro TX markets will be mirrored in El Paso. TX is a huge state and owning real estate anywhere is a large undertaking - one worth taking a considerable amount of thought and analysis.

Lastly, I would 100% recommend using your VA loan if you do choose to buy. That will allow you to keep some of your liquid cash in a reserve account for your property as well as keep that cash on hand for your family.

@Bailey Anderson Hey Bailey! Im originally from the Thumb but my parents now live near Bay City and I have spent a lot of time in the tri-city area. I am living out-of-state now but have been very tempted to purchase in Bay City as I come back to MI about twice per year now and the price points are low. I've analyzed a lot of deals in the area and it has always been a tough decision, but I've so far decided not to purchase anything and don't have any plans to do so in the near future.

If you are living there, I do think that there could be some opportunities to purchase a 2-4 unit multifamily and do an owner-occupied purchase. Some other folks on Bigger Pockets told me that the hardest things to find in Bay City are reliable property managers and reliable general contractors/handymen. Also, the city has some requirements from what I've heard regarding certifying certain types of rental properties so that could be another concern as a prospective owner. 

Lastly, although some areas of Bay City are seeing some renovation, I am personally not super bullish on the area for the long-term. I wish I could see more of a future upward trend, but it is just so hard for me to see. Sad to say because I know so many people in that area, but it just isn't where people or large businesses are moving and that is my main concern. With that said, I am sure that there are many people making money in real estate in the tri-city area, and if you are living there anyway, you can certainly house-hack and decrease your cost of living while simultaneously growing equity in properties.

@Michelle L. I am in the process of doing the same for one of my properties and I went with a $1,500 deposit on a $4,500/mo rent. 

As owners, we want to make sure we are charging enough to cover any possible damage, but usually first month rent is a standard security deposit on a 12 month lease. So maybe divide the traditional security deposit for a 12 month lease by the actual length of the lease ($1,800/12) = $150 and then add in whatever you think necessary to make you more comfortable. 

I have never had a guest on Airbnb/VRBO stay for over 30 days, but even if I did, I would not have had a security deposit for that length of time. So we definitely need to be reasonable with it but also not leave ourselves vulnerable to disrespectful guests.

@Colby Wartman I'm doing the same thing to one of my properties in respect to converting from STR to MTR (at least for Oct-Mar each year when the STR demand slows). I am mostly keeping everything the same in terms of policies, rules, details, etc., but am now advertising the MTR on Furnished Finder as well as on Avail.co which publishes to several home/apartment search websites. I use Avail.co for an LTR so I am familiar with its features but I really like it and think it is super user-friendly for landlords and tenants.

I actually think that most people looking to book for a MTR wouldn't go to Airbnb first which is why I am advertising on other platforms. If someone is looking for a MTR they might go to Apartments.com, Zillow, Furnished Finder, etc. I am keeping everything else just about the same in terms of my systems and processes. Also, you're correct on the lodging tax depending on your state, but most STR lodging tax are defined as less than 30 days. I know this is the case in my county in FL as well.

@Shyam Kumar I thought a lot about hurricanes/flood risks before buying in Florida, but ultimately ended up moving forward because I realized that no matter where I buy real estate in the US, every market has its issues. It really comes down to which types of risks you are willing to accept (tropical storms, tornados, earthquakes, droughts, snow storms, etc.). Bake the risks into your analysis.

As others have mentioned, FL is generally more friendly towards landlords but may depend on the exact area that you are in. A lot of this risk, independent of where you buy, comes down to the type of property you buy and how you screen tenants. If you're buying in strong rental areas with a large tenant pool and a strong economy, chances are you'll have more qualified tenant prospects and can minimize the risk of putting yourself in a situation where you'll be relying on the landlord laws as much. Granted, great tenants on paper can still be terrible, but in general this rule applies.

Lastly, Florida is the third largest state in the US by population, over 21 million I believe. That means that there are A LOT of other landlords and owners who have been asking the questions you are and have proven that FL is a worthy market for investment.

@Greg Scott Doesn't always have to be solely a cash flow vs appreciation decision. It's probably actually most prudent for a portfolio to have both cash-flowing assets in lower growth markets AND some assets in higher appreciating markets. This diversifies off some of the risk to the overall portfolio. Maybe 3 cash flowing properties to every 1 appreciation property? But it really depends on everyone's personal situation. If someone is making $300K in their W2, I probably wouldn't tell them to buy in a market where they could cash flow $250/month on a SFH. Conversely, if someone is making $50K in their W2, buying a much more affordable property in a cash-flowing market may be what is best for their goals and financial situation at that time.

The bottom-line is that we'll never know which markets will continue to grow steadily and which won't. People have been slamming SoCal for decades saying that everyone is leaving and that prices simply can't continue to rise but they have and they've far exceeded pretty much every other market in the US. A lot of people who call out SoCal have never lived here or even traveled here. Do I think that will continue? No clue. Just as much as I don't know whether Cleveland/Detroit will return to their early 1900s glory. So maybe best to snag a few properties in different markets with different strategies and hold for the long-term.

@Jordan Decuir Good thinking and I do think that there is some opportunity for those out there able to take advantage of assumptions.

I can only speak to the VA loan assumption as that is what I have researched the most being a Veteran and trying to use my VA loan again in the future. The main pitfall that I learned is that you are assuming the seller's current VA loan (monthly payment, total amount owed, and interest rate). Although it sounds super enticing, the VA loan is a 0% down loan product, but an assumption of a VA loan would put me in a situation where I could be having to but a significant amount down.

For example, if a seller has a current mortgage of $300K and interest rate of 3% from late 2020 or early 2021, that property may now be worth around $375K or more depending on the market. So in this case, I would have to bring that difference to the table at closing ($75K before closing costs) which decreases the whole primary advantage of the VA loan which is the 0% down feature. Granted the interest rate is still great, so if someone who has enough cash to go conventional and can assume a VA, then it obviously would make them quite happy. This same general principle would apply to the FHA as its a similar low-down option.

This is really just the first roadblock that I think a lot of folks run into. The next obvious ones would be, whose VA entitlement is being used if a mortgage is assumed? Are there options for non-VA eligible to assume VA? The list surely goes on, but I think we will start to see a lot of videos and articles on this topic and I think it could be a good strategy for sellers to offer in this market and for buyers to have their agents search the MLS for because rates under 4% could still be a long way off.

@Ben Bartkowski Hey Ben, welcome to BP! It's great to see other service-members / Veterans on BP looking to build for their futures. BP has helped educate and inspire a lot of military folks to pursue real estate as a means of building long-term wealth.Using your benefits to pursue something you are interested in and passionate about also sounds like a great strategy. Have you used your VA loan at all to purchase any properties thus far in your career?

@Siddhanth Maheshwari If I were in your situation, I would try and buy a nice 4 unit building. As long as you don't have crazy high debts from school loans, car loans, credit cards, etc., you would probably be approved for a pretty sizable loan given your strong financial position and high stable income.

You really have to run the numbers on what your current housing expense is (rent, utilities, rental insurance, internet, etc.) and compare that to if you spent maybe $2M on a solid 4 unit building where you could live in one unit and rent the other 3 for $4K/mo each. Of course, you'd likely need more cash equivalents on hand for a down payment depending on which type of loan product you use. Not sure if these numbers would work in your current area, but you probably want to own in an appealing area for other tech workers to ensure you're getting quality tenants as well as live in an area you like and enjoy yourself. Having $12K gross coming in from other tenants could be enough to cover a decent amount of your housing expenses and have your tenants pay off the majority of your PITI; therefore helping pay down your principal which builds your equity.

Something walkable to restaurants/bars and close to all of what the Bay Area has to offer will be your best chance of attracting strong tenants with stable incomes and rental history. Especially since you'll be there for 7+ years, that is a lot of time to live in the property and manage that asset accordingly. Plus, the longer-term outlook mitigates your risk on the downside at least in the near-term.

@Luca Giani You'll probably get a lot of bites on this post from people in Detroit. Many folks working these types of properties across the Midwest to include Detroit. Some people I've seen here on BP call Detroit an easy place to find deals and a great cash-flowing market. Having been there and looked at properties in the area, be careful taking their word. 

I am from Michigan, but now live back and forth between FL & CA. As a potential out-of-state investor myself, wondering why you're looking for properties that have the potential to generate cash flow instead of properties already cash-flowing. Are you going to be BRRRRing?

Just curious because in most areas in Detroit, cash flow is really the only reason out-of-state investors buy. Historically, appreciation has been abysmal compared to other markets across the country (except for maybe 2019-2021).