All Forum Posts by: Ryder Meehan

@Craig H.Thank you for the welcome! I'm trying to wrap my head around the Macon market since I wasn't really planning on entering it but fate intervened and presented me with a SFR there and ain't she a beauty?

I'd love some local market knowledge - I'll connect with you on DM.  In any case, I'm excited to be in the market and take on my first major rehab and owner finance.

For those looking for my background and story I have that first but if you're just looking for the tips skip on down below, but know that you are crushing my soul =)

My Story

In 2010 I was living in a small apartment in central Dallas, TX with my then girlfriend (now wife) and cat.  At the time, my naive brain had no concept of buying real estate (not even for my own primary residence) but then came the "Obama Tax Credit".  Barrack Obama in his infinite kindness was writing checks for $8,000 and all I had to do was purchase a little house.

After 2 minutes Googling I was on Zillow.com, found a house I thought looked adequate, call the listing agent and saw it the next day.  It was a terrible house but when the agent found out I didn't have my own agent (shoot, I didn't know I needed my own!) he offered to show me some more.  2 houses later I made an offer that I thought was aggressive going $2K under their ask!  It went through and I was a homeowner - and also got some of that sweet, sweet Obama money - probably the first and last cash the government will have give me.

After living happily in my new home for 2 years I had rebuilt some savings after that down payment. I kept hearing that the Dallas market was going to be heating up, real estate was at an all time low and interest rates were insanely low. It made sense to my only slightly less naive brain. I called up my previous realtor, told him I wanted a multifamily house and he sent me a few from the MLS. I think we looked at less than 10 and put in offers on 2 and I purchased 1. LANDLORD STATUS UPGRADE!

Lucky for me the Dallas market really did heat up and rents shot up so that I was actually cashflowing well.  I live near by so had no probably management, took care of all lawn care and maintenance issues myself and kept costs very low.  I had walking around money!  Purchased at $190,000 (plus $15K in rehab) and after a year was renting at $2,625.  Do you ever look back at yourself and say "damn, I had no idea what I was doing but somehow it all worked out"?

Then, my wife tells me we are moving back to San Francisco.  Not sure how long it would last, I rent out my house in Richardson, TX and off we go (after responsibly finding jobs there first of course).

The real estate itch grows stronger but SF is not the place to scratch that itch, at least not for me in 2014.  So I call up the same old realtor, tell him I want another multifamily and go to Zillow.com myself.  What happened to my 2012 MF inventory and prices?!  I'm like, welp, guess I got to pay more this time.  I buy 100% occupied 4-plex downtown for $242,000 (plus $8K in rehab) and $2,400 in monthly rent.  A margin deal by my more educated standards today but I'll share later how I'm making it work much better now.  PIVOT, BABY, PIVOT!

Another 6 months go by and that damn itch comes back.  Fortunately I had the SF tech-sector income by this point so had some ability to scratch.  Call realtor, go to Zillow.com, oh lordy - what is going on in Dallas?!  Where did all the cap rates go?  My realtor tells me I need to live with 5-8% cap rates now.

Finally, I realized I needed to get more educated on REI so I got an Amazon Kindle Unlimited account as well as a Scribd.com account. I read probably 10 books on real estate investing and realized just how much I had been winging it. Now more informed, I still didn't think Dallas going to work with my 10%+ cap rate fantasies.

I started thinking about other markets and remembered I had a cousin who was a realtor in St Petersburg, FL. With her help I learned the market, researched rental rates and trends then picked a few from Zillow or Trulia or the MLS. then caught a flight out, looked at 20+ properties and put in low-ball bids on 5. I got 2 under contract then researched more. Finally, we went with a vacant $155,000 triplex that later rented for $2,225. Filling those vacancies was a struggle. Not because rentals weren't in demand or pricing, but because I hired a God-awful property manager without much vetting. He sat on it for 3 months without so much as a Craigslist post or sign in the yard despite my constant calls. Lesson: SCREEN YOUR PROPERTY MANAGERS. Even still I have a convicted felon living in one of the units they filled who is currently on bail awaiting trial for another case, the gift that just keeps on giving.

Earlier this year, I came to terms with the fact that the only reason I'm able to cashflow so well is because I'm not paying for property management which would otherwise wipe a lot of that out.  This also meant I was getting calls from tenants, handling book keeping and managing maintenance requests to local handymen (or more often my Pops) myself.  I knew adding more properties and tenants would stretch me even thinner.

Did someone say self-storage?  I went back to the Dallas market, but highly rural areas that were still unappreciated yet.  Then there she was a neglected 60-unit storage facility in Bonham, TX for $120,000 (that I would ultimately purchase for $100,000 with 5% seller financing).  It only has 10 units rented, I hope to post an update in a few months in the Successes Forum on this one, fingers tightly crossed.

And finally, just yesterday I went tri-state with a SFR in Macon, GA that a fellow investor needed to offload his books as long as I took care of the $2,335 back taxes. It will be my first remote flip and owner finance deal - another hopeful candidate for the Success Forum.

My Advice

• Do this ONE THING.  Screen tenants thoroughly and even more so property managers.  Do not take marginal tenants, even if it means having to wait other week or two to rent the unit.  Always do a background and credit check no matter what.  Always check referrals, especially previous landlords and employers.  Don't accept rude people as tenants.  If you have a well-maintained, nice property (which you should) then you don't need to settle.  98% of land-lording problems are due to poor tenant (or property management) screening IMHO.
• Go with markets you know or at least know someone in RE.  Little things will come up, you need at least one pair of boots on the ground to be there if only to drive by your house and confirm it's still standing.  
• You only get the profit margin you demand.  If you're willing to accept a weaker return, then you will get it.  Know what's realistic then go beyond it!  Buying a house is a big commitment with considerable risk, don't let yourself settle on marginal deals.
• Adjust marginal deals to become winners.  Going back to my 4-plex, since the cap rate displeased me, I am converting it to an AirBnB hotel with a local manager. My small 1/1 which was renting for $600/mo now earns $1,000/mo after all associated fees plus I no longer deal with any tenants as a bonus! There are lots of options in REI - rehab, sell, owner finance, AirBnB, etc. Be willing to get creative to save deals when you can.
• Managing remotely takes efficiency.  I needed tech to make it possible.  RentecDirect.comwas a cheap ($15/mo) and bare bones platform where I could track expenses, log rents, screen tenants, post vacancies and upload all my documents.  It's worked great for me though I know others like Appfolio are much better, the price is prohibitive.
• Advantages of being remote. The biggest is focus, I'm not wasting my valuable time pulling weeds or painting when I could paying someone $10/hr to do these types of tasks. Instead I'm using my time learning REI, networking with other investors and pursuing deals. Another advantage is that I'm less connected to the tenants which may sound cold but it's easier to make tough decisions when you don't know the tenant personally. Things like demanding late fees or not renewing leases to convert the unit to AirBnB become much easier to make, at least for me. A third advantage is that you learn to invest and manage remotely! Once I was able to handle Dallas remotely, I knew I could do the same in St. Pete, FL and Macon, GA. Now I can look at markets nationally and feel a little more confident in entering there.

Well that is my short list, I'm definitely interested to hear more from others going REMOTE.

I am living in SF and buying in DFW, mostly MF and self-storage.  MF is fantastic in Dallas but getting hard to find in the last year or two.  Still tons of opportunity, just a little more digging necessary.  My favorite MF book is still the BP Beginner's Guide for new folks (as was already mentioned).  This article is also a great overview for exactly what you want to do: https://www.biggerpockets.com/renewsblog/2013/04/0...

Oh and wow, and I didn't realize Dallas had so many REI organizations, way more than we have here in SF - more than anything network with the local pros as much as possible!

If your plan is buy and hold, you will always be better off with multi-family for the reasons already listed.  

The reasons to buy SFR would be to flip since they have the advantage of (1) a bigger pool of potential buyers - retail buyers (2) a bigger pool of inventor - in a lot of markets even finding a multi can be difficult.

I will say though that my SFR is much lower maintenance than my multi-family tenants who are more transient and less capable of solving any problem that comes up - i.e. change a light bulb, plunge a toilet. That's just my experience though.

Any other sources of referrals working well for you?  I want to come out marketing guns blazing the minute I take those keys!

Greetings BP Self-Storage gurus,

I'm a 5 year active multi-family investor and landlord but am closing on my first self-storage in about 30 days.  I picked it up for a song when looking for commercial as my bandwidth managing residential is getting stretch with my day job commitments.  

Here's the basckground: It's a $100K small, 60-unit facility that has been terribly managed.  Only 10 units are occupied and current on rent with just 1 move in the last 2 years.  Every other facility in town in 85%+ full.  It's run down - many of the doors are hard-to-impossible to open, it needs painting and marketing in non-existent.

I live in San Francisco and it's in Bonham, Texas so I'm hiring for a local part-time manager paid on a commission basis.  Maintenance is already schedule for the doors and painting so marketing and "features" are where I'm seeking wisdom.  Current prices are 20% below the competition.

 want to fill those 50 units and fill them fast at market rate.  Bonham is a small country town of around 10,000 people.  I'm thinking website launch, newspaper classifieds, Craigslist, Google AdWords geo-targeted to the city, a large storefront signage and building personal relationships visiting realtors, local businesses that might need storage and banks.

Beyond maintenance I could add features like security cameras, moving supplies retail, and graveling the area around the units - currently it's just grass.

Here's the advice I would love: when you take over a facility, what are the first things you do to promote it?  What works the best, especially if you are in rural and less tech-saavy market.  What features do you find most appealing to clients?  What should I plan for in the weeks leading up to taking the keys and what should I do after taking over?

Thank you!

Hi Brent, good thoughts.  About 50% of my equity is my initial down payment which is usually 30%.  I'm doubtful I can pull that DP out as equity - is that what you are getting at?

There should still be adequate equity there to draw on but not as much as I had originally thought.  $500K is probably a more realistic investment range than $1M then.

Agree that I can't pull the equity again any time soon but once every 5 years is better than none I suppose.  The cashflow on the small apartments I'm analyzing should be good enough to rebuild my DP funds for the next deal pretty quickly... or so I hope.

Hello esteemed real estate investors, I am at a point where I have a profitable portfolio of 4 multifamily properties with caps all around 10% and looking to double down with a small apartment building. My total equity based on my estimated appraised value is around $400k across all 4 with the most at $170 in a triplex in downtown Dallas. I would like to use this equity as a loan for the down payment of my small apartment building at a total cost of $1M so $200k down, plus I have $50k cash available as well. Has anyone had experience with using portfolio equity loans as a down payment? Do lenders allow frown on using equity loans as a down payment? Any advice or pros/cons would be most appreciated. Thanks Ryder

The bubble is coming!!!  Quick dump all your property to me at a fraction of what to pay to get out while you can!

Originally posted by @Anthony Gayden:

It doesn't cash flow much, but it does cash flow. How much do you think you would have to spend to get the upper end of comps? Also if you fix it up can you raise the rents to make it cash flow better? Finally would refinancing to draw out equity put you in negative cash flow?

Yep, I've been thinking of fixing it up but have been waiting on my neighbors to fix theirs up first haha!  Some places are totally renovated but 2 out of 3 in the area are still similar to the condition of mine.

I estimate $40K to repair and paint the siding, resurface wood flooring, update kitchens/baths, and other cosmetic fixes and updates.  If I did all this I might be able to charge a $100 more per month but the neighborhood wouldn't pay much more than that.

My only equity is really the down payment I put in.  I just closed on another property so I'm pretty leveraged, it would be hard to qualify for a refi until I can build up some cash savings again.