All Forum Posts by: Paul Alphonsus

Hello Josh,

I am Tracy Bailey, AKA The PINK Realtor, and RE investor (commercial focus) here in the Indianapolis region. Currently I am on MIBOR's Economic Community Development Council where we get to learn and help fund non-profit organizations that are improving our communities. Currently Indiana is experiencing exponential growth and we do not have enough inventory to keep up with the demand. This is true for the region. I have attached a great website you should peak at for what is already set in place. Honestly, you can not go by Zillow. 1. They are only averaging estimates and not comparing similar properties/amenities. 2. Your local realtor associations are the definitive source of information. 3. Zillow is not attending planning, commissioner, economic and development meetings in each town or county. Therefore, they are not able to know what is going to happen 2 years from now, today. The items that are now happening in the Indianapolis region began many years ago. They are only NOW being talked about as shiny and new, when in reality, the projects have been in the works for a while. 

https://www.visitindy.com/meetings/why-indy/new-developments

link to the hot talks of today. Personally, the Indianapolis and surrounding areas will remain "hot and trendy" for a while as economic development is growing in the region. Hope this helps. If you would like specified market stats and growth information... that is conversation for set aside time. 

The rural areas of East Tennessee within 30-45 minute of major cities will offer you MANY cashflow opportunities. They might not exactly look like what you're envisioning. Buying land, putting a small house on it and turning it into a long-term rental is one system that I've seen working. There is a lot of dirt and a dearth of cheap properties available. 

I took some acreage that I inherited from my grandparents. It was a few minutes from a seasonally prime whitewater rafting site in Ocoee, TN. When I took possession of the property, I invested $45,000 in a tiny house, septic, electric and city water. That has cashflowed about $15,000 per annum so far. The land is growing in value, the property is paying for itself with cashflow and in three years it's pure profit. 

 You will need to have your agent pull sales comps for you. You also need to be able to estimate budget or send GC out based on "offer contingent on contractor walkthrough within x days of offer acceptance" in your additional terms & agreement.

Example of projects I do:

PP: 65k (adjust this number based on [ARV*0.7] - Rehab costs

ARV: 170k

Rehab: $45k

You will adjust your PP based on ARV and rehab costs to make sure the project makes sense. You can also adjust your risk tolerance based on the 0.7 to 0.8 number. I would not go beyond that.

 I used to bid on 30 properties a week at the auction in Franklin county in columbus ohio and have to analyze. I used to use an aggregate average of redfin, realtor.com, and Zillow. on average I would do all 3 and that would give me the closest. when I did my own comps I found redfin and realtor.com to be the two most accurate. if you want a better value I'd average those two. their algorithms give an average value. 

just notices that i tagged @Corey Conklin on my last post but i meant to tag @Paul Alphonsus 

It's pretty easy to find cash flowing markets today simply because there aren't that many left.

Most are in the midwest, and you'll be looking at Ohio and Michigan for the most part.

I'm a bit north of you in the Central Coast and I invest heavily in Detroit. I have 12-doors there now kicking off something like $16,500/mo in gross rents with more than half of that net cash flow.

I'm a big believer in Detroit and all the revitalization that's happening. But I'm also biased at this point with my portfolio and investing activity there.

The most optimal play in that market is to buy something cash, do some light rehab, and then refi out. You'll recycle a lot more of your money that way and be able to scale much faster.

 The partnership shows experience completing a deal. Conventional banks are going to want to see financials for 2+ years which I'm assuming isn't an option for you just starting out. So, when it comes to Hard Money and Private money the lenders look at 2 things: the deal and the ability for the investor to make the deal happen. Going in with no experience a lender is not as comfortable that WHEN you find something unexpected you will be able to execute. Completing deals shows you will get them to the finish line. Also, a partner with experience serves as a type of mentor as well. You are able to tap into both their knowledge and their network. If you work with a partner and fund a deal or two with them at XYZ BANK and are able to pay them off through whatever exit you decide. Now you can go to XYZ BANK and tell them you're experienced and are looking at this deal. They will be more inclined to work with you by yourself. Then when you have a few solo deals completed ABC bank sees you have a track record of MULTIPLE deals and will be happy to lend to you.

Often a request for all cash indicates the property is not financeable. Reach out to the listing agent and find out why they are asking all cash.

Then yes, hard money is another option to explore with a refi once the property is fixed. Play out the numbers and make sure you can afford the holding cost with a healthy buffer zone.

Note: talk to a lender and be sure you'll be able to refi.