All Forum Posts by: Shawn Ackerman

@Ryan S. I am not sure about the RE laws in the market you are referring too however in the State of WI if there is a property a seller does not perform on contractually, before expiration we have our attorney draft a notice of interest into that property and file it with the county.  Whenever there is a search done on the property this notice will appear and need to be resolved prior to that sale.  I've done this a few times and it usually results in a monetary payout or the seller kills the next buyers deal.  I have yet to successfully close on a property that I've filed a notice on but i cements your presence. Now if a new buyer is ok with buying the property without a warranty deed then that is a different ball of wax. hope this helps man.

All the best!

@Jeff Calcaterra Trust but verify! if that is what you do for all other applicants then this case should be no different.  When you start making exceptions you are no longer following your process. stick to the script.

All the best!

@Daniel Vo congrats on getting started on your RE journey.  Have you decided what type of investor you would like to be? Buy and Hold/appreciation/a bit of both? I think if you can nail that down you will be able to find a market easier.

As a buy and hold investor some of the things that were important to me when deciding on a market were landlord tenant laws, price to rent ratio, housing demand, ability to build a team, large population 500K plus, multi-family availability and some other factors.

take the process step by step and you will be fine.  All the best!

@Tristan Kelly Hey man. Thanks for the transparency in your experience investing in the D class area especially as an OOS investor. I am glad you highlighted the management piece as this is a crucial part of buying in another market.

Excited that you are stabilized and are generating cash flow on that deal.  Good luck on your journey man.  We have invested in these type of deals in Milwaukee and there are pros and cons to this asset class.

All the best man!

@Shayan Sameer If you can service all debt and property expenses and have money left over then I'd say it's worth it. But coming close to break even, especially when using Interest only debt(HELOC), I'd say probably not a good idea.

Head over to bank rate or and take a look at the mortgage calculators, plug in the numbers and get an idea of what the property needs to generate to satisfy the intended debt.

You still have to underwrite the deal for the non-finance expenses as well(typically 40-50% of the gross rents). I wish I could give you a quick and easy answer but that is just not how my brain works lol!!!!

Looking for 1% deals will be cutting things close.  I'd say, at minimum look for 1.5%. 

Example. $200K property needs to rent at 1.5% for a minimum of $3K per month. half of that will go back into property expenses.  putting 20% down on $200K will be a $160K (first position)note. Let's say at 6% over 30Yrs will be about $960 per month(Principle/Interest) with the remaining  interest only portion $40K costing roughly $200 per month. 

$1500- $960 + $200 IS $340

Cash in your pocket after everything roughly $1500-$1160-$340 which is not bad for a 100% financed deal(INFINITE RETURNS)

Now, If you ran this analysis on a 1% deal as @Nicholas L. mentioned you will undoubtably end up in the red each month.

All the best!!!

@Diana Teng There are a couple of approaches you can take with investing OOS.  We are based in Long Island NY but invest in the Mid-West.  Mainly because of being priced out of the market around us here in NY.  However we did not start deploying capital into Milwaukee until we had all of the necessary connections to get started. I.e. Title Co, PM, Contractors, process server, RE Atty, Handyman, Lenders, insurance etc.....We were also building a wholesale business at the time so visiting the market was essential.  

I'll say this.  You can buy it built or build it yourself.  Meaning you can spend the time traveling to the market(As we did for 18 Months once per quarter) or you can seek a reputable operator in the market you want to invest in and leverage their team.  Even if you chose the latter I strongly suggest still making your own connections over time.

All the best!

@Jay Hinrichs Long time man! Yesir still operating in the MKE market. 

@David Lewis Don't give up man.  There are alot of real estate strategy out there which will allow you to obtain a piece of property unconventionally.  Finding motivated sellers off market and making offers using creative finance strategy. I won't overwhelm you with all of the different terminologies but begin researching these concepts.

All the best!

@Danielle B. you are welcome.  Always fact check the people who you are taking advice from. Being a landlord is not an overnight get rich quick scheme.

@Danielle B. when buying out of state you have to know the people you will be working with.  You can build your own team i.e. title co, insurance, pm, contractors, handyman,process server, lender etc.... or you can find an operator who can get you going in that market while simultaneously building out your team.

Section 8 housing is a great way to ensure consistency with rent payments however not all tenant who have HCV pay 0%. Many times the tenants are income based and pay 20-40% wherein only 60-80% may be guaranteed.

Aside from the rent percentage issue is pride of ownership. Sometimes the tenants are coming from shelters or other communal type of housing where maintaining a space my not be solely there responsibility so maintaining the unit may not be to your liking.  Not in all cases but more often then not.

Additionally you have to have solid management who is checking on the property at a minimum once per quarter as many times I find these tenant don't always report issues timely.  

Is it a great way to ensure income consistency? Yes, but you should really be involved at the outset.  

There are so many other nuanced things to discuss but I'll leave it right here for now.

Best of luck!