All Forum Posts by: Ryan Stumbo

 I respect your honesty. Trust me, I'm not chasing the deals. I gave the realtor my offer but two of them now wouldn't even submit the offer because they said it was "lowball" .. Then when I sent them market comparable rents, with the CoCr rate and what price it would take to give me a reasonable return, they did not respond. I'm pretty strict with how I invest my money. Especially when I feel I can make a crap ton in Crypto right now, I have no desire to blow money on real estate just to look cool. 

Also, I don't feel a deal is going to be easy to find. I'm more about putting out fair offers in comparison to rent/return rates, and seeing if anyone bites. The worst they can do is tell me no is the way I approach life. This goes for about everything I encounter haha. Admittedly, I only have 3 properties, so I'm not hotshot expert in real estate yet, but I'm learning more daily. So it sounds like you're saying most deals on the MLS are not going to be where I get my deals. So where do most people get good deals, just through connections or chasing down leads?

1) I am open to both. Initially I preferred multifamily because more cash flow and quicker, but judging by the overpriced multifamily properties in this market, maybe single family is best for me.

2) on my other rentals I had a trusted inspector/contractor walk the properties with me. My goal here was to hopefully  get in contact with another and a good contractor can usually see subtle signs of a poor foundation, poor plumbing, electrical, etc. So age doesn't matter to me as long as contractor sees no major red flags, but obviously everything is sort of a risk until you bust open walls.

3) Not a priority.

4) You are right on the metrics. I definitely will never go 0% vacancy. I have used 2% for when trying to calculate for good areas, and if it's newer or recent repairs obviously the maintenance and cap-ex I will decrease the percent also. So I'm willing to lower or raise numbers depending on certain qualities of the property, but I don't think I'll ever use 0% on any of them, because that's going into a property preparing for only the best case scenarios, when in my opinion you should always prepare for the worst case.

5) agree with you on the fact you should run your numbers based off long term rentals, just because you never know when travel nursing may slow down or short term stays might slow down. I prefer to do the numbers based off worst case scenario which is I have to rent it out to someone long term and the short term rentals take a dip.

6) agree totally. I am totally open to fixer uppers and am inclined to agree with you there is more value here. It's just hard to find fixer upper multi family properties so it looks like I'll have to do single family for a little while in this market.

7) I am open to BRRRR. I have actually already used this on one rental. Your questions will help me focus in even more on what I'm looking for. Thanks a ton!

1) I did the calculations with what my return would be after my required 1 year of living in the rental.

2) interesting conclusions you reached with saying I'm not willing to do a value add. I would like to know where I wrote that. I simply brought up MTF property that I liked and thought the area was ok and how the price was outrageous and the realtor told me it was a great price. Even with value add, that's irrelevant to what I said about it being a -50% return though. If you're getting a -50% return it's a terrible deal, and my question was asking if there's something I'm missing in this market on real estate with these realtors both saying "you don't understand that market" when I tell them I like a property but not willing to pay the list price. Now had they said "well that's overpriced but they aren't going to come down to the price you need to make it a good CoCr" then I would just move on. But it seems 2 realtors in a row tried to steer me into bad deals or making an offer that burns me. Maybe let's address the moral compass of some of these so-called realtors out here before we go wondering about other things. (not saying all realtors operate this way, but this is about the 5th shady occurrence)

3) the price doesn't matter. I have plenty of money to throw down on some properties, but I'm not going to blow it just so I can say I'm a fancy pants, big-time investor in Phoenix..lol I prefer to make money, not look cool to a group of people at a dinner table.

4) these specific properties were on the market for over 100 days and list price hadn't changed at all. So that was also part of my confusion as to if I'm missing something with my numbers/market. Clearly others saw it was overpriced or something about the deal was off or it would've already been bought. I am perfectly content doing value adds/fixer uppers/single family over multi-family at this point due to the outrageous prices on multi-family. 

Also, I know I stated 8% earlier, but with this market I would do 5% simply because of the growth I expect overtime. But I also like the idea of what one person said on this post which was they don't do a deal unless their CF is going to be $500 a month or more. That's a pretty good standard to go by also.

Let me try to respond to all your points. As far as my goals, I don't really have any picky standards outside of needing my money to have a higher return rate/similar return rate than what my stocks/crypto are doing. For example, if I can invest 80k in crypto and get 20k within a year (25% return), why would I go take 80k and throw down on an investment property that gets me 1% a year. So CoC return to me is very important. I know you say it's not specific enough, but I mean the overall goal with my investments is to make money. Obviously you have to know the pockets near Phoenix that are considered good areas to know how much your average rents are (which RentRange and Bigger Pockets both have helped me find good rent numbers).

So as far as my needs/desires in a property

1) CoC Return 5% or greater

2) Location not poor since I want to do long term rentals and also rent to travel nurses (since I am one). No travel nurse wants to rent in a dangerous area where their cars will get broken into. I know the travel nursing industry pretty well so I know what travel nurses are willing to pay on airbnb, what's considered a good price, etc. So Location needs to be average-good.

3) I can do a fixer upper, again, if the estimates I receive to do the contracting work still give me a good CoC return, then I'm cool with a fixer upper.

4) I'm more of a long term holder. Even if I use it for STR and do airbnb, I still am not the type to want to take a property, fix it up, then sell it back quickly. I am looking for financial freedom and steady monthly CF. So this rules out any flipping in my eyes. I am not interested in flipping.

I am a new investor also as I have 3 rental properties total, so bear with me if I'm misunderstanding some of the acronyms and phrasing. But I think here I have given enough details for a realtor to point out some good deals for me havent I?

@Account Closed I understand exactly what you're saying on the one part of your response! It really does seem the realtors want me to just be happy that I'm an investor now and just be happy I got a property, instead of actually making money. It also seems some investors have this attitude as well. They are just happy to have a property but they use no math at all when buying something. I've also had 1 realtor down here keep using the "Cap Rate" every time he tries to explain a deal to me, when everything I've ever learned on real estate investing is a cap rate isn't really a good picture for a property. I've always been told CoC returns are your #1 number you want to look at when evaluating a deal.

 No Problem man. I just posted 1 of the 2 deals, but the 1 I posted was in the -40-50% range. I want you to do the math also to make sure something I've typed in doesnt seem off. But those are all numbers from the listing and basic investor math such as all investment properties I've always been taught you use

5% Cap-Ex
5% Maintenance
5% Property Management
3% Vacancy (in this market)

If there are any more numbers you need let me know.

But basically rents $1300 per unit in triplex (so 3900 total) with an FHA loan, MINIMUM amount to put down and it still came out terrible. As I said, let me know if I typed something in wrong or something looks off because all of these numbers are directly from the seller's listing.

Oh forgot Cap-Ex at 5% also.

@Account Closed are we allowed to post specific properties on bigger pockets and analyze the deals publicly? Lol If not no biggie, but this property in specific, I walked the entire property, looked in the units. Cute little units. Not the best area in Phoenix (Arcadia or something like that) but not the worst either. Realtor who listed it tried to tell me 775,000 for this triplex was a great deal. 

Here are the numbers in the listing per the seller:

Insurance: $1552 yearly / 12 months = $129.33 monthly
Taxes: $1351 yearly / 12 months = $112.58 monthly
Landscaping: $713 yearly / 12 months = $59.42 monthly
Maintenance: 5% of rents
Property Management: 5% but from what I've learned most property managers get 6-10% so 5 is actually generous.
Water/Sewage/Trash: $2362 yearly / 12 months = $196.83 monthly
Adjusted Gross Income: $43,789.69 / 12 months = $3649.14 monthly rent (three 2 BR units so about $1215 per unit it sounds like are the rents monthly currently)
Vacancy: 3%

FHA Loan at 3.25% Interest
.85% PMI rate
5500 Closing Costs Approximately
$27,125 @ 3.5% down payment on $775,000 property.

If someone has the time today to just play around with this on one of their apps or programs and tell me what the Cash on Cash % is on this deal and if it's the same awful deal I'm calculating? Lol I was told this was a good price by a realtor. And that I need to kiss it goodbye if I want to see a 5% return. So I'm like "why am I even investing here then if it isn't to make money? Just to say I'm an investor in Phoenix. Whooopeee!!"

I want to private message you the listing and let you type the numbers in yourself to make sure I didn’t improperly calculate something haha that’s how outrageous some of these deals are, but I’m pretty sure I typed in the properties exactly for what the numbers were. I had never seen a -50% deal on any other place I’ve invested, yet being told here I don’t understand the market. Still hard to believe I’ve had 2 realtors try to look me in the eyes and tell me that. Also had one try to tell me on a 2 BR, 2 Bath in a not so great area of Phoenix that I need to calculate my numbers based off 2k per month rent. I laughed at that one in my head.