All Forum Posts by: Sebastian Villacis M.

Hi BP,

Me and my wife are wanting to invest in Fort Wayne. We are from NYC and want to move out of the area to start our RE journey and picked Fort Wayne as our option. We have a one-year-old little girl and were originally going to move to Northern Virginia (close to Washington, DC) since our family is located there but with this high-interest rate market, we decided to switch markets to a more affordable one for the moment until rates come down a bit more and hopefully buy in Virginia in the future.

This is our plan:

1. Buy a property as a primary residence with 5% down and live there for one year or for as long as it takes before we can buy our property in Virginia with a lower interest rate than now (today at 6.09%).

2. While we live in the property, we want to put some work in it bringing it up-to-date. We will furnish it as we live in it too.

3. Once ready to buy our Virginia house and move out, we want to rent our property as a medium-term rental to travel nurses and medical professionals (but not limited to). So anyone with experience in this space in this area would be so great to hear from.

4. Property can also be rented as a long-term rental but since it will be already furnished, we dont know how that would work.

5. We are looking to but in the vicinity of major hospitals such as Dupoint, Parkview, Lutheran, Lutheran Children's, etc.

Does anyone know or has worked with a great investor-friendly REA? We would love to connect with someone who has experience investing in the area and possibly someone good with off-market deals.

We are so excited with what Fort Wayne can offer and bring to our lives. 

Thank you!

PD: we will be getting pre-approved the next month but we got already pre-approved the last year when Virginia was our first and only option. So, we are serious to buy ASAP.

@Mikhael Brown congrats! I am a prospect investor in the Fort Wayne area. Can you share more details about your investment, strategy, neighborhood, real estate agent your worked with, and overall experience? 

It would be great to connect too.

 @Logan Grissom you are indeed in excellent shape. And from my understanding, as a college student, you can use part (if not all) of your time spent in college to qualify for a mortgage. They consider your education as if you were employed or something like that. I follow tons of awesome lenders in YouTube and always hear them talking about this. Follow Win The House You Love in YouTube and ask this question to get specific information as I'm not a professional. They go live every week. Go luck!

1. Scared that the MTR strategy will not work in the market I want to enter as it requires more money for furnishing, etc.

2. The high-interest times we live in.

3. To make the numbers work.

Thankfully, in the last year I have either overcome the issue or accepted/embraced the reality. I realized that real estate is a moving target that changes consistently, and so should the strategies. In my case, my wife and I are lucky enough to have stable jobs, excellent credit, and decent income (I am a mechanical engineer and she is a nurse). We were limited by the flexibility to relocate, but we can't have it all. So we decided to forget about the limitation and relocate out-of-state with our one-year-old daughter to a state where our numbers work or at least are not too bad to begin with. We are from NYC so you all understand the difficulties we encountered. Along the way I did lots and lots of research, ran numbers, talked to experts (lenders, REAs, REIs) and that helped me mitigate the fear I had. In the book 30 Day Stay they mention that RE is education and action. The first one I already overdid it.

Whatever you decide to do, it is always a good idea to talk to a knowledgeable person that will guide you and will tell you about the different routes you could take depending of your situation. At least for me, the strategy will be:

1. Put 5% down (we could go higher but we need reserves) and get a property in a state where we can afford.

2. Live in the property for 1 year.

3. Move out and rent it out as a MTR.

4. Get the second property as a house hack at a better interest rate (hopefully) and refinance the first mortgage.

All comments are welcome. Good luck in your journey.

@Bob Stevens

Your numbers are in the ballpark, yes! The net operating income (all expenses + taxes + insurance) of 12k sounds about right if this is an all-cash deal, but if financing is required, which is 25% down + CapEx, that beautiful 12k operating income shrinks down to around to 1.5k operating income which translates into $125 of monthly cashflow, and this is what gives me the 4.5 CoC that I was talking about. I would love to know the areas in Cleveland that you are referring to where you could get a duplex for 105k and can collect $850 per unit (at least)

Best regards.

@Bob Stevens your feedback is much appreciated. If the areas I mentioned are not ideal, which ones do you think should be considered? Running my numbers with the scenario you gave me gives me a conservative 4.5% CoC which is not bad but not great either. Of course if increase rents by $75 to $100 per unit the CoC will increase too, but it will all depend if the location and condition of the property allows me to do so.

Again, thank you for your valuable advice.

@David G.,

Good question. Cash-on-cash return has 2 components two it:

1. Annual Cashflow (usually before tax): this is your gross potential rent (factor in vacancy to get net rental income) + other sources of income that the property could bring in minus your operating expenses (property taxes, insurance, PMI (if any), repairs, and other operating expenses). You also have to substract the mortgage (principal and interest) and your CapEx (around 8% of your rent). So annual cash flow = income - operating expenses - mortgage - Capex.

2. Cash invested: this is usually the upfront money you would have to pay at closing (down payment, inspections, closing costs, etc) + your upfront renovations/improvements costs (if any) that you will put before renting it out.

Formula is:

CoC=Annual Cash Flow / Cash invested

Hope this helps. I also recommend you getting the book Real Estate by the Numbers to improve your skills when analyzing deals. It is really good!

@Michael Delgado

I am kind of in the same spot as you. Live in NY, early 30s, and want to invest. I have been looking a lot into Cleveland. I have been researching and gathering as much information as I can before jumping in. I already spoke with couple real estate agents (investor-friendly) and there is only one thing that both of the agents told me, which I believe is a big deal given the fact that a lot of people in this forum are recommending and it has to do with finding a good team. Both of the agents I reached out have told me that getting a hold of a good contractor in the Cleveland area can be a headache. They pointed out that they are all busy, the lead times are crazy, and that they are not finishing on time, so I decided to adjust my strategy to find a property that has already been renovated or that maybe needs a just a tiny bit of work (something that wouldn't take more than a week or 2). This will drive the property price up if you want a good area. We are planning to buy a duplex which will require 25% down since it will be an investment property and use it as MTR for traveling nurses but now I am stuck figuring out if Cleveland is attracting travel nurses. Otherwise, I will have to stick to LTR and get a low cash-on-cash return (around 3 to 5%) and go with it. Hope this works and  I wish you the absolute best in your journey.

@Colleen F. , thank you for your advice. Will get into it now.

@Jack Mawer, thank you for your response. Yes, I have been reading and researching about Cleveland and see if it is even doable for MTR location. I will keep working on it and follow @Sarah Weaver advice. I ran my numbers and if the 2 units will rent as MTR with 8% vacancy (maybe too low), the CoC is pretty good. The dilemma is figuring out if they will actually rent. I will keep doing my homework and will keep you guys posted.