All Forum Posts by: Ray Johnson

Thanks @Ozzy Smith I've noticed that as well with the neighborhoods when trying to analyze by zip code, they become a very mixed area of Asset classes within the same zip code.

@Ozzy Smith Are you seeing good opportunities still available in the Class B product in Dayton? 

SFR and Multifamily. Do you have info on which zip codes or neighborhoods you prefer or looking at for opportunities?

Can you share your links with me? 

@Brian Gerace Will the property still cash flow if you held the property and cashed out the equity? If not, maybe selling the property and 1031 into a better asset in a lower cost area that hasn't seen a big increase in prices but can get you more cash flow than what you are currently getting.

I know some of our California properties have increased 150%-300% in prices since 2010, we probably won't see this type of rapid price increases again.

@Clay Gradis Conrgats on getting into the Multifamily space. You mentioned knowing the cost before we take on deals like this, What caused the increase in cost, Was it changes on the interior finishes versus what you originally planned or projected to install? Were things discovered during the rehab that weren't a part of the original inspection or quotes you received from your contractors?

@Shon Drennan We need more information to help with advice. If you Buy-and-Hold, How much is the rent for the property? Like @Greg Dickerson mentioned selling it retail may be an option for you.

How will you be purchasing the property, Cash, Loan with 20% down, Move-in while rehabbing using 3.5% Owner Occupant Loan?

Below is just a basic workout to give you an idea as to what to look for when making a decision. To make it simple I did this as a Cash purchase, the profit numbers get smaller if you have a loan in place as a part of this equation. These are mock numbers for rent since I have no idea what the rent is in your area. Other options are you can do a cash out refi, or a HELOC to get your cash out if the ARV is at $190,000

Update us and let us know what the numbers really look like beyond the purchase price and rehab cost.

@Jason Yarusi Thanks for providing good info! I just sent you an email.

@Jim Edward Walker The number is definitely achievable, It just depends on your plan and how you plan to execute it.

Because you have a 9-5 job, you will need to dedicate time outside of work to get mostly there, this means you will basically have a part-time job starting your Real Estate business, this is where I've seen many fail due to lack of discipline or not wanting to give up that playtime, treat it like a paid job. When I started investing I dedicated a minimum of 3 hours in the evenings on weekdays, and up to 8 hours on Saturday and Sunday, searching for deals, visiting properties, running the numbers, analyzing deals and neighborhoods, etc..

I would go to the local Home Depot in the morning before work and after work every few days, and on Saturday mornings to take pictures of the Contractor vans that had advertising/company Brands on them, then research them online, I did this to build a list on contractors that I would use to get quotes for rehab cost once I found a property.

In addition to getting on Wholesalers list, get on all of the public sites like HudHomestore, HomeSteps, Homepath, Redfin, etc.. and setup alerts on your phone so you get instant notification once something comes online.

Get practice analyzing the deals that come from Wholesalers, most of those deals will not pencil out with good profits but it will give you practice gathering Comps, pricing rehab cost on a project, etc. Do the same with properties on the MLS, most of these will definitely have little if any profit unless you're getting short sales, or old listings nearing expiration.

Depending on your financial situation, you may not have to purchase one property at a time to get to that 20 property target, You may be able to purchase Duplexes, Triplexes, Quads, or if you really have a decent down payment, a small multi-family property like a 6 unit building can be mixed into your portfolio to get you to that 20 unit target quicker, also you may get some deals that are more than $100 per unit in cash flow.

I see you're in Tennessee, I was in the Nashville area looking at properties late last year near Vanderbilt University, I didn't find any good deals but I was told I needed to get further outside of the Nashville area to get the deals. I only invest in heavily populated areas so I had to pass on the Tennessee suburbs.

That's the other thing, define your business model so you don't waste time in this process, the more you have planned the easier and faster things will go for you.

Good luck! 

@Pramod Yash Like yourself, I come from the Institutional side of the business where financial modeling and IRR templates are the least of your concerns.

It looks like you're trying to learn the Asset Management and Financial Sales side of the business is that correct?

If you're going to do the "Intern for free" route, I would suggest going to one of the larger REIT's or Real Estate Private Equity firms where you can work on a few different teams. Since what you're wanting to learn is typically handled by different teams in the office it's difficult to get everything from one Mentor or team.

@Kevin Charles what @Chris Tabanico says about scouting the area is key if you're out of state. I previously made the mistake you're currently doing buy looking at Zip Codes online. When I travelled to the area, I would see a nice house on a terrible block or neighborhood. One property was in a "nice" area but if I drove three blocks in any direction I was in the hood with Corner boys hanging out putting in work.

Now I connect with Realtors on the ground that know the neighborhood well, I also always ask about their network of Property Managers, number of General Contractors in their network (so I'm not waiting for a GC to finish one job before they get to my property), if they regularly deal with Out Of State Investors, etc...    

@Jamie Garcia I've never purchased with them but everything they are offering is way overpriced, It's clear you'll have to do some hard negotiating, and that's on the older assets to start, the new construction Assets are even worse, a projection of $661 month cash flow on a $750K property is terrible, and since it's new construction the expenses aren't seasoned yet and expenses never go down as a new construction seasons.

I say negotiate hard on the older product and let us know how it goes.