All Forum Posts by: Paul Hillyard

In my understanding, it really depends on the area. And probably more than that, it depends on your goals.

In more stable areas, you are more likely to find lower cap rates (which means less cash flow), and in less stable areas, you are more likely to find higher cap rates (which, of course, means more cash flow).

It's not all bad, though.

(Excluding <5 unit properties,) The total value of your multifamily property increases as cap rate decreases. So an apartment complex in Tampa, for example, that cash flows 2% of its value per year, doesn't really flow what a complex in downtown Detroit might flow (let's call it 8% just for giggles). But it will likely have a much, much higher value. It's a much more stable asset.

On a personal note, my cash flow end-goal is $10,000 per month. If, after analyzing the financials of a property, I am confident that it will always cash-flow positively (because the debt is long-term, the rate is fixed, and the balloon is either inexistent or super long-term), then it helps me reach that goal. I'll have that property, my kids will have that property, and if I teach them well, maybe they'll teach my grandkids to have it, too.

So for me, I probably give the cap rate a quick look, and if I know the cash flow is within 1-2% of this "expected" number (and again, I am confident it will always cash-flow positively), I am personally not worried about per-door cash flow, because I can manufacture that by improving the property, and...well, getting paid to wait, because I chose my market carefully.

Your agent is wise and honest. Keep him on your short-list.

One super quick, super high-level (but honestly a really good start) way to research the "quality" of an investment area, particularly (but definitely not exclusively) for multifamily, is population growth.

My favorite site to check this is worldpopulationreview.com. It takes a minute to learn how to navigate, but you can narrow your search down to cities. WPR lists the 500 most populous cities in every state, as well as tons of data on population growth. *I highly recommend starting your search by state, not city.* That higher-level data will give you more perspective. But you can just use the search function if you want.

The reason this is such a good metric, if it wasn't obvious, is that increased population yields increased activity...more people means more money from the state, county, city, what have you. More money means more businesses, homes, apartment complexes, jobs, which in turn brings it full-cycle, inviting more people to the area and repeating the whole thing (Hello, increased rents! Hello, equity!). Be aware though, diminishing returns do exist...

I'm a real-estate greenhand looking to do his first deal. I'd really like to network and find people with some experience, and it's a super-bonus if you've done deals via seller finance or sub-to...I am confident in my ability to acquire good deals, but I would really love some different perspectives on what to do with them once I've acquired said property.

I've waited and learned, and waited and learned some more. I am just really ready to stop waiting and *do,* so let me know if you'd like to collab!

I enjoyed it myself! Can't wait for the next one. Got an interview with Jacobs Engineering, hopefully I can land that and start flowin & goin

If you're not coming to this meetup, you're missing out big time.

@Isaac Pyle good deal, man

@John Teachout so if you find issues during this inspection, how do you make the now-gone tenants liable?

@Isaac Pyle There is a lot of solid advice already, and I agree with the majority - read and learn everything you can for sure. But don’t think for a moment that BP is the only resource you can use. I have spent a wealth of time on YouTube (yes there is a BiggerPockets channel) and have learned a great deal.

Also, I saw that someone said you’ll probably need ~$20K to get started. In fairness, I haven’t done my first deal as of yet, so this may be true and I may have wasted 2 years learning about creative real estate investing. But I don’t believe it is. I think it was Phil Pustejovsky who first separated the convention of real estate—an investor must first have a lot of money, then he can spend that lot and make more—from the truth about real estate, which is this; the more you know, the less you need.

This may not be for you, and I understand if that’s the case. But, as an unemployed college graduate of 2 years, I highly recommend it to you.

Check out Phil Pustejovsky (Hour+ video, be advised, but it’s very worth it)

https://youtu.be/lSXGxOiRp7A

Check out Kris Krohn (Focus on his “compassionate finance” videos)

https://youtu.be/GGPpZm_A964

Check out Graham Stephan (You’re probably already familiar. He is the king of penny pinchers man)

https://youtu.be/smvvTw5GhyM

https://youtu.be/ukaWAjgkH9M

No mater what you decide, best of luck to you Isaac!

Hi everyone, it's Paul again!

Before I get started, let me just squash this bug up front; I am doing a lot of research and leg work myself. I promise you, BP is not always the first place I look for all the answers. So please, if you're here to tell me I need to figure it out myself, I am trying. Pick a different website to troll.

Now for the good stuff. I am in the North Houston area, but a lot of services (e.g. tax advice) can be provided remotely - so no matter your location, if you've got a recommendation or a review, shoot! What I'm after is a team who'll work together on multiple real estate deals - not just one instance of "I need your services" and done. Who they are:

- CPA with gratuitous knowledge of the tax code, who is not afraid of the words "real estate investor." Seriously, this is the most important piece of the puzzle. I do have an initial call set up with Tom Wheelwright's Wealthability network, but I refuse to be close-minded. I know there are hundreds of savvy tax-pros out there, I just don't know their names yet!

- Real Estate Lawyer. Not just someone who can help me form LLC's and cover me on closing/title issues, but someone who also has prior experience with real estate investors and knows how to draft great real estate contracts.

- Insurance Broker. It's important to have someone in my corner who will CMA in terms of home insurance!

- Lastly, Real Estate Agent. Once again, it has to be someone who has prior experience (or even better, primarily does deals) with real estate investors. There are a lot of agents out there who just hang up halfway through the word "invest." But I'm fully aware that with the right agent, the symbiotic relationship is just plain powerful.

If you think I'm missing something, you're probably right so please let me know. I feel like this is a big ask, so please know that I really do appreciate your time and effort!

Rick, thank you so much! I have heard convention after convention of “20% down payment for investment properties” and I guess it’s got me good & jaded. This is an enormous tip for this newbie!

Hey everyone.

I’ve been into Kris Krohn’s videos on his “modified” lease option method for some time now. I just got off the phone with a private lender, and we’re trying to figure out...

How does an investor manage to put something as little as 5% down on a property?

Obviously a down payment this low is incredible for cash flow on a lease option, but how is it achievable?

For “regular” lease option deals, where I’m assuming investors put 20% down, does the investor intend to collect an option consideration that covers his original down payment?

Burning questions. Thanks in advance, BPers!