All Forum Posts by: Michael Hastings

@Richard Biechler, the more I learn about Land Contracts, the more I love them.  I certainly know that many deals are available in almost all markets with some sort of owner financing, but land contracts are a special animal.  This a great way to waltz into a deal without a lot of banks lingering around, and the few deals I have been working on pulling together with land contracts, are all being sold by investors who have no special tie to the property (except the cash flow that it brings).  They also are OK with floating their profit into the future and taking it in installments (either accelerating the repayment or asking for a balloon at the end of an agreed term).

Congrats to you, certainly a lesson to be learned here is that accumulating property doors in bulk IS possible, in a short time period if you are prepared and ready to act!

@Brian Bellew, Grand Rapids?  Based on your current line of employment, I assume there must be some serious economic trends happing there that you see.  I wonder what you guys are seeing?

Hi @Ryan Barr, thanks for the explanation.  I agree with your assessment that the numbers have to work after you move out, but you can compute that on your own using Rental Property Calculators here on BP.  You wont need a specific agent for that (it cannot hurt, however, but not needed.)

@Jacob Barnhart, I have taken a stab at answering these questions.  I would note that the list of things that you "could" do before placing an offer on a property is exhaustive.  To avoid "analysis paralysis", I think many of these steps are not needed to just get started with property investing.  In an effort to support your progress, I have listed your questions and my answers under each.  I hope this helps!  One thing that you did not ask about was deal analysis, which I believe to be the main thing that has to happen before an offer is submitted.  Will the deal make me money and help me reach my investing goals?  The rest can be addressed as you go.

1. Determine vacancy rates in my town and that neighborhood specifically.

A = There are a lot of sources for this, but when analyzing a deal, I just use 10%, which is conservative for the areas where I am researching properties (people here use between 5% - 10%, could be more, depends on property, area, etc.)

2. Determine an accurate insurance price on this property.

A = Call a local insurance agent and ask for a quote, tell them you are interested in buying property at xx address and need info. on homeowner's insurance.  I have never had an insurance agent refuse.

3. Determine an accurate property tax.

A = Most counties have tax information online. I checked and your county (Bryan County Treasurer) does have an online site to find property taxes by parcel #'s or addresses. Also, Zillow has this information on the MLS listing itself.

4. Determine crime rates for the area.

A = Unless you are buying in a high crime area, or in a city that you know absolutely nothing about, I am not sure how important this information is. I was born in Madill and know your area well, I would guess there are only a few pocket areas in SE Oklahoma where this would be an issue.  You can get this info from local law enforcement websites.

5. Determine if you want an LLC, other asset protection, or none.

A = I think this step is something many new investors spend too much time on. I say skip this and just buy a house, in your name. If you get to be a person who needs asset protection, and your assets or monthly income gets huge (a good problem to have), you will find an accountant or attorney to help with this later. Also, know that an LLC does NOT always protect you from law suits as a property owner, as is written here on BP often.

6. Set up a checking and savings account and possibly another savings account for security deposits.

A = Have a separate checking and savings account for your rental deposits and expenses. I use bank accounts in my own name, others may be different.

7. Create/Gather all forms such as lease agreements, rental applications, acceptance letters, denial letters, move in/out checklist, pet policy, lead paint disclosure, rules and regulations, deposit receipt, legal notice to pay or vacate, legal notice to comply with lease, notice for landlord to enter property, instructions for move-out, disposition of deposit.

A = Get a property manager and they have all of this stuff.

8. Visit the neighbors and see if what they think about the neighborhood, or just to meet them to see if they are decent neighbors.

A = Nothing wrong with doing this, but is not always needed. I don’t even know most of my own neighbors, and I live in a great area in South Denver.  I see this as an important step when rehabbing property for flipping, as they could give some history of the property which could help you when making an offer.

Let me know if there are questions, glad to answer.

@Matty Bee, I think more information is needed.  For example, what price are you paying?  What part of town is this potential in?  How much in rent are you planning on collecting? What will the expenses look like?  The deal has to be analyzed to determine if the property is a good investment or not, and there are some other facts needed here to help you get responses, in my opinion.

I can help you analyze the deal if you add some details.

@Keyonte Summers, welcome to BP. If you want to know the easiest way to get started, I suggest you use "house hacking" to do so. Get approved for a mortgage (use the FHA program, only 3.5% down) and then go and find a multi-family property that you can move into one unit and let the tenants in the other units pay your mortgage. This is the most simple path to get going, and there is a lot of information here on BP to help you with this.

Just search the forums under "house hacking", get the details and make it happen.  If there are additional questions, let me know how I can help.

@Dylan Eck, not only can this be done, this is exactly what I am working on now, in the inflated Denver, CO. market.  Get the book on "House Hacking" from @Ben Leybovich, he discussed this exact topic and gives a blueprint on how to accomplish this.  

Hey @Ryan Barr, I am going to take a stab at answering this.  You posted a few questions, I will break them down:

1.  "would it be wise of me to search for, network and ultimately select an agent? I am only interested in this 1 property for the time being AND it will be my first deal; which is why I don't envision agents wanting to give me their best deals."

A = If you are asking if you need to have a buyers agent to help you find and select a property, which you have already been approved for financing for, I see no problem with that.  But, I note that you state you are only interested in this one property, so I would then ask what is the need for an "investor friendly" agent?  Note that unless you want to work specifically with a buyers agent in your market, you could use zillow or redfin or realtor.com and the like to find a property you are interested in and contact the listing agent.  This to me, is personal preference.  I see Buyers agent as necessary if you need assistance with seeing a lot of properties, help with financing choices, have questions about the area where your property will be and want someone who will be working to help you close a deal.  This person does not have to be investor friendly, for one deal, in my opinion.

2.  While we're at it, without utilizing an agent, what are some other ways you guys find deals in your marketplace? I have considered cold calling duplexes for rent in my area and asking if the owner would be willing to sell their property, as well as using the county assessor's office.

A = That is one way, there are tons. You can search the forums on BP to get ideas on how to find deals. Most use the MLS, wholesalers, realtors, other investors, networking, telemarketing to owners, mailing to owners, door knocking, lenders, driving for dollars, probate sales, auction sales, craigslist, oh the list is exhaustive. Find one that you are comfortable with, and work it. When I was new to investing, I found what agent was selling foreclosures for the banks in my area, and got friendly with them. They forwarded me deals that fit my criteria. This is when a investor friendly agent would be needed.

Hope this helps!

@Ida Powers, to answer this question "would it be a bad idea just to find a normal at market priced house on the MLS to live in currently and then rent out", I assert the answer is no, it would not be a bad idea.  The concern would be that you will seek a home that is going to be great to live in, but will not be great as a rental due to the price point.  It would be wise to analyze any property you want to buy as if it were going to be a rental immediately, that will help you land on the correct number that you should be buying a property at.  Further, if you are willing to sacrifice some comfort, knowing that you are going to buy and hold the property when leaving the area, I would say that it is possible.  

My first investment was a SFH that I lived in in Oakland CA, in the not so nicest part of town, that I was able to rent out after I moved out and into a duplex. The SFH tenant paid for the mortgage and left me room for cash flow, so, it is possible.

I like @Justin Taber's idea of looking into multi-family properties, as the prices for one in Columbus are reasonable, and you may be able to get a double (or triple) in which tenant # 1 (and/or tenant # 2) would pay the whole mortgage note.  I have been thoroughly researching properties in the Columbus / Dayton / Cincinnati areas for a few months, so I know this to be possible.

Good luck!

@Krish Das, hello, I note that the questions you pose are pretty broad, and the opinions of people here on BP to these will vary.  There are tons of threads and blog postings here on BP that address opinions on the best markets for flipping, buy-and-hold, wholesaling, etc.  I have been reading these for months, asking myself the same questions you pose, seeking some magic answer.

I finally realized that the best situation has to do with my tolerance for risk, my ideas about appropriate returns and how much time / effort that I wanted to put into my real estate business.  I agree that Denver seems inflated, but there are still a lot of options available for investing, and right now the appreciation on properties is great city-wide.  

I have a SFH in Denver, but like you, I have been seeking buy-and-hold opportunities in the midwest, as the point of entry is lower and the cash flow returns are healthy. But, I chose a city to invest in on my own, after reading as much as possible about an area's housing prices, crime reports, industry, jobs, education opportunities, demographics, population growth (or decline) and economic outlook for about 25 different cities in the midwest.

Fact is, you gotta do your homework.  Use the search tool here on BP to find a list of cities that may be good for RE investing and start investigating (Cities like Nashville, Birmingham, Cleveland, Kansas City, Indy, Dallas, St. Louis, Buffalo will come up often).  I would advise to look off the beaten path, as there are a LOT of cities besides the common ones out there (big and small) that have GREAT opportunities for real estate investing.

Good luck, and if I can answer any direct questions, please let me know.