All Forum Posts by: Sean C.

Originally posted by @Corey Frank:

@Sean C. 

I am quite new to analyzing myself! What I am wondering is, are you analyzing just for practice? Or are you analyzing a true potential deal? For myself personally, I am analyzing types of properties all over the country that meet my criteria as I will be buying a long distance rental. 

I am using most of the same numbers for all of this in my initial analysis as I want to be very conservative with my numbers. 10% for property management, a higher amount for insurance (depending if the property is in a flood zone I will add more) and maybe $150 in utilities that I would have to pay month to month. For the interest rate I have been using 4.5% across the board on my analysis. I have low DTI and high 700s for credit score. I should hope my interest rate is around there. If a properties numbers still look good for my desired metrics (good cash flow) after using my conservative numbers, I will verify that all my initial calculations are correct. Like calling a property manager in that area to verify how much their monthly fee will cost me. Calling an insurance agent in the area to get a solid quote. Making sure my lender will give me the interest rate I used in analysis. verifying with my agent all of the monthly owner costs associated with the property.

In my initial analysis, if I would have to bleed a property of 2-3% extra in property management fees or I would have to pay $150 extra every month in either utilities or the mortgage just to make the deal look "decent" to match my criteria, I can pretty safely say the properties numbers are to far from comfort for me. To make the numbers better for me, I would have to either low ball on the offer or the deal just will not work for me. 

I hope this help! Cheers!

Corey,

Thanks for weighing in.  I am brand new to analysis.   I am doing it, right now, purely for the practice, reps and insight.   I do not know if I could get a property right now if I found one, so while I get those ducks in a row, this is for exercise.

I have lined up one person on my "team".  A real estate agent, that sold my house to me years ago, and was one of the most stand-up quality humans I have ever met.  I do not know ultimately if he's the best fit, as far as if he has the knowledge of an investor.  I asked him if he invested, and he said he used to, and ended up on the bottom side of that, due to real estate volatility.

He'd also never heard of Rich Dad Poor Dad, so again, I don't know if he will stay on my "team" but what he is great at doing, is faithfully culling MLS listings and sending me those, being available for any questions (except he hasn't answered my invite to take him to lunch today, yet) and sends me local area analysis of activity, sales, and any changes and numbers indicating growth here. He also advised the finance and mortgage brokers products are always changing and recommended a couple that he highly respects.

Anyways, I'm really wanting to learn the best practices, for analyzing.  Here is what I have so far.

Initially I was analyzing *everything*.  I looked at a multi family in Asheville, a fixer upper in a place 2 towns away, you name it.

Now, as in 30 minutes ago, I think what I'm going to be doing is the fast "test" quick math using the 1-2% test.  I'll use the asking price of the property, and the Insights on the address to estimate area "rent", and plug those in.  If it pegs at 1-2% or higher, I'll dig into the weeds a bit more with analysis, and if it doesn't, no cash flow, and I'll move on.

I'll confess, I'm all over at the moment, but what I am thinking right now, is

1. "speed pay" my home off. I have less than 20k to go. 

2. Make that a rental property, for cash flow.

3. Maybe get a HELOC towards a House Hack multifamily (that eventually passes analysis, due diligence, and the careful counsel and advice and possibly someone might want to mentor me by then from the network of, I hope, friends I've made through the BP community).

4. I do not know what my credit situation might be, but I want to pull the report and get with a banker and strategize what can I do, do I need to do to get into the best position down the line, for when I am actively ready to buy.

5. Tied up in all that is a substantial investment into my website, that does bring in income (I teach online all over the world) to bring in more students via a marketing and a rebranding effort, but that would open up a cash flow, every month, in and of itself.  This would put me at least part way into the B side of the cash flow quadrant.  If that improves, my speed payoff will be that much more pronounced.

So, at present, that's my operating "plan".  

Best,

SC

I heard that 1/4 of all the money in circulation, was minted in 2020, so if this true,  I agree with the person that called it double taxation. 

I wonder if they will print money for landlord subsidies.  Can you really see the world as we know it now, not raising a fuss when people start mass evictions?  Do any of you see a potential political trap, for the government to come against the "heartless" landlords and multifamily "rich"?   I'd be very watchful of the political climate, which seems to already be targeting those with wealth.  

I don't think I'd mass evict anyone...that screams "set up".   That could turn public opinion against investors very quickly.

I don't know, these are just thoughts, and by no means supported by anything I've looked at in detail.

Originally posted by @Joshua Bailey:

@Justin Phillips i was looking to get a regular HELOC, but the bank came back and said its easier to pay my mortgage off with the heloc and still have access to the 20k for a down payment on my 1st rental. Is this the 1st position heloc your talking about? Its a variable rate at 2.75 is what she told me compared to the 4.6% on my current fixed rate mortgage

In a book I just read, if I read it correctly, they (Brandon) advise to look at the max % that variable can go up to, and, how much max % it can go up per year, so you dont end up upside down - if it goes up 2% a year to a max 11%, For example, you can calculate how that might change your payments.

Good luck!

Best, 

SC

I read that it's a good idea to dig deeper and look into the "types" of crimes in that area because your tenants have to live there so it is good to understand the crimes themselves.  For example, are they property crimes, break ins etc.

Best,

SC

Originally posted by @Saemi Jung:

@Nicholas L.well not too seriously since I am waiting another month to finish my car payment for better loan and I heard that having pre approved helps. Since everyones been a advising about the risk, I know to avoid solely relying on equity.

From what I understand, Cash Flow is very important.  It sounds like you are starting in a hole.  Keep in mind also, that Inflation goes up, and changes the value of the dollar with each passing year.  Do you plan on keeping up year after year with the rents increasing, property improvements to get higher rents?   Did you use the BP calculator to analyze the deal?  Did your analysis include CapX costs for example, reserves, etc.?

I'm glad that you are asking questions.  To Quote Rich Dad Poor Dad  "There are no risky investments, only risky investors."   Continue asking questions and educating yourself.  I hope it works out for you!

Best,

SC

I've started to try and analyze properties, to get into the practice, however there are several variables that I do not know when it comes to estimating.  I'm aware these are very beginner questions, and appreciate any help you can offer

1. When you figure out the Interest Rate, how do you determine what number to use?  Do you have to go figure out what banks would charge *you*, as in go get preapproved/prequalified before this is analyzed?   If not, where do you recommend I find the Interest Rate information, so that I can have a carefuly considered analysis?

2. In Insurance, how do you come up with your numbers?  Do I have to call an Insurance company with the property address for every individual property every time, to get that estimate?  Or is there a way to figure out a comfortable guess.

3. Is there a way to figure out if I pay the utilities, or the tenant does?

4.  I have heard of Property Management fees, ranging from 6-8% in Podcasts.  How do you find the most accurate figure for your Property Management Fees?   Do you have to call several agencies in your area, and then average them to find out what they are? 

Thank you in advance.  I'd love to learn how you guys dig up certain details.  I feel like the better you understand the numbers, the better you can analyze these.

Best,
SC

Originally posted by @Joshua Noth:

Welcome to BP @Sean C., happy to have you here! It's great that you've found your motivations and drive behind REI - it'll help you tremendously as you go. You've got the right idea for now: learn, learn, learn. Forums, podcasts, blogs, and books are great places to start, but also look out for local meet ups and groups to join. Wishing you the best of luck, Sean! Never hesitate to reach out if you need anything

Josh, thank you for taking the time to respond. 

I know there are meet up groups out there.  I do not know if there are ones in my area, or maybe I should start one, if not.  Right now my meetup group, is my former student and myself.  Perhaps that's the starting point, and we might add more.    We played the Cash Flow Game for the first time on Sunday, and talked about the books we are reading and what the next steps are.  This week I'm going through the BP success blueprint and I'm going to start learning to use the Calcs.  My intention is to get into habits.  Even if I don't have a deal, I want to know how to use the tools, and become more natural at doing so.  Just as an exercise, if for right now.  My attitude is, even if I don't have all the pieces in place (today) to invest, I can still use the tools, and analysis techniques to learn how. 

Best,

SC

Hi Deena,

I am relatively new to this as well.  By a few weeks.  I'm a bit older than you and I feel late into the game as well, however, I'm not going to let those thoughts have their way.   As I realize that staying the way I was is simply not an option anymore, this means that one "option" is off the table.  I have to do something.

This urgency is not reckless though.  It's not panic.  It's poise and quiet determination.   If I may share what I've discovered the first few weeks.

Your first investment needs to be in yourself.  Educate yourself, financially.  That sounds very general, and not actionable, so I will suggest a starting point.  Read/Listen to Rich Dad Poor Dad.  You can listen to it on YouTube.  If you search for the audio book.  

Your investment cost:

1. Open an new tab (3 seconds)
2. Go to YouTube (3 seconds)
3. Search for the title and Audiobook (3 seconds)
4.  Listen to the Audiobook.  (a few hours)

By the time you finish that audiobook, you will be better educated.  The next steps will be much more clear.  But if you are still looking for a baby step, I'll suggest more.

1.  On the Same YouTube site, search for Bigger Pockets.  Subscribe.  Open up Playlists and find the Beginners Guide To Real Estate Investing Course.   Take it.   Listen to these podcasts, buy the BP Books that line up with the strategies

Invest in yourself and others will be more willing to invest in you.  Investment can take many forms.  Advice, Mentoring, and a boost here or there. 

Right?   Because these people here, know who is putting in that work, and they know who is investing in themselves, and putting their own skin into the game, as the saying goes.   They know who wants the easy fish and who wants to learn to fish.  

When you ask certain questions, they will immediately know how much "work" you've put into yourself, because many questions people ask, are answered in a free video here on the site or in that Investment Course on YouTube.  They will know if you looked around and explored, or if you just hopped in, and started asking questions.  This site has an Education Tab, and I would

It's a matter of a few extra seconds and a few mouse clicks that will tell people.

They will help those they see with the drive and fire to educate themselves, and are taking actionable steps.

But, first your commitment has to be, that you want to learn and put things into practice.   I cannot stress enough, that education in the basics is so important, and I'm only a bit more ahead of you.   I think that it is commendable that you have already overcome things in your life, you now have proof that you can.  Drive, and perseverance is a great trait for a person to have.  I hope this helps.  

Best,

SC

Welcome James!  New here as well.  Does your condo give you a passive cash return?  I'm thinking of paying off my house and either selling it and putting it into a House Hack, or renting it for the cash flow and low key it a while, living minimally, and just enjoying the rental income to augment my cash reserves. 

Best,

SC

Welcome!  From one newbie to another!   Kudos, for wanting to educate yourself, and become financially intelligent!

Best,

SC