All Forum Posts by: Michael Lucero

Your pre-screening efforts seem more of an enjoyment/detective work, though hard to believe in this day and age, it is still possible to hide your info from google searches. Just because you can't find anything doesn't logically mean there is anything wrong with the guy. Doing these searches doesn't provide much value because you're still going to have to get an application and run a credit/background check where you will find your answers.

 You may have to get uncomfortable and go out of those cities to find cash flowing opportunities that have a decent return.

There is no way this thing sells for 407k. The road to actually closing on this property is far off, may not go to auction and if it does, will go for more. 6 beds is like a hotel, very management intensive and who would want to live in this style of housing other than students. If you find 6 random people, I would think the quality of tenant would diminish.

Use those connections, make more connections, find a few REI groups/books, and find the niche you like! Good luck!

the problem is that you are thinking about whether YOU feel like you are taking advantage, which is backwards. You should be concerned with you making the right moves to secure a better future for yourself and family if you have or will have one. Dont waste your emotional energy on guessing or assuming or feeling like you are wasting anyones time. You do what youbhave to do and let the other person figure out id you are wasting their time. Who cares what it seems like you are doing, you either are and the agent will stop working for you or you arent and they will work with you.

You should start finding an agent now, that's part of building your team and building a relationship/rapport. You don't pay the agent anything, they understand their compensation is based on commissions of real estate transactions. You shouldn't be the one determining if you are wasting their time, they should be, and they will let you know if they are, either by telling you or ignoring your emails/calls lol.

It depends on a lot of factors, but at the end of the day, I couldn't care less what the backstory is, as long as she can currently pay rent and not destroy my property. So I would ask myself, can she pay rent prior to her job starting and can I prove that she actually has the job and will start when she says she is; I'd look at her current bank/investment accounts, and outstanding debt. I also like the fact that she worked 4 years while going to school and now has a job, that is impressive compared to what most people do. If she has some money to pay the first few months of rent before she gets a paycheck, I'd probably go with it. 

Other things to consider are, are you inundated with a lot of other eligible tenants, or is she your only option? Is your state landlord or tenant friendly if you have to evict her, or do you get the feeling that you would have to or would she just move out if you asked her to after not paying rent? Can you get someone to co-sign with her or not? What is her personality like, do you get a good feeling from her, can you "trust" her?

To just put it out there, I don't think starting an LLC provides any value in your position, other than to make it feel like you are taking action. I understand it's a first step and that's good, but what I think you should first do is get an idea of where you want to end up in real estate investing, fix and flips, rentals, wholesaling etc. To answer that question, you need to download a few ebooks from real estate investors and read them. This will give you a high level overview. Also attend local real estate investing meetings in your area. Then once you know where you would like to end up, you can create a step by step plan to get there, then every day work towards taking one of those steps to reaching your goal and over time you will get there, along the way you may also realize that you end goal is different than when it started. Basically, start taking action on things that will give you results, get educated while saving money is first.

Do you have any idea of required major repairs?

I'll try and answer this down below assuming what I think you are asking, but here is my thought process response to what you wrote just so you can see it. 

There is no one size fits all answer here, the return that people want is impacted by an almost endless amount of factors. It entirely depends on the individual and considers such things as how risk averse they are, are they looking for growth or capital preservation, what deals can be found in their area and are they willing to invest in areas out of their vicinity, etc. Also, the term "good" is WAY too general here and asks us to assume way too much. Do you mean factually a good return based on the risk/reward in comparison against stock market, start ups, the lottery, CDs, etc. Also, what a person would perceive as a good return can mean completely different things to various people. Someone who is a millionaire and wants capital preservation may want a 4-5% return to safeguard against losses, so that is an acceptable return for him and one he may consider "good" for that purpose, when he knows a 4-5% return is horrible in the grand scheme of things. 

Furthermore, are you asking for someone's input into what they think should be a good return for your business, because if so, you haven't provided any information. 

Based on your question and the fact that the question was written on a real estate website, it seems you are asking for a % that is generally considered a target, acceptable, "good" cash flow in real estate investing, which I presume is on a rental business. 

Note that there are numerous different cash flow calculation methodologies, but one popular calculation is cash on cash returns (COC). COC is basically your annual cash flow (revenue minus expenses), expressed as a % of cash investment. It's sort of your return on investment (but not entirely since it doesn't really include equity increases from mortgage payments, tax savings, and potential profit upon selling the house). Generally, a "good" return ranges from 7-15%, with 10% being the acceptable lower limit for a lot of people, 12-15% being acceptable/very good # to hit and anything above this is amazing.

When you are considering investments and businesses, you think of the returns you can get in other markets, investments, and the risk and effort it takes to get that return. Think of the stock market which has historically returned like 8% or something, yes it has risk, but requires little effort if you are a passive investor. Therefore, most people would probably want a higher return than the stock market if they are going to go out of their way to do real estate investing which takes energy and time. 

At the end of the day, just make sure you are at least cash flow positive (you make more money than you spend on expenses) when you are getting started. Yes there is a cost to becoming educated, but that doesn't mean you need to lose money, but rather, the cost of learning may just be the difference from a goal 10% return and what you actually get 2-7% return, but you're learning.