All Forum Posts by: Nathan Platter

Hi Mike,

The most often used search criteria are (local) immigration, unemployment rate, income growth, housing affordability. The less-but-still used criteria are Crime stats, Section 8 frequency, and Municipal investment.

(Local) Immigration - Properties Appreciate when more people want to live there.

Unemployment - If tenants lose a job, they need to find something quickly and that pays close to prior income levels.

Income Growth - Are businesses investing in this area? Are entrepreneurs setting up shop? 

Housing Affordability - Can the residents even afford to buy if/when they want to?

Crime stats - is the market even safe? Do people go out after dark? Are households wanting to move and live in this area?

Section 8 - this state-run program caters to households who earn more than poverty line yet still struggle affording rent. Class A areas usually have lower Section 8 tenants for the area.

Municipal Investment - Does the city spend money in this region? Are they trying to boost the overall appeal by spending on bike paths, clean lakes, hiking trails,... Or is the city letting this area fall and allow litter and trash in the gutters?

Would love to see where you buy next!

Hi Marc,

Smart move on pursuing your first deal! The first one is always the hardest, and building connections (realtors, lenders, property managers,...) is all part of the process.

Assuming you buy a Turnkey rental (minimal repairs/touchups before leasing) the bank will want you to provide 25% of the appraised value. Assuming you do this deal solo without other investors, I'd recommend capping your investment search at $200k since you can always negotiate down.

I personally buy properties where I can foresee the investment being sold relatively easily. If the building has an abnormally tiny lot or zero off-street parking spaces, selling to the next owner will be more difficult.

Would love to hear your next steps!

Hi Shannon,

In my opinion, consider refinancing (or HELOC'ing) your SFH and taking the equity and deploy it on rentals. The equity is stagnant in your home but it can be used to generate income, create tax benefits/writeoffs, and potentially appreciate in value.

I prefer multifamily apartments (5+ units) but you will generate more profit/unit with 1-4 units.

Would love to hear what you decide to do!

-Nathan

Whichever way you decide, acquiring a residential investment property (non-homestead, 1-4 units) will require 25% equity in today's markets.

Seller Financing works great if you need to build up reserves for that 25% or if you can add value/improvements to the property before obtaining traditional financing.

Most often, sellers who carry the loan want to reduce or delay their taxes for another year, so sell the owner on that benefit.

Ultimately, the seller wants to take the money and go, so be sure to listen to his reasons why they may want to carry the note shorter than you'd prefer.

WOuld love to hear how this deal concludes!