All Forum Posts by: Michael K Gallagher

@Tom Vanderlinden don't worry about deals falling through, especially if it didn't appraise.  Just stay consistent, if you are looking for deals, review deals, 1 a day, 5 a day, whatever works for you.  But I'd say to start with one, and track it, and stay consistent.

At 1 a day, thats 365 deals looked at in a year.  If you make an offer on 10% of those, thats 36.5 offers, and if you get 5% of those offers accepted thats 1.8 deals a year.

I'm personally curious to see what happens in the next 3-5 years with commercial spaces.  Is this forced "remote" workforce going to finally show companies that they don't need to hold or lease huge amounts of office space to keep their teams productive.  Will but curious to watch what happens when leases in the next year or so come due.  

Hey @Account Closed welcome, and very impressive that you are getting into this so early. I'm jealous.

Now I am not a flipper, so take this with a grain of salt....this is more just how I'd personally look at the situation with the info you've given above.  

- are you doing the work yourself?  If so how experienced are you/how involved is the repair?  If the repairs are things you do all the time and are comfortable with then thats great but if this is the first time you are working on a house I'd build a hefty cushion into your budget for errors and mess-ups.

- If you are using a contractor, consider it your job to manage them, document everything in great detail that you want done and expect, and hold them accountable.  There are tons of great articles on BP about how to handle and make the experience go smoother with contractors.   Might also be a great place to connect with an impeccable contractor in your area.     

- Don't forget to plan for taxes coming out of your profits.

- Have a plan B exit strategy....if the house doesn't sell or won't sell for how much you'd like what then?  Are you able to put a renter in it and will it cashflow?  

- Don't get so fixated on the profit, this is your first one, its probably going to go sideways, if you break even I'd consider it a win.  Think more about what you are going to learn and how it will help you in the long run.  And then if you make a profit thats the icing on the cake. 

- Don't be afraid to bring in an experience partner in your area.  Perhaps there is a flipper in the area that would advise you, or help you make connections or maybe just helps you see a solution you wouldn't have seen yourself....and bring them in on equity in the deal so they have skin in the game.

Good Luck! and keep us updated on how the project goes!     

@Andrew M. First of all both having W2 Jobs will for sure help securing traditional mortgages. I believe traditional personal mortgages top out at 10 doors? don't quote me on that but there is a limit, as I understand, on how many "traditional mortgages" you can get. However, don't let that deter you. As we talk about all the time on BP small local banks are a huge partner for REI like you. So in the beginning years I'd be looking at building relationships with the local credit union etc.

If I understand correctly you are looking to invest with Turnkey Providers?  If thats the case one of the best providers in the country is "Memphis Invest" so if you have not heard their BP podcasts I highly suggest it.  If you are going to be investing turnkey, you really want to understand what you are looking at, and looking for when buying from a provider.  There are obviously some amazingly honorable and well managed providers out there, but there are also some really sketchy ones.....cough cough....Clayton Morris...cough cough.  So I'd encourage you to find a provider that shares your values and goals to make sure you'll be aligned.  

Not knowing too many details about your market, your cashflow goals seem reasonable and well thought out.  Other cities or markets that you may want to look at are Cleveland, Columbus, Indy, really any decent sized mid west city seems to be a great place to get some long term decent cashflow and appreciation.  

If you are interested in Columbus I'm happy to talk specifics, numbers, details, locations etc, but thats about the only location I'd have any hard data on.   
  

@Ronnie Huckaby Welcome! As a a manufacturing engineer, and by no means an I a REI expert, I can tell you that with your education and thought process you are already about 10 steps ahead of most people when it comes to the analytics side of this biz. I think two super ground breaking books for me as an engineer is #1 "the one thing" by Garry Keller. Totally makes you see that this is really "just that simple" if you run the numbers, run the models and stay focused. And then obviously if you have not read "rich dad poor dad" it's a must!

Good luck!

@Patrick M. Fascinating read, thank you for sharing!  Are you seeing similar situations in NJ?

@Chelsea Wallace If it were me, I'd do the renovation, and push the rents up to even over what is currently on the market, and I'd make it a 2 year minimum lease.  This, in my opinion does two things, 1, sets the standard and expectation that you are an amazing land lord, that has top notch service and has an elite property, and 2, it simultaneously sends the message that you demand the same from your tenants.

Now obviously there's a risk you won't get the higher rent, but as long as your numbers work out at the lower market rents, theres no harm in trying to push them in my opinion.

Doing the renovation I'd encourage you to determine what your "break even" point will be on recouping the cost in rental income just so you can track it, and it might help you decide either way.  I'd also consider the "education" factor in this decision.  Even if the numbers don't work out perfectly to make the renovation "worth it", if you are going to do the work yourself, and its the first time doing a renovation of this type there is inherent value in the skills and tricks you'll learn doing the renovation that could help you in other investments down the road. Now, if you've already built a house from the ground up there's obviously no need to consider that.

Good Luck! 

What an amazing question!  I'm only about 2 years into this RE journey at 31 years old, so my "practical goal" if you want to call it that is to own 5 duplexes exactly like the one I currently own, use them to pay each-other off and own them free and clear, have a bunch of long term Bad A** tenants and that should net me about 100K/year in passive income.  I have no doubt I will get there, should probably put a timeline on it and see how fast I can get there.

The "reach" goal would be 100K/Month passive income.  That puts me at about 120 doors according to my last calculations, I believe.  

@Lee Burns here is one that I've done recently.  

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I'm in Columbus OH so prices are substantially lower than where you are at.  I notice in most of my numbers I'm really guessing at the rehab budget, but I figure if I go on the high side and the numbers look ok, then I'll rerun them when I can get a contractor out there to look at it.  I don't know enough to be able to estimate well yet.  I also use it to judge where the rehab needs to be.  So it may not give me a good representation of cashflow right away but it can help you set up a rehab budget prior to seeing any bids so that you'll know if the project is even feasible to fit inside your numbers.  

@Mark D. I'd hang onto it, especially knowing that the Hospital is coming and that the FL RE market is historically very strong.  

Alternative income streams being close to a hospital could include "furnished finder" for attracting traveling nurses when the Hospital is up and running.  Perhaps residents/nursing students become a future target market for tenants.  So perhaps take a negative cashflow for the first couple years and then you are able to use a shorter term solution like renting to traveling nurses to demand a higher price and cashflow it at that point.  Plus I'm partial to a long long term view, and when the property is paid off even at $2200 a month, that's a decent amount of income to build into a retirement plan.  

If you plan on making further income property purchases being able to borrow against the equity in this property can help you fund those deals and in the future you can always leverage the cashflow from those to help pay down this property. 

Bottom line, I'd view it from a very long term lens and see if it fits in a plan that works for you.  At the end of the day if you keep it for a year and it's not working out for you or your situation changes or a deal comes along you want to jump on, you can always sell at that point.