All Forum Posts by: Michael Ealy

 I agree with you Jay.

Specially managing "F's" - that's a full time job.

Good thing when you go with Multi-Family, specially with 50 units and above, it can afford a full time PM so I don't deal with the tenant drama anymore!

Carlos,

I understand your frustration. Finding good deals nowadays is a lot more difficult than in 2009.

Here are some of the things I do to find good deals:

1.  I work with a few wholesalers - the really good ones. I require them to find me deals that are NOT on the MLS. One of the guys I work does 300 wholesale deals a year. That's how good he is. This guy does so much business though because he is not greedy like a lot of wholesalers out there.

2.  I work with title companies - they know I am a cash buyer. I tell them if there are deals that could fall apart at the last minute that they should let me know. They know I can close so once in a while I get a sweet deal when the buyers can't close.

3.  Drive around B & C neighborhoods looking for vacant homes - you know the tell-tale signs: tall grass, broken windows, etc. Then look for the owner, and call him/her.

4.  Work with your city and find a list of properties with CODE VIOLATIONS - Then send them a postcard or if you can find the phone number, give them a call.

5.  Work with Property Preservation Companies - these are private companies hired by the banks to secure foreclosed properties for them (change the locks, board them up, etc) prior to listing them on the market.

 Chad,

My answer is - I usually renovate the property before I rent it out so no. 

Value add is definitely more complicated and if you don't know what you're doing or you don't have a good team (contractors, GCs), it's riskier. However, value add is where the MONEY is so you need to find properties you can turn around.

You can buy a turnkey property but keep in mind the money has been made and you are there to convert your Capital into an income stream. 

When I acquire a property, I like to not just get an income stream, but I like to multiply my capital as well.

Chad, 

Cashflow is just one aspect of the over-all profit of the deal. 

"A" areas tend to have little to no cashflow but great appreciation

"B" areas tend to have more cashflow and some appreciation

"C" areas tend to have very good cashflow and little appreciation

"D" areas tend to have a lot of cashflow with headaches and NO appreciation

"F" areas (warzones) have mind boggling cashflow, mind boggling headaches/hassles and negative appreciation by the time you factor in inflation

Investing OOS is risky when you chase that 1% rule buying in "C" areas which are really "D"s or "F"s. 

Personally, I like to force the appreciation through quickly solving the problems of the property and/or doing value add improvements. MF investing is better in this regard than SF (I've done both). 

Here's an example:

https://www.biggerpockets.com/forums/311/topics/64...

 James, 

You need to know what you're doing before jumping in.

Here's my experience with a 48-unit apartment. I made over $1M but it's a lot of hard work and to be honest, this deal could have bankrupted me...

Below is the story told with the good, the bad and the ugly :)

https://www.biggerpockets.com/forums/311/topics/64...

Either way could work but you need to analyze the numbers to see which option makes more sense.

Cheaper properties could lead to more headaches as they generally attract lower end tenants. Pricier properties though, the cashflow is lower but the appreciation is generally better.

Use the calculators here on BP, learn the numbers and invest based on them.

Will Bank of America think twice about NOT filing their foreclosure papers with a borrower 90-120 days late on their mortgage payments? 

Are you willing to manage your rental business as a business or a hobby?

If you can't do what BoA does, then you're not treating your rental properties like a business.

As Warren Buffet would say "An investment becomes a great investment the more 'business-like' it becomes". 

There's a lot of drama with rental properties specially if you don't get good tenants (and even if you get good tenants). After acquiring over 1,000 units, despite having the best PMs in my area, I still get some bad tenants go through the screening process. Here's my story on my 48-unit, the drama, but in the end, we got over $1M profit (so it's worth it!)

https://www.biggerpockets.com/forums/311/topics/644570-how-i-made-over-1-million-on-1-deal-after-6-years-of-headaches

Yes anything is possible if the numbers make sense.

Tell us the numbers for the 14 unit. Purchase price, current NOI, proforma NOI, cap rate, repair cost, etc.

Does the 14 unit have a big vacancy?

Why does the seller want to sell/close quickly?

Congrats @Walter Anderson on this first deal.

You learned a little and took a lot of action and that's how you learn a lot.

To do BRRRR, I suggest you seek out/learn how to fix properties. In this way, you are able to add value. Also, if you don't have the cash to buy a property out right, you need a good hard money lender as part of your team. HMLs lend on properties that need repairs/not liveable. You can't get conventional financing on properties that need a lot of work.

Buy using hard money (and some downpayment)

Renovate the property to add/increase value

Rent to good tenants with the help of a good property manager

Refinance out of hard money into conventional loan

Repeat because now you get your downpayment back (and hopefully a bit more)

Good for you and congrats @Mark Burlison!

I am a landlord myself (but I also do other things like wholesale, fix and flip and now, hotel developments).

Here's a story of how I made over $1M on one property. Hope this inspires you.

https://www.biggerpockets.com/forums/311/topics/64...