All Forum Posts by: Samir Ali

@Jon Crosby thanks for your response!

I agree that the margins are way thinner than what I saw a few years ago. Paying top dollar for a property and probably not getting much, if any, equity at the time of purchase doesn’t help those margins either..

Part of me wants to be okay with lower expense estimates, given the fact that they’ve got data to back up average vacancy rates (below 3%), maintenance (below 4%), average lease time (5 years), but at the same time I have to remind myself that these buy and holds are long term, and my cynicism says Murphy’s law is unavoidable!

Although, building equity on a tenants dime + appreciation (or speculation, lol) are other added benefits.

Hey BP,

Been working with MI/REI Nation as the general bp consensus seems to be that they are a reputable and well managed/respected turnkey provider. I'm looking at some pro formas they've provided and running my own numbers and wanted to get general thoughts...

They claim their average rent to price ratios are around .7-.8, well below the 1% rule.

Basically, their historic data is used to justify low estimates for expenses such as vacancy, maintenance/capex (4%).

The resulting cash flow looks appealing ($2-300/month).

Their justification is that since their rehabs are robust, since they replace typical capex items (I.e. roof) and since their average vacancy and maintenance rates based on historical data are so low, the lower estimates are feasible from an roi/cash flow calculation perspective. The resulting CoC is 10%+.

My guts telling me that their estimates for expenses are really low. When I increase them, the cash flow number is wiped out, and CoC dwindles to just a few %.

Simply using the 50% expense rule, you can tell that cash flow is also minimal.

Do y’all think that based on the “white glove” service that they provide, coupled with historic data trends to back up low expense estimates, that an investment like this could be feasible? Or am I doing myself a disservice if using low estimates?

If it was another turnkey provider I’d probably pass, but I know a lot of investors use them. I’d like to think that part of this is the “cost” of your sanity using a company that does all the heavy lifting for you. At the same time, with price to rent ratios so low, how is anyone making a decent return unless their low expense estimates are truly accurate (which I know, is a gamble, right?).

Has anyone else used this provider, or a similar white glove type service? If so, how are your returns?

Appreciate everyone’s time reading and helping guide me in the right direction for my first investment.

@Kris Wong thanks for the tip, been meaning to checkout meetups. 

@Jordan Moorhead good strategy..personally doesn't fit my lifestyle! How's it going? How many units does your building have or are you just renting out rooms?

BP,

I’m an Austinite looking to network with local investors.

My primary strategy is out of state SFH turnkey, so anyone local with experience- I'd love to talk you and pick your brain!

Also open to hearing about other strategies, goals, and generally discussing real estate investments, etc. Let’s help each other learn, grow, and be successful!

Samir

As a young professional (mid 20s) I’ve spent my last 5 post college years working my butt off for a large corporation. I’m finally at a point where I have a good amount of capital saved up and have done enough research to where I feel comfortable taking my first step towards financial freedom, hoping to eventually escape the rat race, help my parents retire, and set up my family for future success and wealth (I know, how noble of me!). 

The goal of this post is to provide a bit of context on where I’m at and what I’m trying to accomplish. I’m hoping to get advice and reassurance from this great community to help me execute, as I know that wisdom comes from experience, something that I admittedly don’t have in the real estate space (yet).

I'm leaning towards getting into SFR turnkey rentals for all of the obvious reasons (low capital required for entry, less time intensive since I still work full time, etc.). Specifically, I'm looking to invest out of state as the financials don't necessarily make sense in my current market of Austin, TX (some markets I've identified include Memphis, Cleveland, Missouri). I understand the basic concepts of deal analysis and important metrics (CCR, cap rates, IRR, etc.) and am also leaning towards using a property management company. I have a very good friend who is also a loan officer, so leaning on him for financing advice and best practice has been invaluable.

While I can overcome the first widely conceived barrier to entry (money), I find myself hesitating to pull the trigger. I’m nervous about making the wrong decision, using the wrong approach, or investing in the wrong market or property. This is all natural, I presume, for anyone taking their first dive into the business. 

What are some of the best practices that have helped y'all be successful? What do you wish you would've known when you bought your first real estate investment? What major implications of going the out of state SFR turnkey route should I consider or be aware of?

I know these are loaded questions and I’m not looking for every detail. I adamantly believe knowledge is power, and I understand that it’s my responsibility to continue to do the research and leg work to make this endeavor successful. Instead, this is geared to sanity check and hedge some of what I think I already know.

Thanks in advance to anyone who takes the time to offer a newbie some guidance!

Sam