All Forum Posts by: Mike Kehoe

Drive for dollars with an app like Batch Driven or Deal Machine. 

Subscribe to PropStream and pull recent cash sales in the area. Most of the results should be flippers and buy and hold investors. Skip trace the list and start calling. This is what we did when we started our business. Reach out if you have any questions!

@Kevin Sharkey my background is in payment processing before getting into real estate. Would you consider charging customers that use a credit card a convenience fee? There's out of the box solutions that you can use that would completely eliminate the processing cost for you, but tack it onto your client's invoice. 

If not, there are plenty of other options that are cheaper than what you're currently paying. Since you're taking card not present transactions, your all-in rate (per item plus percentage) should be 2.5% or so. DM me if you have questions. 

@Tony Scarangella my fundamentals and rules have stayed the same, but the locations that I invest in have changed. I live in Chicago and used to invest here, but now invest in North Carolina. 

I find deals that make sense from a cash flow perspective in the tertiary markets of Raleigh/Durham and in Greensboro. 

Raleigh and Durham are appreciation markets and are difficult to cashflow in, but we're still able to through creative acquisitions strategies. We're willing to take on other people's problems in exchange for a discount. For example, we take on squatter/bad tenant issues regularly. The worse the situation is, the deeper the discount we'll require. I cut my teeth in Chicago, where eviction laws are extremely tenant-friendly, so the landlord friendliness of NC makes an eviction or cash for key's situation feel like a walk in the park. 

My advice is if your market no longer works for your fundamentals, find another market that does. Also, get creative and figure out how you can add value to sellers by relieving their stress in exchange for a discount. 

@Alicia Tingey Geddes I'd strongly consider living in Raleigh-Durham, NC, and investing in the great tertiary markets in and around the Research Triangle. The Triangle offers a great quality of life, no matter your hobbies or interests. Personally, I'd choose the Old West Neighborhood of Durham to live in because of its walkability to restaurants and shopping. Durham has great culture and vibrancy. Either way, depending on where you are in the Triangle, you're only about 2.5 hours to the beach and 3-4 hours to the mountains. 

Regarding investing, you can achieve the 1% rule or better and BRRRR with a low barrier entry in cities like Burlington, Mebane, and Greensboro. The Research Triangle and surrounding areas hit most if not all of the markers you look for when underwriting real estate markets.... population growth, income growth, house value growth, crime trends, job growth, business-friendly state, landlord-friendly (some areas are not as friendly as others).

PM me if you have any questions! 

@Chris Orlob I have a similar background as yours but went full-time into real estate a few years ago. 

Real estate is an excellent way to diversify, grow wealth, and mitigate taxes (assuming you have passive income from your tech startups). 

Investing passively as an LP in syndications is the way to go for you. 

You should spend the extra 10-15 hours per week reaching out and networking with General Partners of multi-family, self-storage, and industrial syndications while educating yourself on how syndications work. Through networking, you'll learn a lot about the different verticals and will begin to prefer one over the others. 

I'd pick one or two operators in the vertical that you like and do some background research on them. Then, assuming the background research checks out, I'd start to educate myself on their real estate vertical. You want to know how to evaluate and underwrite deals in the vertical to understand what you're looking at and ask the right questions when an opportunity is presented to you. 

Yes, this is a lot of work upfront, but as long as you document your findings, you'll have this information for the rest of your life. Furthermore, I think that you'll find that the information learned and the people you meet will help you in your tech startups. 

After selecting the suitable GPs, evaluate their opportunities, and make your first passive investment. 

Hope this helps!

@Zackarias Aitchison my partner and I invest and wholesale in North Carolina while living out of state. My business partner lives in Napa, and I live in Chicago. Neither of us like the markets we live in from a real estate investment perspective because of the tenant-friendly laws, taxes, and migration patterns.

We researched a lot of markets before planting our flag in North Carolina. Among other resources, Neal Bawa's Best Citie's For Real Estate Investing free course on Udemy helped us analyze the different markets.

Once you find a state you're interested in, I believe in niching down to a specific MSA. So we analyzed all MSA's in North Carolina and built relationships remotely on Bigger Pockets with boots-on-the-ground experts in each MSA that piqued our interest. The experts were active SFH/small MF investors, Flippers, Property managers, and realtors.

We then spent four days in NC, visiting each MSA and getting tours from the experts we met on BP. We extracted as much of their market knowledge as possible (neighborhoods, zoning, land use opportunities, buyers, sellers, etc.) while getting a feel for the market from our perspective.

We eventually chose Raleigh-Durham as our launch MSA. PM me if you want the details on why. Our original third partner (we bought him out of our business) moved there for a year and worked full time at a property management company while being the boots-on-the-groud for us part-time.

All of the research we did up until this point was with the intent of building a single-family and small MF portfolio. However, after we solidified our market selection of Raleigh-Durham, we found it to be more competitive than expected, and we had a tough time finding a deal that met our investment fundamentals. In addition, we felt that opportunities on the MLS and those sent to us from wholesalers were too inflated and were usually sold quickly with multiple bids over ask.

Frustrated and wanting more control, we started marketing directly to sellers to see if we could find deals that made sense for our investment principles. After a few months, we found that we were really good at marketing to and speaking with sellers. However, we were getting too many opportunities to handle, so we started wholesaling them to other investors.

A year and a half after sending our first marketing campaign, we pick up a property or so per month for our portfolio, but we're almost solely focused on wholesaling. We're now getting two to three properties under contract per week and growing. We're now in two MSA's and plan to expand to other MSAs in other states soon. We have a team of seven, with three of the seven in-market.

I think you can replicate our OOS success with any investment strategy, even as a flipper. However, unless you can visit your OOS market twice per month or so, I think it's imperative to have someone with boots on the ground that is compensated for performance or is an equity partner in your business or deals. Finding the right person for either option isn't easy, but it's doable.

This has gotten too long, so reach out to me if you want my suggestions on finding the proper boots on the ground partner. On a high level, be VERY picky and kiss many frogs before you get into any partnership.

My pros of investing OOS

• Live where you want, invest where it makes sense
• Forces you to have tighter systems and processes
• Easier to scale
• Get to travel every month or so
• Easier to look from the top down
• Sharpens your communications skills

My cons of investing OOS

• Not able to be there, interacting in the market on a day to day basis
• Harder to build close relationships with partners and vendors
• Lack of visibility
• Vendor selection is harder
• Market knowledge takes longer to obtain

@Matt Lyons ahhh, good for you. I would have done the same thing if I was in a county that could get it done that quickly and inexpensively.

No way that timeline is happening in Cook county, which is extremely tenant friendly.

I always feel out cash for keys before proceeding with an eviction in Cook. It’s usually way less expensive and quicker.

My process depends on location. I invest in NC as well, and my first step there is the formal eviction process because it’s landlord friendly, quick and inexpensive.

@Matt Lyons how long did the eviction process take from the time you didn’t accept payment and how much did the whole process cost?

From the sounds of it, this tenant won't respect a text or mail reconfirming that he needs to be out by April 1st. Most likely, April 1st will come and go and you'll be in the same situation you're in today. 

The Chicago eviction process is awful. It's long and expensive. I know from experience.

Be active in your communication with this tenant. If you don't want to meet him in person, tell him that you're out of town or have something that prevents you from meeting in person and you need to talk over the phone. You need to know what you're dealing with, opposed to waiting until April 1 to find out he's not moved out. 

Text and mail is too passive.