All Forum Posts by: Michael Gulinello

Welcome aboard. Many markets available. Cleveland is the one I am most familiar with and it's also very popular with investors across the USA so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides those listed above. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Google Clayton Morris scam and/or Morris Invest scam for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $68,000
Cash invested: $25,000
Sale price: $125,000

BRRRR:
One (1) 3bed/1bath & one (1) 1bed/1bath duplex
Purchase Price: $68,000 , Rehab: $25,000 Appraised Value: $125,000

Early estimates, performed better than -
Monthly | Annual
Income: $1,900.00 $22,800.00
Mortgage Pay: $615.60 $7,387.18
Vacancy (5%): $95.00 $1,140.00
Management Fee (7%): $133.00 $1,596.00
Property Tax: $241.67 $2,900.00
Total Insurance: $133.33 $1,600.00
Maintenance Cost: $150.00 $1,800.00
Other Cost: $20.00 $240.00
Cash Flow: $511.40 $6,136.82

What made you interested in investing in this type of deal?

Power of BRRRR investing.

How did you find this deal and how did you negotiate it?

Found on Hubzu when it went to auction as a REO.

How did you finance this deal?

Cash and line of credit.

How did you add value to the deal?

Flooring, paint, lighting, HVAC updates, plumbing updates, new kitchen cabinets and appliances.

What was the outcome?

Returned near 100% of capital and property cashflows over $500 per month.

Lessons learned? Challenges?

Have contingency plans for when budgets grow.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Sheldon Zimmerman and Slatehouse Group!