All Forum Posts by: Ryne Ray

Hey there everyone! Trigger-shy newbie investor here. I have been a long time lurker here on biggerpockets and thought I would share my biggest roadblock to investing in that first deal. Maybe you all can help get me over it, as I imagine some others may have the same fears. 

For a long time I have been analyzing buy and hold deals with 8% vacancy, 8% property management, $1000/year in repairs, insurance, property taxes, and of course mortgage. I thought these to be conservative numbers. I had no problem finding houses in my area that were in safe neighborhoods, and had good potential for appreciation. These houses also gave off a tiny bit of cash flow or broke even after all my "conservative" numbers. 

However! I recently read an article on the bigger pockets blog by a well respected/accomplished investor, talking about capex numbers that just destroyed any potential deal I look at. It was suggested that on buy and hold properties you would need to set aside $3088 a year for capex. When plugging in these numbers, I cannot find any way to break even or make positive cash flow short of buying the house all cash or putting 40-50+% down. 

Now this article was to steer people away from the 30k houses in the rust belt. However I can run numbers anywhere in the country at any price point and they just don't make sense. 

My question simply is this. Are these realistic numbers? Am I missing something? Is this just the market we are in. I know I want to get in to real estate as my retirement vehicle one way or another, so I will put more down on a mortgage to make it cash flow if I have to. Obviously I would just rather not. Any insight would be greatly appreciated. Hopefully there are some others that can learn from the wisdom you guys will no doubt lay on me. 

Thanks in advance!

This is Huge! I've been looking at investing in KC, and am a blind out of stater. Thanks for taking the time to make this list @Chris Dawson!

I always see alot of houses on auction.com or hubzu that I'd like to buy. Nothing would kill a deal like liens I didn't know 'Id owe. 

I am also curious to this. I'll take it a step further and ask about cash only auctions. Can you use hard money as your cash?

Thanks,

Hey everyone,

I've got about 30K to invest, and am really intrigued by turnkey properties. Having looked at all the various TK companies in different states and cities, it seems buying 2 houses at around the 50k price point would be most advantageous in terms of cash flow. 

My concerns are the exit strategies for turn keys @ that price point. Being a new investor, I don't have prior data to go off on the appreciation history of rundown neighborhoods. I would love to be able to exit a house in 5 years and turn the appreciation and cash flow saved from that house into the down payment for 2 more. However, Im not sure that 50k houses appreciate. When I look at those neighborhoods that have houses in them selling for 8k or even lower next to my 50k house, at best I assume it will stay at 50k forever. What makes that area any different then Detroit people are just leaving by the busloads? Maybe an area that has consistent job growth will help raise the values of even these lower priced houses? 

So what is everyone's exit strategy for cheap turnkeys? Do they just buy and hold forever and keep saving money from their cash flow and 9-5 job to add more houses for passive income in the future? 

This is my second post and must say I love the community here on BP and thank you all for taking the time to provide great insight for us new people browsing every day. 

-Ryne

@Daniel Flemingyes sir, I will keep you in mind.

@Doug Johnson Yea as a person just getting into the game, I don't know that I would be able to properly evaluate a wholesaler's deals. I've used sites like myhousedeals, and I didnt seem to find anything that seemed necessarily worth it. I think I will look out of market for the time being. 

How are you liking Frisco? My dad bought a house up there in 2012 and its value has skyrocketed. They can't build houses fast enough up there it seems.

@Alexander A. Hey alex, What markets are you in? Ive seen alot of people going into memphis, chicago, kansas city, atl, and indianapolis. Mostly because of the people on bigger pockets that provide turnkey opportunities there. Any favorites?

@Joe Fairless Thanks for your input Joe. Congratulations on your successes in real estate! I have looked at Marco's turnkeys and really like what is offered. That is likely the route I will take. 

Thank you for all the replies @Todd Plambeck@Scott Beck. I will start looking at other strategies as I knew it was a long shot in this market to have lower offers accepted. 

@Doug Johnson I love the idea of out of state turnkeys myself. I think Dallas is a great place for appreciation but that is always speculative.

Hey @Ned Carey,

Thanks for the welcome and the reply. 

From what I understand of the Dallas market, I should have no problem cash flowing paying full market value. My reasoning for the initial equity was to provide myself with a little bit of a buffer should the market go bad.

As far as upsetting people, I guess I will just have to find a realtor that will be okay putting in low offers until I'm able to myself.

-Ryne

Hey everyone, 

I've been a lurker on bigger pockets for probably about a month and thought I would finally introduce myself and maybe ask a few questions. I am loving everything bigger pockets and the community has to offer. 

I have listened to a lot of the podcasts and read quite a few books at this point, and think I have narrowed down a plan for myself that i want to implement. Hopefully, by the end of the year I will have my real estate license so I can show myself houses and make my own offers. 

One question that I'm hoping to get some help on is making offers. I want to find rent ready properties on the MLS or sites that use the MLS (redfin,realtor,zillow, etc..) and make offers that are below market value. Being new to the game, I don't know if that would hurt peoples feelings, or upset realtors I work with. I know reputation is everything in this business, but I also think that if you throw enough mud against a wall somethings gonna stick. I would love to be able to dive into equity from the get go and rent the house out as it seems the dallas market has some pretty decent cash flow. Being that the d/fw market is as hot as it is, I imagine I'm going to have to make A LOT of offers to get something I want. Do you think it is doable, or do you think it would be damaging to a realtor's reputation or ultimately mine when I become one.

I originally thought about finding distressed properties, fixing them up and renting those out. However, I know nothing of construction and would rely heavily on a general contractor and a property inspector. It would be easy to lose money if they weren't very thorough or helpful to someone just getting in the game.  

Any insights or suggestions would be greatly appreciated as I am very new but learning and digesting as much information as I can.  

Oh and the housing price range I'm looking at is 100-150k.

Thanks, and I look forward to talking with you all.

-Ryne