All Forum Posts by: Matthew Irish-Jones

@William Nguyen working is a good start. If you have W-2 income you can get an FHA loan and buy a double for 3.5% down. Then force appreciate the property with sweat equity. This is the way to start.

Cash on cash returns for decent properties are 4-8%.  So the math is simple if you want $120,000 of passive income you need 1.5 million in readily available capital.

Thats assuming you hit 8%, not 4% and don't have any dog investments.  Since you are just starting it's highly probably you will have a couple dogs along the way.

Investing is a path to retire with more money than you would have if you didn't invest.

I have never met someone who lived off off passive income and started by bootstrapping.

Im sure they are out there, but its normally a life style choice that comes with living simply, not living it up on the beech while money flows in. 

150k all in is going to be tough to BRRRR in almost any market. Out of state BRRRing is the most difficult strategy to pull off and you almost need an entirely vertically integrated company which is very hard to find. Not many companies can pull off Realty, construction and property Managment and do it well.

if it were my money I would be looking for a B class, low risk asset, in good condition.  Let it sit for 5-10 years and consider a refinance to buy more doors.

That is a more viable alternative.  

If you are set on the BRRRR route I suggest saving another 100k

 I would recommend finding the right agent first.  They will be able to help you analyze, find a market that meets your goals, and should have every vendor introduction you will need. 

From there your job is to double check all of their numbers, ask questions on assumptions, and learn as much as possible. 

@Stephen Keighery How are you judging the performance of the portfolio, IRR, cash on cash, etc...

 Are there mixed utilities?  Why are you paying gas?  

My suggestion is the owner get a security deposit prior to closing.  As mentioned I would be taking a hard look at leases and application process. 

 There are a couple options:

1. Spend a lot of money on marketing and generate off market leads. 1-10 will be decent and you will need to answer the phone, screen, project rehab costs, and comp the ARV in about 24 hours. If you are out of state this is pretty much impossible and now Agent is going to run around doing that for you. You would need to pay an employee.

2. Go to auction and buy properties in cash.  You will be competing with all the big dog investors, who have sq ft comps on past jobs, know the market, the area, and have cash.

3. Work with local wholesalers, they will put you on a buyers list, tell you when they have a property, and you can make a bid. Since you may not have boots on the ground, probably also tough to pull off buying direct from a wholesaler. If you find an agent willing to run around doing this for you with the promise of the lift after the sale, they are most likely not qualified to project rehab cost and ARV's.

4. Work with an agent to buy off or on market deals.  This is perhaps your only option as an out of state investor.  They will have off market deals that come to them (you will need to buy cash), or they will find you an on market deal.  The on market deal will have thinner options, but they will be able to introduce you to vendors that can do renovations, plumbing, etc..

Flipping from out of town is very difficult.  In my opinion taking on a strategy of buying, renovating and holding is much more realistic strategy and can be executed.  

Good luck!

 What is the issue with the structure that a structural engineer was needed?  Even though your tenants are on month to month payments there should still be a lease, and a screening process.  The lease is important, but the screening is more important.  You need every adult in the house listed on the lease, and you need contact information. 

The key to investing in a double is accurately projecting your variable costs, CapEx, Maintenance, and Vacancy. The rent roll is obviously also important, but that is, frankly, much easier to project by running comps.

I have seen many cases of a rents being at $1200 for each unit, tenants leaving soon after closing, and there being a 10K bill per unit as a sunken cost.  A sunken cost means you need to spend that money to keep the same rental rate, not improve it.  

Your agent should have a pro forma built out for you based on their walk through showing all of that data.  If you don't have that, its up to you to project those figures.  You can use the inspection report to do so, or if you are a seasoned investor you can do it yourself.

Watch out for leaky basements in South Buffalo.  There are certain areas that seem to have water in the basement year round. 

 That is a lot of effort on marketing, maybe too much.  Our growth comes from our current client base.  Client referrals, clients buying more property because they are happy with our service, and our Realty division.

If our agents are out there finding great deals for investors, there is a good chance they need management.  If not, no harm done either way.

If you are not in the Realty business consider working with some Realtors, sign non competes, pay them a referral etc...

I don't know about spending a lot of money on marketing for property management clients, that would not be my strategy to grow. 

 There is a local meeting the second Wednesday of every month.  You can find local investors, agents, property managers, etc.. there.  That is a great place to start networking.

Investing in Residential flips is a tough business.  Frankly, its not really investing, its running a business that happens to do flips.  You need business systems set up for everything from finding deals, to financing, to rehabbing, to selling.  It can be done, but you are up against full time companies with a war chest of a balance sheet buying up every foreclosure, auction, and off market deal in cash.  They also have in house staff doing their flips most of the time.