All Forum Posts by: Shawn Ackerman

@James Holmes congrats on getting started on your journey! This is a marathon not a sprint. Regarding finding your first deal, where are you looking?  We are still compiling lists an skip tracing, cold calling.  What sort of marketing are you doing to find your first deal?

All the best!

@Cole Bossert Thanks for taking the time to share your thoughts. All the best to you man!

Good day BP world!  I hope everyone is doing well and are diligently working on your respective real estate goals!

I first want to say that I am thankful for this great community that I have now been apart of for over a decade.

That said, I wanted to speak to my noob REI's. Life is short! Take chances! Calculated chances.

I read countless posts about the fears of getting started in real estate.  And I get it.  However I want to tell you that there are so many real estate avenues to travel both passively and aggressively.  Despite the path you take, You must START!!!! you must also get comfortable with the notion of not getting it right on the first try.  THERE IS SO MUCH I'VE LEARNED FROM FAILING ALONG THE WAY!

Luckily for today's investor you have such a wide array of community members who are successfully executing amazing deals in all facets of the real estate game.  you must START!!!

I look back on some of the posts from 2015/2016 only to see some of the people posting in that era still making posts about uncertainty in their market.  I just laugh to myself because those people are essentially in the same position they were in a decade ago.  

I don't post often but this was just on my heart to share with the community. And if this helps someone I have done my job.

I am rooting for you!

All the best!

TIME WAITS FOR NOONE.      

"Thinking will not overcome fear but action will." - W. Clement Stone

@Renee Everett congrats on getting started on your journey. I would suggest 1. learning how to analyze deals, develop a relationship with a lender both qm and non qm to understand the lenders LTV, seasoning time frame, scalability. Also you should develop some metrics in order to measure markets that would fit your strategy.

It's difficult to put all of the steps in a message but I'd stay start with the above.  Lastly, You must get comfortable with debt as that is a major part of this strategy.

All the best!

@Michael Prejean I'd say consider working with the person who is in the market you intend to work in, can show you proof of concept(Not just great advertisement), can provide references.

Further you should understand what the program looks like.  Is it coursework with exams? Practical in the field type of teaching? or live video 1:1 calls on a regular basis? or a combination.

You should look at how you learn the best and be sure that the program is in alignment with that.

Wishing you all the best on your REI journey!

Hello @Manny Guerrero congrats on getting started on your REI journey! You are in the right place!

In my experience hitting the 2% number has left a little money for me after all expenses are paid. Every situation may be different as you can have a lease option tenant who pays you $1500 per month and PITI are $1100 per month. Your cash flow in that case would be $400 because you do not have all of the other expenses a you would have with a "regular" tenant. In a lease option the tenant buyer is responsible for basically everything besides debt, tax & insurance.

but 2% Price to rent(reno) is a safe bet.

All the best!

@Jordan I hope you are ready because I get into the weeds on these type of deals.

ARV $200K

Reno $25K

$120K purchase

I would need to know the lenders seasoning requirements(This will tell me the holding costs until refi) and the lenders LTV. Let's use 75% LTV for this example.

Take 75% of $200K = $150K- 6%(Lender fees)$9000 = $141K note

Take repairs off that number off that number, so $141K-$25K=$116K

Next I have to know what the cash flow looks like.  So if I buy and renovate for $145K, I need the building to rent for $2900 per month or 2% Price to rent ratio.

Using the gross rents and 50% expense ratio(Vacancy, cap ex, maintenance landscape/snow, taxes, insurance utilities), we are looking at a cash flow number of around $1450 per month

From this number we need to take off the monthly debt service cost on $150K @6.5% with a 25Y Amortization.

so $1450 - $1012 = $438(cash flow after all expenses)

I would use this number to see how long it would take me to recoup the money that I left in the deal($120K purchase and $25K reno)

Take the actual loan amount $141K - Purchase and reno $145K, so there is $4K left in the deal.

It will take you around 9 months @ $438 per month or so to have $0 money into the deal as the $4K left int he deal will be recouped by then.

Here is where the compounding starts as you have no money into the deal and you repeat this process over and over while building equity year over year.

All the best!

@Adele Tegger I would take the funds and use it for investors as a HML. Obviously you would have to have the ability to underwrite deals and learn about the specific market but lending $60K for a $600-$700 per month interest only return, then compound it year over year will help you grow your capital.

Alternatively, you can use the capital to acquire, renovate and rent property in some of more affordable markets in the country.  However you will need to use the money as a down payment and partner with a lender to acquire and renovate.

Lastly, I would say using the capital to begin a marketing company where you target distressed sellers, get properties under contract and then sell the contract to investors would be a final way I would use the capital.

Hope this help you. All the best!

@Jinming He Congrats on taking the first steps to getting started on your REI journey! I've been where you are now and remember what I felt when deciding on a market. I was hyper focused on what actually constitutes a "Deal".

I am happy to see that you have narrowed your focus down to cash flow.  This will help with deciding a market because things like price to rent ratio, landlord tenant laws and other metrics can be used to measure markets evenly.

Keep in mind that when running your numbers on a deal, always run the numbers conservatively and include all of the expenses(Including reserves for cap ex, maintenance, vacancy).

All the best!