All Forum Posts by: Michael Strobel

On the first deal (I only have a duplex) you just have to be willing to jump and take a risk. Thats what REI is. A risk. Its extra scary the first time you do it. You can analyze to the max (you should still do that thoroughly) however you just have to tell yourself, Im going to do whatever I have to to make this work. Once you see from that lens:

-Figure out how you are going to finance/how much you can finance

-Find areas that you can see yourself succeeding, it can be different based on what REI strategy you use.

-Understand the first house you see most likely is not the best deal you will find. 

-KNOW YOUR BREAKEVEN POINT. You cant just throw a number out and hope to be profitable. Know your numbers and make sure you stick to it. REI is a business decision, not an emotional one.

-Commit to making the offer. If you see something you can see yourself being profitable in, ACT FAST because that deal might not be there tomorrow. 

-Build a team around you to help you for success. Talk to relators, other investors, learn as much as you possibly can as fast as you can. Use BP to learn more about other aspects within the strategy you choose. 

For rent collection I use the CASH app. Its great because all you need to do is link a debit card to your account and you can send money instantly (for a 1% fee) or next day (for free). Never have to worry about a check clearing or something getting lost in the mail. Its super easy for the tenant and for me. I get paid really quick.

I want to make it as simple for both my tenants and myself. I just bought a duplex a couple months ago and inherited a tenant. They have been a great tenant so far but my goal was to make paying rent be as easy as possible for them. My tenants are younger, mid 20's and have 2 kids so most likely, they have smart phones. I told them I wanted to use the CASH App. This app is great because its secure (the parent company is Square) and gives you the option for instant deposit into your bank account (for a 1% fee) or next day deposit for free. My mortgage isnt due till the 15th so I always do the next day for free option. Its been great so far. Eventually I want to get to something like cozy or another type of Property mgt software however for the time being this works really well. 

Both are pretty big risks. I would get rid of both. Before doing so Id make sure your source of heating both units is up to date and in good working order. Esp before the winter.

Not sure of the laws in MI but could you just put everything in you name and then just split whatever the cost is monthly for utilities and and add that to rent?

Thats awesome James! I always love hearing about other peoples hopes and dreams when it comes to REI. Honestly, long term, all I want is to have 10-15 rental properties that are paid off by the time i retire. Im not looking to stay in corporate America forever though. I def want to be a buy a hold investor but I think diversifying REi can be really good. If Im able to partner on a flip I will. Im doing research right now on Direct Marketing campaigns in order to find better deals. Im in a really stable market where multifamily deals are hard to come by. But in the long term I def want to be a buy and hold investor.

How many properties do you currently own?

If over 4 what ways have you broke past the loan requirements only allowing 4 loans?

Hi James! Wow thats great information! Thanks! 

I was paid up front at closing for prorated amount of this month's rent and the security deposit. I've put the security deposit in another account just to be safe! I'm going to double check with some local investors that Im in communication with to see the laws where I'm investing. Because my closing costs were less than what I negotiated the seller pay for I get to receive that money back. Its not a ton...a few hundred bucks. But still the fact that I didn't have to pay a dollar at closing is pretty great. I didn't have to tap into my reserves and can use those now to bring the units to market expectations in order to get the most rent possible. 

And for the next few months (at least till I find my next deal) I'm pretty much living for free. 

Do you focus on buy and hold properties?

Hi BP!

So Im a newbie. I dont hide it. But today.....I just closed on my first deal. Oh...and I got paid to buy the house. Yep I closed on the house and got paid a check (over $1500) to buy it. Its a duplex. Its in a quite neighbor hood, not too bad of schools yet close to stores/shops and restaurants. And the house is in good condition. Didn't have to put 20% down because I utilized the VA loan. Bought it for $146,500. Negotiated the seller to pay closing costs and 1/2 point to lower my interest rate to 3.25%. Total monthly mortgage is $820 w/ taxes and insurance. One unit is rented on a 2 year lease (only 4 months into the lease) And Im moving into the other. The unit that is rented is bringing in $650/mo. (probably $50-$100 below market rents). I am going to have a roommate live with me and pay me $300/mo.

So Im going to be bringing in $950/mo while Im living there. Covers my mortgage. Im doing 8.3% vacancy rate ($79) 5% for repairs ($48) and 5 % for Capex ($48). Total monthly expenses =$175. So I have to pay $45/mo to live there. So people might not have taken this deal. But Im a newbie. Ive read books, listen to podcasts and each of those things encourage to just do it but make a calculated risk. Thats what Im taking. See Im already on the lookout for my next property. My hope is I can find one by May. Move into that one. Charge $750 for the unit Im current and bump my income from $950 to $1400. Easily covering prop. mgt if I choose utilize it. The property will cash flow. Which is the only reason I bought this. See my first deal will nearly allow me to almost live for free. I have a good salaried job that will allow me to save more money over the next few months so that I can buy another property by May.

Getting started is scary as ^*$#@. This house was not the best "deal" as BP and other investment books encourage you to get. I pretty much paid market value. Might not have been the best thing but I had to jump in. When I realized the property cash flowed, at around $145/mo per unit (when both units are rented at market value) I just said screw it and jumped in. Im meeting with other investors in the area and learning how else to find great deals. But in the mean time, Im learning how to landlord and learning from others and building systems to make this into a business. This time will be very valuable as I start my REI career. This is just a step towards the goals where I want to be in 15-20 years from now.

My encouragement to those thinking about getting started....you just gotta jump. Yea...its scary. But to finally start chasing what Ive been dreaming about for over 7 years in my case.....theres nothing as exhilarating like pursuing your passions.

Thanks Mark! I really appreciate your input. There are a couple things that I think I can use as deferred maintenance in price negotiations. The windows are original to the house...house was built in the 1950's and the tenants currently put up clear windpaper to prevent drafts from coming in the house. Its a fairly simple house so there arent any elaborate windows. Just simple square ones so I believe I can use that to my advantage in negotiating the price to get below retail. But thanks for your advice!

That was some really good ideas Jeremy Pace! This property has fairly new AC units, water heaters and roof but both units have very poor kitchen flow so one thing I was going to do was to gut the boxy kitchen and open up a wall in order to give it more of an open floor plan which should add some value as well.