All Forum Posts by: Seth Hochberg

 @Ari Hadar

Rent and ARV are two very important numbers and you just have to put in the work to find them. Take this with a grain of salt as I'm a new investor to Baltimore as well.

Rent: Scan apartments.com or craigslist.com and see what similar homes are renting for. A step further would be to reach out to these places and ask the property managers whether they're struggling to rent at that price or finding it easy. A step further is to have an excellent property manager who should know this data. Rentometer is great but it's only on piece of data. It'll give you a ballpark but they can easily be off and you need to verify those numbers anyway.

ARV: is easier to find. Go to Zillow.com, or Redfin.com (I find Redfin has more data) and look in the exact area of the home you're interested in and look at homes sold in the last 3 months. If there aren't many close by, bump it to last 6 months or last year. Most places looking within a mile radius will do the trick, but in Baltimore, you really want to find homes within a block or two. Any further, you need to know the area well and likely it is very different. And then just look at the most similar homes (bedrooms, bathrooms, total area, similar finish) and those are your comps and likely the same comps an appraiser will make to determine the ARV.

I'm new to Real Estate, and am currently in the process of working out the details of a partnership with someone. In a nutshell, we're looking to do one BRRRR together, where I provide most of the capital, and she provides all of the labor (managing rehab, inspections, tenants, etc.). We've worked out many of the high level terms, including how to split costs, profits, and equity, and we've worked through how we'd approach many hypothetical scenarios (eg what happens if we cant recoup X amount of capital, etc.).

We recently got stuck on a few points and I'd love to hear any insight. 

1) Do We Need a Legal Partnership Entity: Is it possible to form this partnership just as two individuals rather than through an LLC or other legal entity? We have an agreed upon plan that I mentioned above: I pay for the house, put both of our names on the title, and she manages the rehab and gets it rented out. We've also agreed on how to split costs, profit, and equity. Could we just meet with an attorney who draws up a contract outlining this agreement and sign it? Simple as that? Is this commonly done? Or is there always some form of legal partnership (LLC, Joint Venture, etc). I don't know much about the different types of legal partnerships, but I'm a fan of just signing a contract outlining an agreement for simplicity sake.

2) Difficulty Obtaining Private Lending: Is the private financing trickier in any way because of a partnership? I have capital, but I will need ~50% more for our plans. If I reach out to a hard money lender or a private lender, would it be any more difficult because there are two people working on the project? I imagine private lending is more about building a relationship and hard money lending is more about the property itself.

3) Complications With Cash Out Refinance: Is it possible that I buy the property entirely with my own funds (plus some private lending), put both of our names on the title, and then have the cash-out refinance be entirely in my partner's name? Or does the cash out refinance need to be in both of our names? Or do we need to be looking at a partnership vehicle (eg LLC, Joint Venture, etc.)

@Nate P.

Take this with a grain of salt as I'm new as well, but I would reconsider the location. Instead of focusing on B class property with a negotiable location, I would pick your location(s) first and then be negotiable on the condition. You can always fix up but you can't move it to another neighborhood!

@Paul Savanuck

Doing everything in BRRRR except the rehab? For your Bethesda comment - you're referring to a typical buy and hold then? But perhaps you would rather buy in cash to be competitive and then do a cash out refinance? Perhaps consider delayed financing? I just learned about it yesterday but that seems to be what you're thinking of (if you're talking about skipping the rehab)

Welcome Nate! I am also new to the real estate game, looking to invest "semi-out-of-state" in Baltimore (currently live in DC). It seems like you're well grounded in your expectations in Baltimore and have a decent grasp on your path forward in real estate. I'm aligned with you in the belief that worst case scenario, if the first deal doesn't work out for some reason, it will be an expensive, but valuable education - more education then we could ever hope to receive from a paid guru class. 

When you say  you're targeting B or C class properties, are you referring to buying properties that are in B or C neighborhoods, or rather B or C properties that are not necessarily rent ready and need some rehab? 

As for Baltimore resources, I currently read the Baltimore Sun occasionally to keep myself grounded in what's happening in Baltimore.

@Ryan Greenberg

Can't wait to see a follow up post. I love before and after pictures. Where in Baltimore is this?

This is super insightful! Thanks for sharing this. This evidence seems to be one of several indicators that Northeast Baltimore is a strong market to invest in. 

http://www.biggerpockets.com/guest

Here you go! Don't forget me once you're famous!

@Jeffrey Ward

I'm very new to RE investing, (but familiar with Baltimore) so take my opinion with a grain of salt. That location is pretty solid. My partner lived 5-6 blocks south of that at one point and I locked my bike there for 15 minutes and my bike seat got stolen. Literally, someone pulled out the seat... Made for an awkward ride home. This may sound contradictory, but even with that, I think it's a solid place to invest. Baltimore School for the Arts is right there and that's one of top public high schools in Baltimore.

But what's your plan? Buy and hold? BRRRR?

After all that, I checked in with my employer and learned today that my company does not allow any IRA -> 401k rollovers. Since most of my money is tied up in my IRAs, I was planning on rolling it over to my 401k and taking a loan. It looks like I will either just pull from my Roth IRA or look into my options with the CARES act. I wonder if I'm able to take a loan against either of my IRAs with the CARES act...