All Forum Posts by: Michael B.

Jennifer, where are you based out of? I always have already rented out turnkey opportunities that I would be willing to sell. 

Interesting. Thanks @Jamaal Johnson

Amber, I invest a lot in Michigan at the moment. If I buy MLS properties, it usually works well for me to offer the selling agent to double dip in return for a steep discount on the house. Using this strategy I bought a MLS listing a few months back that was listed for 55k. I purchased the property for 37k and it appraised within a month @63k.

All I did was offering the selling agent to double dip. The property has been sitting on the market for a while and it worked out great in this scenario. Have done this a few times now and it worked pretty well every time. Let's connect!

@Jamaal Johnson can you please share a few credit unions that you have worked with that do that for non owner occupied properties? I very often pick up properties for under 20k and I have yet to find a COMMERCIAL lender that would jump on a deal like that. 

Books: Rich Dad Poor Dad, Think and Grow Rich,  How to win friends and influence people.

Podcast: BP

Mentors: @Ben Leybovich, Tom Krol, Joe McCall for the US. 

Thomas Knedel, Alex Fischer for investments in Europe.

Totally agree with @John Underwood. Vinyl plank flooring is the best and looks great! 

I personally don't know any private investor that would send funds directly to your account. If he did, there would be no security for the PML that you won't run with his money. After all it wouldn't be tied to a property. The PML always transfers the funds to the title company who disburses the funds after closing.

Also, you can't use bank financing on fix and flip deals. You either use hard money outright or you have to find a PML that pays for the whole acquisition and rehab. I'd suggest you purchase a buy and hold property first, push it to performance and let a PML refinance it. This way can show a track record and it will be easier to attract private money to fund your deals upfront in the future. 

During the refi process you will also learn the mechanics of financing that is tied to an asset. The refi process is like a regular closing when you purchase a house. 

The numbers for taxes and insurance are easy. Most cities have an online property tax system where you can find the actual numbers. When it comes to insurance, you could get quotes for a few properties to get an idea of what your insurance payments will be.

When it comes to proforma for repairs, capex, vacancies I highly disagree with what is taught in the webinars at bp. You can't do buy and hold real estate small. One property simply won't cut it. If you pretend to deduct a whole lot of percentage numbers with just one deal, you will still lose at the end if your roof goes bad within 2 years of purchase. Like you said, the numbers won't pencil out. 

A way better strategy is not to account for your buy and hold income as a job replacement until you have reached 140% of your monthly expenses (freedom number). The reason for the 40% addition is to be able to cover the costs to keep your real estate operation alive. In the meantime when there are no repairs, you will be able to use the extra income to grow your portfolio even further. 

As an example. Let's say your "freedom number" is 10k. According to my calculation, you will be able to stop working as soon as you have reached a monthly income of 14k. After you have reached your freedom number, let's say the roof breaks for one of your properties and it costs you 6k to repair this roof. At this point it will be virtually unnecessary for you to sit on a mountain of capEx savings because you have 4k of extra income coming in each month. You use a line of credit or a credit card to pay for the immediate repair and have it paid off within 1.5 months. 

Let's say your operation is really going to hell in year 2020 and 6 roofs plus 3 furnaces go bad all in the same month (highly unlikely). This will cost you about 42k in total. You pay for those repairs with a line of credit and you will have paid it off within 10.5 months with your surplus money. If you follow this strategy you virtually can't lose and you have 40% of extra income that you can also use for yourself every now and then.

I hope you get the point, don't get hung up on capex etc numbers. Just don't plan to live off your rental income until you have reached 140%. 

I'm also an out of state investor. I agree with what most people already said. The one person that really makes or brakes your business is your property manager. Once you have found a good manager, treat him well and don't pretend that you are a big shot. Too many people that only have one rental property act like they are the most important account that the pm manages. 

The property manager does A LOT of work for the 7%-10% that you pay him. When I started out I told my property manager that I would buy a lot more houses in the area for him to manage and I performed on my word. Every once in a while a send him a gift card because I appreciate what he does for me and my family. Your PM will also have an "in" with local contractors and he can make sure that you are not screwed over.

Ask the property management company that you are planning to work with about the investment that you have in mind. Ask if they will be able to rent it out and how much they will charge in rent. In my experience, agents don't really know anything about the rental market. I bought a property at a bargain price in February through an agent. The agent told me:"The max rent that you will be able to get is $750 Dollars per month if you pay for utilities." She was a real estate agent of 20 years and claimed to have deep knowledge of the market. At this point I knew that I was able to take advantage of her lack of market knowledge.

Man was she wrong. I had this baby rented out at $1000 per month, tenant pays all utilities within 3 days. My contractor only painted the interior. Even better, the property appraised almost 30k above what I paid within 4 weeks!

The best way to learn is to buy one property and go from there. You will learn SO MUCH from your first deal. Also, It's not too late in the year to find renters. It will start to slow down in November and it's very hard to find renters in December.