All Forum Posts by: Sherry Patterson

Well I am a fan of Texas! I do all investment real estate here as an investor and broker. Although our market is hot "high" right now I believe we still have a better ROI than most states. If I can help you in any way please reach out! Happy Investing!

Investment Info:

Other buy & hold investment.

RV Park with 26 spaces, a house and an apartment with 4 additional acres to expand.

What made you interested in investing in this type of deal?

Better return that MF with less expenses and headaches.

How did you find this deal and how did you negotiate it?

MLS and with the agent and seller.

How did you finance this deal?

Syndication

How did you add value to the deal?

increased occupancy and lot fees

What was the outcome?

We are at about a 13% CAP

@Rafael Morales Hi Rafael! Congrats on graduating and the new job! I am unclear if your job is in Austin or if you will be working remotely? I have written the same comments on several posts to new investors lately so it might be good to go look at those for mine and others advice as well. Obviously everyone's situation and journey is different. However, I find here that most people commenting are pretty set in traditional real estate and there is nothing wrong with that if you have the money for it. However, there are lots of ways to make money in what would be considered "real estate" or different streams of income for much less money than traditional SFR or MF. I am just going to list a few ideas. If you have questions please reach out or again I go into more detail on some other posts. Happy Investing!
1. Tiny homes great for STR and cheap
2. RV's great for STR and cheap you can park them or rent them out
3. Small patch of land outside of town to rent out for camping, glamping, parking, etc...
4. Arbitrage 
5. RV or tiny house on lake front for STR (lakes outside of town for affordability)
6. Boat house for STR
7. Boats for rental
8. Cars for rental
9. Mobile homes: be careful of lot rents
10. Passive investing: buy into a syndication deal
11. Get a partner with more experience and money, you can buy more together. 
12. Use friends/family's IRA/401K/insurance money as a private lender
13. House hack flips: buy with hard money and live in it while you rehab it then sell for a profit and move to the next one
14. Buy a cheap RV (you can finance it) and live in a RV park: much cheaper than SFR especially in Austin so you can save that money for investing and then when you do move you can rent it. Also, keeps you from wasting money on rent. 

So there are a lot of strategies you just need to think outside the box! SFR are expensive! First you can arbitrage: you lease the space (not buy it) and then make it into a STR. Obviously it has to be an area that you are going to make quite a bit more than your rent you are paying. But this is a great way to make income, build your STR business with little out of pocket expenses. Next STR people like experiences and will pay more for it. A SFR is not an experience. So you can buy a tiny house for less than $50k and find some place to put it. Maybe a cheap patch of land outside of town, maybe an RV park. I have 3 tiny houses and the most I have paid is $33k and I make on average $1200 a month NOI. You can buy RV's very inexpensive and make them really cute and again park it somewhere and rent it out. Or you can rent it out for people to take on the weekends. I paid $7k for an 18' trailer that is a nice size for anyone to pull. I spent less than $2000 fixing it up (painting, replacing some furniture, replaced mattresses) and putting linens, kitchen wear, etc inside it. It rents for $300 a night with a 3 night min. and rents just about every weekend. Buy a small patch of land outside of town and rent it out for camping or set up a cool glamping area. You can make a glamping area out of all kinds of cool stuff to sleep in and people will pay more the weirder it is! So it doesn't have to cost a lot of money to STR. I have a lot more ideas as well. You just have to be creative with your ideas and money. Happy Investing!

@Kristi Tietz Hi Kristi, Congrats on the decision to get started. Obviously everyone's journey is their own and everyone learns differently. Let me start by saying that EDUCATION IS EXPENSIVE! You can chose to try and do it on your own without a mentor and will more than likely lose money your first couple of deals while you learn. Or you pay for a mentor and learn from them and their mistakes to be profitable quicker. Either way is expensive. You don't know what you don't know and therefore don't know to ask! My history: I found bigger pockets and spent months reading and learning. Then one day on one of the podcasts someone said the only way to do it is to just do it. So I went out the next day and found a house to buy and flip. At this time I could not find any REI groups around here. Everything I knew I had learned here on BP. I made a good and bad decision of buying a house that was built in 1890! Bad because it needed EVERYTHING! Good because it was a huge learning experience because it needed everything. I lost about $17k (I think because accounting is probably the main thing you need training on) on this first deal. Went and bought my second house, I only lost $12k on that one! BTW I had gone and met with a local mentor that wanted $20k and I thought he was crazy, I could do it on my own. In hind site that $20k could have not only saved me that $29k I lost (probably more) but could have made me a substantial profit on those houses plus gave me a much better education and saved me a ton of TIME! Can you really put a price tag on time? I started looking for people on BP in my area and asking if they wanted to get together. They did! First time we met there were 6 of us. We decided to meet monthly and it turned in to my own REI group which was great! I brought the people that were smarter and more experienced to me. We are starting our 8th year it is called IMPACT and pre covid I was doing 3 meetings a month in 3 cities with over 8k members. We started back in March live with one meeting and are building back up. I found sponsors to pay for the meetings and we provide free networking, dinner and always great education at each event. I don't allow guru sales but do have people come in an teach master classes that people can pay for. I said all of this to say, I WISH I WOULD HAVE FOUND A MENTOR FIRST! I have done it all and taught it all, wholesaling, flipping, BRRRR, multifamily, short term rentals, RV/MHP, to syndications. I strongly recommend what others have said and find a few local REI groups. Start attending and get to know them. Find someone that is either a mentor or willing to mentor. First and foremost make your goals: BHAG (big hairy audacious goal) and back out from there: 10y, 5y, 3y, 1y, monthly, weekly, daily goals to get you where you want to go and make sure you make choices to spend time on it EVERY DAY! Then look at your finances and talk to different types of lenders; hard money, conventional, private, and see what is realistic. (we investors can get very creative with financing) Maybe get a partner! With partners you can do more together with money and knowledge. Don't be greedy you had rather own a percentage of something than all of nothing. Hone in on what you want to do. Don't try to do multiple things in the beginning. If you are going to wholesale then do that, if you are going to flip then do that... become an expert in that and then move on to the next thing. I have so many ways to create income in "real estate" I have posted about them on the forums quite a bit. It doesn't have to be traditional, there are a lot of ways to make a lot more money with less risk as you build your business. (and a lot less competition) I would be more than happy to have a call with you if you are interested. I am in Fort Worth, TX so not trying to sell you anything. Just willing to help because I know how hard it was for me getting started and if I can help you over that hurdle just reach out! Happy Investing!

Hello, I admit I am not familiar with the CA market. I have lots of CA clients but they invest here in TX. However, I agree that any of us that have done enough deals have been there. I am in a similar situation myself right now with 7 units I also purchased in March. Education is expensive. Is this an area that you could do a short term rental? I make much more on my short term rentals than long term. What kind of loan are you currently in with your personal home. Is there a way you could refi into a FHA loan. I am not a mortgage professional or an attorney.... so obviously you are supposed to live there for a year. But if this is possible it could save you a lot of money or at least maybe refi without losing too much. If you have a current home using a FHA/VA you can refi that into a conventional loan and use the FHA/VA. That is all I got on this one! Sometimes it is just a loss. You win some you lose some, let's just hope you find a way to win. Good luck!

So many things you could do to get started! I just wrote about this on another forum this morning if you want to look that up for ideas. This one is a bit different since it is specific to money/loans. If you have 2 years of taxes that is what lenders need. So I understand not wanting to show profit due to taxes however, this is costing you more by not being able to invest. Start with 2021 taxes and suck it up and show a profit and pay the taxes. It doesn't have to be huge but it needs to be over $50k. They will average this with 2020 and hopefully this will help. Do this again in 2022 so that you have 2 years of profit to show and then lenders will be lined up. In the mean time you can get creative and use one of your businesses to purchase property. The interest rate may be a bit higher but you can get a portfolio or commercial loan. You can get a loan that is just based on the asset and not on you. You can put 40% down and get a non-recourse loan. You can ask your friends/family to loan you money out of their 401k/IRA and pay them more interest then they are currently getting. You can get a partner. If you have a partner that has good DTI and credit and you have the cash it is a good trade off. You can buy more together. It is better to have a percentage of something then all of nothing. Once you file this years taxes if that is not enough averaged with 2020 then you can buy with a 12 month hard money loan. This will probably cost 3% and have a high interest rate. But you can do this for a year while you wait to file 2022. Once that is filed and you have 2 years of taxes then you can refi out at a good rate and you have at least had a property for the past year that maybe didn't make any money due to the interest but you were building something and increasing equity. Or refi your restaurant and home and pay cash until you get your taxes in order then refi what you bought. Use the money now in a passive investment deal, again a part of something much bigger than what you can buy alone. Use some of my other strategies listed in my other post to build some cash flow with the cash you have while you wait out the taxes situation. The main goal is to just get started! Happy investing!

Investment Info:

Single-family residence buy & hold investment in Fort Worth.

Purchase price: $756,000

Lake house that I made into 3 short term rentals and a wedding/event venue.

What made you interested in investing in this type of deal?

Great way to have a lake house and have someone else pay for it!

How did you find this deal and how did you negotiate it?

It was on the MLS! It needed work so I was able to get it at a great price.

How did you finance this deal?

Conventional loan

How did you add value to the deal?

I divided the 3 story house into 2 units and there is a guest house to make a 3rd rental unit. I cleaned up the 4 acres and am advertising it as a wedding/event venue.

What was the outcome?

It got several bookings in the first 48 hours listed. Within a week I have one wedding booked and several more interested and a graduation party booked.

Lessons learned? Challenges?

Challenges with the neighbor. This will be an ongoing issue but I put up a nice metal fence between the yards to avoid the issue of them going into her yard. The guest house is going to need a lot more work than anticipated but we will get it done slowing with the income from the other 2 units.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a broker and did the deal myself.

@Andy Ronquillo Hello! You are on the right track. Even with little money now, you know what you want and are setting goals to get there. That is the first step. There are a lot of creative ways to get financing. You also need to think outside the box. "Houses" are not the only way to make rental income. You can only use an FHA loan if you are going to live there for at least a year. However, this is a great strategy because you can do it every year. You can also buy multifamily with an FHA loan. There are still deals on the MLS you just have to have the right realtor that understand investment real estate and most do not. With $100k approval though you are very limited.
So.... if you have any family/friends that have 401k or IRA they can loan you money for a higher interest rate than they are making with it sitting there.
You can buy with hard money or private but it does cost more and you still have to be able to refi out.
Doing a flip if you do not have the knowledge or experience can quickly turn into losing money instead of making money. Education is expensive! 

Other things to consider to make money, in order to save to build a portfolio:
Get partners! You can grow quicker together than we can by ourselves. You had rather own a percentage of something or a lot of somethings than all of nothing or little to nothing. 
Tiny houses: you can buy them cheap and find a small patch of land for cheap to put it on. The rent is high or great for short term because they are hot right now.
RV's: You can get used RV's for cheap and fix it up for cheap and either rent it out where people take it and pay you to use it or you can park it at an RV park and rent it out long or short term.  
You can also do this with boats. You can get a house boat for a lot cheaper than a house and make it a cool short term rental.
You can buy mobile homes. You would be surprised that these rent just as well as houses in some areas and are much cheaper but pay close attention to the lot rent. 
You can find an acre or so of land out away from things pretty cheap and set up either tiny houses, glamping, tree house, boondocking RV's, you can charge people to store their cars, boats, RV's or what ever on it, you can rent it out for photo shoots or events, or if it is close enough to a populated area you can use it as a dog park. 
Arbitrage: You rent out a house/apartment/whatever and then you short term lease it. The only thing it cost you is to furnish it and the deposit and probably the first months rent. 
Rent out your current house: If you live in a house and have any friends/family you can stay with for a few nights here and there, then stick your house on airbnb and rent it out. Or just rent a room if you have one available. 
Take the money you have now and invest it in a syndication deal that has a high return. 
My friends say buy crypto that it is the best investment right now, I personally don't understand it but they are making more there than in their real estate businesses. 

So many ideas to make money! Don't limit yourself to traditional "real estate"! 

Happy Investing!

@Sean McGrady Hi Sean! I am so impressed with you already! The fact that you are in college and already considering investing is awesome! I have helped so many new investors and several right out of college. Please don't be discouraged by these posts. Yes the market is hot but I get deals accepted daily with all kinds of loans.  I do only investment real estate and sometimes we have to get creative. I agree that you should reach out to @Andrew Postell to get a pre-approval. However, if you need to get competitive I have a few other ideas to get it under contract and then Andrew is there to refi us out. Obviously where you get a job may determine where you want to live. However, in this market with everyone working from home it may not matter. Personally I am more of a fan of Tarrant Count and anything west. You are going to get a much better deal than in Dallas. People outside of DFW think it is one big city, and it is, but very different. Fort Worth people, neighborhoods and pricing are very different. If you are set on the Dallas area you need focus on the outskirts that will be more affordable. There really is not a bad rental area once you are ready to rent. However, I highly suggest short term rentals, that is where the money is! I run a local REI call IMPACT we meet in Grapevine between Dallas and Fort Worth the 4th Monday of every month. We would love for you to come. It is free networking, dinner & education and would be a great place to start getting involved in the DFW investment market. Happy investing!