All Forum Posts by: Matthew Banks

Hey Ricardo R. thank you very much for your post. The info you provide is very helpful. A CF buffer above living expenses makes sense.  

I've been eyeing new construction. I've done over a dozen flip/Brrrrs.

Here's some basics I'm considering:

-top school district 

-land cost <20% of total cost

-either fully developed or pre-approval by town

-I'll act as the GC, likely work on-site during construction

-I've a real estate license so have good market knowledge

What I'm not sure of:
-legal contracts/terms to use with contractors
-how to secure best pricing for finishes/fixtures
-whether $500-650 range is too risky for a first build

very interesting. good to know. I didn't think 1031E was viable. I'm seriously looking at new build.

I've done 7 Brrrr projects but am a bit burned out. We've got $1k/mo CF on each door which is great. We're in a mid-size Northern rust belt city and the economy here is good. Its almost impossible to find a Brrrr acquisition that pencils if we hire contractors to do the reno's, so we've been making a lot of DIY contributions. Curious if others are doing the same or if you found another approach? Any advice on how we could find more affordable contractors or crew hires? I do regularly see good deals to either flip or BRRRR but I've got a f/t job and am nervous to make the leap to f/t flip/Brrrr. Love advice from someone who has done it.

For the pro's here: I co-own 6 residential properties (7 doors) in a rust belt city, where housing prices are nothing like Tier1/2 US cities. It's been a big time commitment to manage mostly student rentals which turn over each year. Prices are lower but rents can bring good cashflow. I've been very DIY, using my real estate license to find and buy value-add and doing a lot of the renovation work, managing small crews, and have learned how to handle most aspects of the biz. After being exhausted with juggling my f/t job and the portfolio, I'm training a part-time (offshore) bookkeeper/VAdmin to assist with books and day-to-day management with Baselane. I'm working to find a couple handymen to handle repair issues. I want to automate and delegate as much as possible, to enable scaling up the portfolio to quit my f/t job.

What size (# doors, $/door, monthly NOI) got you to the point that you could quit your day job and have p/t or contractors handle most of the day-to-day work? Did you also move up as you grew to purchase larger units?

At what size did the cash flow alone allow you to quickly purchase an additional investment and really scale?

We've been targeting higher quality neighborhoods to ensure top quality tenants and after value-add (a LOT of sweat equity) are able to achieve $700-1k+ cash flow/mo per door, about $80k/year, my share $45k. My current f/t job is way above that, but could justify FIRE at $100k. I'm going to 1031E out of a non-performing property and that next purchase will add $2-3k/mo cash flow, getting to $70k/yr. A coupe more purchases should do it, so we're close, but I do worry about the additional management burden of getting there.

I need to hire contractors for various renovation projects, such as a new soffit, bathroom renovation, etc. I'd like to use best practices to give contractors a clear outline so that they can understand the scope and bid accordingly. There are a lot of details to a renovation that I'd like to capture so that a contractor understands the scope and my expectations. Would appreciate advice on the format for an RFP or scope of work. Thanks!!! 

This is separate from a legal contract and terms, but if you'd also like to point me to a standard contract terms, I'd appreciate it.

We have some student rental units that turnover every year. It is an intensive leasing process each year, from the advertising to handling inquiries, applications, showings, etc. I most want to avoid spending considerable time showing units in-person to prospective renters, esp. before we've pre-screened them. Any advice on how to minimize in-person showings or how to change our process? I've created a walk-thru video for each unit and posted it online. I have email auto-responders that provide info and links to our website, walk-thru videos and a short application form when someone makes an initial inquiry. People email and text us, asking for a showing, but after getting the auto-response email, they don't move forward. I'm happy to show a unit to someone once they've been screened and we know they are very serious.

Any advice greatly appreciated.

Very interesting post John. We should form a little group and share info as we have similar backgrounds. I've been juggling a W2 while also doing real estate investing (BRRR, flip, RE license). I've managed a number of successful rehabs and put a lot of sweat into them as well. It's been a long-time dream to do a new build and so I'm actively working to find land and begin the process.

I agree that the profit margin you post seems very small. Your 'cost' should include everything, from land purchase, soft costs, holding costs, and hard costs. The S&P 500 index returns on average 10% per year. You should have that as a benchmark in mind, since it offers a good return without any effort. A new build needs to perform better than that to make it worth your time, all the risks and capital concentration.

thanks for the advice everyone and would be happy to connect with you: @Bryant Brislin @Dave Wells @Leilah Davis @Joshua Stewart

Hey Drew, what type of things help you identify a good potential tenant? Do you check their current/previous residences & landlords? Do you check their employment? Are there things you look for when talking with them?

 I'm planning to make this an in-house f/t business. It isn't practical to find "affordable" GCs, at least we've not been able to in our rust belt market, where home prices are way below national average. The margins are squeezed much too tight to avoid going above market value on a rehab. Only by controlling costs, managing the projects, and having a steady pipeline of projects will we be able to have a viable business.