All Forum Posts by: Tanner Crawley

It is definitely something to keep in mind. Places like AZ are already facing shortages that will only get worse. Phoenix also has so much sprawl that their water consumption is relatively high per person and people insist on keeping grass lawns in a desert. 

@Tara Rose Iguidbashian

Welcome! It looks like you are doing a bit of a volume for investor clients. That is great and should set you up nicely to invest for yourself. I'd love to connect sometime.

@Kayla Givens

Leasing is probably the best bet. There are some decent options. I PM'd you.

How long ago did you sell your business? How much of it is allocated to capital gains vs ordinary income? You could defer any portion that is capital gains and get some long-term tax benefits by investing in Opportunity Zones.

You could try opportunity zones. You would defer your gain until 2026 and future gains are tax-free as long as help for 10+ years. 

The 1% rule is inherently flawed and leaves out all nuance. If rates are 2.5% or 5% why would you have the same benchmark? You might have a brand new home with very little CAPEX compared to an old home with stronger rents but huge amounts of deferred maintenance. In this case, I might take the new home with .75% compared with an old home that meets the 1% rule.

You always have to use your spreadsheet. 

@Mace Moseley
I think it is ridiculous people are saying you can't be successful as an agent because of your age. I do think you will probably have to adopt a different strategy. I would try educational content-based marketing focused on first-time homebuyers. Younger folks (AKA first-time buyers) have strong exposure to social media and that is where you can focus. These people will likely be younger and might view your age as a positive. Familiarize yourself with down-payment assistance programs, first-time homeowner programs, and the cheaper end of housing stock. If you can clearly communicate your expertise through video and written content I don't think your age will be an obstacle.

That being said many agents fail and it will certainly be harder for you due to your age. Also the longer you take to generate significant income the longer it will take for you to acquire properties. Most lenders require 2 years of self-employment income and honestly it will probably take you several years to achieve a strong income from RE brokerage alone. This could mean there are 4 more years before you make your first purchase.

If I were in your shoes I would still become licensed for my own personal use and as a potential side income. I would find a full-time job around the industry that pays you a salaried wage that you can use to qualify for a mortgage now so you can begin househacking. The more you are around the industry the more organic opportunities you will get. 

I agree with @Bruce Woodruff in that any construction experience is a HUGE VALUE. In many markets, there is lots of aging housing stock that needs significant repair/rehab. If you can speak to these items that is a huge-value for your clients.

@Naomi Moore

Hiring someone to manage $4M is going to be prohibitively expensive. Someone who is a competent property manager, financial analyst, asset manager, and good at acquisitions is going to cost a lot. If this salary is just a flat $100,000 that is 2.5% of your capital annually. The math is not going to work. For comparison, a professionally managed fund with principals having 40+ years of experience might charge you 2% of invested equity annually. There are funds that do 1% or 1.5%. 

With that kind of money you are an accredited investor and have access to private investments. I would find some compelling funds to allocate some money to. We have ground-up multifamily developments and retail acquisitions available here in Denver with a projected IRR of 20-25%. We also have some less risky acquisitions with long-term tenants already in place. These are usually projected at 12-14% IRR. Minimum investments are typically $200,000 so you can choose how much to invest in a single fund or project. This could be a good way to diversify and spread the money between a few different strategies/target markets.

There are funds like this everywhere that will probably outperform your own returns if you were to just jump in. That being said I would look for funds that align their fees with your success through a small asset management fee/ most of their fees tied to the asset performance. You can also negotiate a preferred return which must be paid to you before they can collect any further fees.

Private funds usually have the deepest network, incredible access to capital, strong deal flow, and experienced managers. They often outperform individual investors if we exclude owner-occupied financing mechanisms which you wouldn't be able to use at scale with $4M anyways.

TLDR:
You can invest privately through real estate funds. Minimums are usually $200,000 per investment. 
Pros
-Low effort
-Experienced managers
-Strong returns
-Usually low risk (preferred returns of 8-12%, often diversified)
Cons
-Fees can reduce potential upside (can be 15-20% of returns above 8-12%)
-Illiquid (you are committed to a certain hold period)
-Little or no control

@Kayla Givens That is going to be really challenging. 50 spots alone are pretty valuable and 10k square feet even with really pessimistic rents and cap rates is going to be worth more than $1.5M

@Aaron Vinnik@Andre Galaviz

Nice to meet you both and welcome to Denver's real estate community! I'd love to connect and chat sometime. 

There are many great resources you can use to familiarize yourself with the market. First I would read Blueprint Denver which is a long-term planning document used by the city of Denver. It dictates zoning, planning priorities, density targets, transit plans, and more. It can be a great way to understand which markets have significant upside. 

Or if you are interested in other markets read their planning targets.

I would also start following some news outlets that largely cover real estate.
denverinfill.com
denverbusinessjournal

As far as a strategy I think house hacking is the way to go if you are starting out. I prefer townhomes with very little landscaping and a high rent/price ratio. I prefer to invest in premier neighborhoods that attract high-income renters and will likely have the highest appreciation. I would recommend using some of the available down payment assistance programs that can cover up to $17,500 of your down payment and have no PMI.

I think some of the best areas are, Curtis Park, Cole, Clayton, Fox, Globeville, Elyria- Swansea and West Colfax.