All Forum Posts by: Noah Chappell

I would try to BRRRR or house hack. You may not come out positive on your first deal, I'd be satisfied breaking even with a good stabilized property in the end. In a few years if you find your return on equity isn't great you can always sell or exchange (tax free if primary residence for 2yrs or 1031) & move it somewhere more productive. I'd say main thing is jumping in while paying attention to fundamentals of deal analysis, & you're likely to do just fine.

I'd look at your property, fix broken things immediately, then take inventory of what cap ex is on the horizon, such as new roof, furnace, windows, etc. You can then plan on how much to put aside monthly for cap ex, while putting aside a fixed amount for ongoing repairs (ex 7%), admittedly arbitrary. If you plan on a new roof in 7yrs that will cost 10k, 10k/7/12 = $119/month. Do this for all cap ex. Your initial home inspection will alert you to what will need to be done. 

Depending on the level of rental, I'd try to make your property as tenant proof as possible. An older property without dishwasher/garbage disposal/central air/laundry will break less than one with all the amenities. 

Just some ideas. 

Agree with above. 

If tenants have been smoking inside the damage has likely already been done & your options are to either renew if everything else is ok, or not renew leases & try to mitigate this by cleaning/replacing carpets, cleaning/painting walls - can be a pain. 

If the deal is really sweet maybe it'd be worth it to sit & wait out a year long lease if you're otherwise breaking even. Otherwise you might just look for month to month specifically to make things easy. Careful to review leases, some specify greater than 30d notice must be given, just something to keep in mind. 

Not too much more to say that these two haven't said, great ideas. 

To take a different angle, you could house hack. You could buy a cosmetically distressed duplex in San Fran for ~$850k-1 million with FHA & your 60k as a DP (look at lending limits), then rehab it to force appreciation, rent out the other unit & live cheaply, then sell for a profit, or save then move & repeat, or stay put & refinance to buy another property, or stay & just sit on the equity. That's what I would do.

@Nathan Roberts is right, lots of ppl talk about Kansas City. 

@Jonathan Beaumont I would suggest not taking anyones opinion or going on word of mouth, but instead investigating what makes a strong market, & identifying where to invest based upon those criteria. 2 good places to start would be Milken Institute best performing cities 2018 (look for best performing large & mid sized cities), & markus & millichap 2019 multifamily North American investment forecast (chart of city cap rates). 

Good luck! 

@Mark S. You are very right, thanks to Mayo that is one of the hottest markets in MN, thanks! 

I've also asked myself if it would be worth going to a more peripheral market for better cash flow. Eventually I went with the old saying "location, location, location", & decided if you're in this for this long term you're better off buying in a great market where you'll have appreciation & cash flow over time than be stuck with a bunch of junky properties far away. 

You could also compromise & buy in places like St Cloud/Manketo/Rochester/Fargo, which are all on the list of Milken Institute Best Performing Small Cities 2019 & in which you could find similarly priced properties in locations with good market forecast. 

I'd read Brandon's books "rental property investing" & "investing in real estate with no and low money down" to get a basic foundation & understanding of the mechanics before starting to look at properties. 

👍!

Even in the midwest a 50k house is likely to be in a very rough area. This isn't to say it'd be a bad investment, but likely management intensive. If you'd like to focus on this type of thing from a distance, I'd spent a LOT of time getting your team (prop manager, contractors/handyppl, real estate agent, etc, etc) together before even looking for a property, as this will absolutely mean your success or failure.