All Forum Posts by: Spencer Cornelia

Although I vehemently disagree with the concepts of socialism, I have had this thought before. What happens if a huge company buys up an entire city of houses and owns the market, not allowing any investor to play ball. But then I looked on the MLS in a couple markets - Cincinnati, Columbus, and Cleveland. You can find plenty of multi's for $20-30k/unit that cash flow. That's such a low barrier to entry and MANY people can do this.

The reason why they don't is why you have no cause for concern.  They don't because it's hard.  It's hard to make sacrifices and save up for a couple of years to afford a down payment.  It's hard to find a good property manager.  It's hard dealing with the stresses of buying an investment property.  It's hard dealing with a lender.  It's hard finding qualified contractors or handymen to fix problems with your units.

Real estate investing is hard and those who want to succeed have 100% opportunity to become successful, especially since many markets have a very low entry price point.

@Paul Burghardt if you're getting into wholesaling to make some quick deals, good luck.  It's 100x harder than I thought it would be.  It's not easy.  Based on what I've heard from people actually landing deals, those guys @Alexander Felice mentions above, is that they have a pretty high marketing budget, understand rehab costs, and have a team in place ready to help out (rehabber, buyers, etc.).

Best of luck.

When I posted this question, the idea of understanding the costs of home renovations and repairs seemed daunting.  After reading through the responses, I have decided to partake on a journey in understanding everything about home renovations in order to properly evaluate capex on investment properties.

After a day of reading through J Scott's Flipping/rehabbing books and watching YouTube videos, I now realize this is possible.  Today's topic was roofing and I feel really comfortable with everything relating to roofing.  I now see the value in estimating the exact capex costs - explained greatly here by Brandon Turner.

Thanks for the replies.  I now have a fun Sunday ahead where I will learn about HVAC, drywall, and sheetrock. 

@James Wise Thank you for this insight.  Since I'm a beginner, this will be a little challenging at first.  However I like the way this approach handles the exact numbers and not estimates.

Excuse the beginner question, but is it easy to figure out when the last time something was either worked on or renovated?

@Ben Stevenson if you are interested in buying a condo, please take the time to look into owner occupied percentaged rules with your HOA. My HOA has an owner occupied percentage rule of like 40% which means you have to get on a list to be able to rent out your entire unit. I've been on the list for ~1.5 years and am still like #60, which means 60 non-owner-occupants need to either sell to an owner occupant or go back to being one. This really hinders me from renting out my place and house hacking the next property, which has hurt my growth potential. Something to keep in mind.

I've begun running numbers on properties and would like someone who has experience to lend a helping hand.  For properties that are basically turnkey, already renovated, and appear to need very little work, I've been allocating 10% of monthly rent to cap ex and 2.5% of rent for simple repairs.

For a property that my partner and I will look to renovate ourselves and will have everything new (basically a gut job), we are allocating 10% of monthly rent TOTAL for cap ex and simple maintenance/repairs.

I know every property is different, but I am curious how you savvy investors on BP calculate cap ex and maintenance/repairs?

Hey @Courtney M., my business partner and I just made a trip to the midwest to check out a few markets because our market - Las Vegas - is getting unreasonable.  We both agreed that seeing the market in person was a lot better than doing it all online.  In addition, we were able to connect with 2-3 great people in each market and had a chance to meet with each for ~1 hour.  

We've basically eliminated all of the worry about investing out of state since those who we connected with are experienced investors and/or brokers and have worked with contractors, property managers, and lenders in their respective areas.

We hope to begin making offers within the next few weeks after we get through the pre-qualification phase with the lenders they recommended.

My first deal was September 2015.  House hack a 2 bed / 2 bath condo in a great gated golf-course neighborhood next to Las Vegas strip.  Cut my living expenses down to $200 / month and condo has appreciated ~$40k+ (potentially $60k since a comp just sold for $20k more than mine's worth).  Absolutely no regrets, but would have been nice to house hack a 4plex instead of a single condo as my first deal.  This would have benefitted me in many ways more than my condo currently does.

@Andrew Hargreave Hopefully you're able to land it.  We're in Columbus tomorrow after traveling between Cleveland and Columbus today.  We enjoyed Cincinnati a lot.  I'm very interested in investing in the Cincy market at the moment.  Even if it is hot right now, the cash flow numbers are much better than what we're seeing in Las Vegas at the moment.

Here's my Part 1 post in case you missed it.

Due to the appreciation of Las Vegas, NV over the past 2 years, I have witnessed my condo appreciate from a purchase price of $120k to ~$160k in just under 2 years.

I have recently found out about a strategy of using a HELOC to buy a cash flowing investment property. Because of the competition and low cap rates experienced in Las Vegas at the moment, myself and my business parter have begun looking into other markets.

I have applied for a HELOC through Wells Fargo and have been approved for a HELOC of ~$37k. The condo still needs to get an official appraisal. Luckily for me, a comp down the street just sold for $180k which could mean my condo appraises for more than $160k which would increase my HELOC.

At the moment, I am currently in Cincinnati, OH looking at potential investment opportunities.  I count this as a success story because the appreciation of my condo has allowed me the opportunity to begin looking at multi families and could really jumpstart my investing career.

I now have ~$25k cash and ~$37k HELOC to invest and believe I am close to finding a multi family that will fit my investing criteria.

My business partner and I are looking to BRRR a multi family and I finally have the opportunity/capital to do so.