All Forum Posts by: Sara W.

Thank you!

Thank you! Yeah I don't usually want to factor in the appreciation as that is not guaranteed. But you are right TK seems to have very tight margins. If something goes wrong with the property it can wipe out the entire year of profit and I need to purchase in volume for it to accumulate to a sizeable monthly profit. I was just curious why some people still want to do TK knowing that there are many other investments out there that are "safer" and require less hassles.

Thank you for the detail. I was looking at Boise ID not long ago because I knew a family friend who lived around there. But I don't see the high return you are talking about. I was looking at Bench and Winstead Park areas, maybe I need to look a little further? And what kind of neighborhood are you investing in (B- or C+ areas?) And does your 20% IRR includes appreciation? Thank you!

@Marcus Auerbach Thank you! Awesome advice and thank you for sharing your insights on the market!

Sara

Thank you, Allen! Good to know! So do you manage the property using a PM, and what do you see as your ROI over the years? And how do you ensure the property is in good condition? Did you hire a third party inspector before the purchase and require your PM to check on the property every 6 months or so to make sure there is no major issues? Thank you!

I am not familiar with Gloucester city and what kind of tenants there are. If it's similar to the one I have invested in around Boston and you are worrying about non-payment of rents, I would suggest to look into the Section 8 tenants pool. Some of my tenants are working in Amazon fulfillment center etc and she is a single mom so her Section 8 voucher covers most of the rent. With Section 8 tenants most of their rents are covered by the government so if you are worried about nonpayment then this should ease your mind a little.

Thank you Marcus for sharing your experience and for your honest feedback. I have been investing locally around Boston and I didn't use a PM. I agree with you, this allows me to generate a higher cash flow so I can grow quicker. Now I have a couple of handyman and contractors that I have built relationship over the years and I can pretty much be hands-off now. But everything takes time. It took me a good solid two years for my most recent property to be stable - getting rid of bad tenants, renovating, and raising rents to market rates. One of the biggest challenge I see now is to find a reputable PM from out of state that can help me to manage the property, but this will mean that I need to get a very good deal on the property in order to get a high enough return that makes sense. And as you mention it's getting a lot more difficult to do now with the whole COVID situation. Another riskier approach is to self manage the property remotely initially and to find and dispatch handyman and contractors when needed. Have you seen anyone who have successfully done it before? 

Thank you, Allen! Totally understand that, think like everything else in life, you will need to actually experience it in order to learn. I saw that you invest in KS. How long have you been investing in the area and what is your experience like so far?

Thank you, Lee! Will definitely listen to the podcast! Thank you for sharing your experience. I am not looking to be very actively involved at the moment. So I want to understand how much work there is to invest in OOS without using a TK solution.

Thank you everyone for your replies!

@Simone G.@Lee RipmaThank you for your response! I absolutely agree that my definition of "worth it" is different from others', and I will be getting many different feedback and opinions from people. But that's exactly what I am looking for. I don't know what I don't know. So I want to see what people's experiences are like and what strategies that they use that work and don't work well for them, so I can do my own assessment.

As mentioned in my question, I checked out some of the turnkey solutions that other BP investors recommended, I calculated the ROI of some of the properties on the site, and compared that to my own portfolio of passive RE investments, and I don't see much of a difference. That's why I am wondering what prompts others to use a TK solution when they can invest in other RE funds or RE notes that can get them the same return but without the work or risks of owning an OOS property. I simply want to know and see if I am missing something. Maybe there are other upsides that I don't know of that other investors see in TK solution over passive RE investment.

And for those that don't use TK solutions, how do they go about getting a high ROI investing in OOS properties? I know that some investors build up an OOS team over the years that they can rely on, so I want to know what ROI they have been getting and how much work they put in and how involved they are with their OOS properties.

So even though there's no universal definition of "worth it" but the effort/risk you take should be on par with the return/benefit you get. I am curious of learning what amount of effort and risk you have put in vs the returns/benefits that you have been getting to make the OOS investing worthwhile to you. 

@Lee Ripma, you mentioned that OOS is "worth it" to you. I am assuming that you don't use a TK solution and you see a much higher return than any other passive investment vehicles out there. Do you mind sharing your experience/strategy of OOS investing, the ROI you are getting, which market you are investing in, and why you think OOS is worth it to you (much higher ROI than other passive investments out there, property appreciation, more control than passively investing in a fund or a note?)

@Zachary Beach, thank you for sharing your IRR and good to know that this is what people can expect of from OOS properties. Do you mind sharing which market do you invest in, and what strategies you use to get this high IRR? Also, how much work did you put in initially, and how involved are you still?

@Jonathan Greene and @Michael Gilman  thank you for your suggestion! 

I started out investing in an area that's close to Boston and it happened to be where I grew up in. I got very lucky with this property as I got in when the market was at its bottom. Then I got into another up and coming area near Boston when it was still low and that one worked very well for me as well. But Boston and its surrounding market has been getting very hot over the years, the ROI just doesn't make any more sense to me. That's why I am searching for other alternative options like OOS.

I did think about properties within a 2 to 3 hours ride from where I live, but there are a couple of reasons why I stopped. The areas that I am interested in have gone up in value so the ROI for rental is not significantly better. I can't leverage my existing team now because they don't service those areas and I don't know anyone who live around the areas, so I would have to assembly a new team anyway. But what makes me want to look out of state is the fact that MA is very tenant friendly. And the areas with high ROI tend to be ones that are in the B- to C+ neighborhoods. I almost had an experience of having to evict someone for nonpayment, and the process was painful. So if I had a choice I would want to go somewhere that's more landlord friendly.