All Forum Posts by: Nate Garrett

@Nathan Duncan So once you acquire all 36 units, you will own like what, half the town?

@Jeffrey Vandagriff

Yes, we did fill the position. She started last week and we are very happy to have her on the team. Thanks for passing the word to your friend. 

Thanks to @Chris Simmons for filling in the details on why consumer financing is good if you can get it. Commercial terms are much more "lender-friendly" and typically have 20-25 year amortizations with 5 year terms (note has to be refinanced in 5 years). This introduces interest rate risk into the equation, which, if you think like I do, is significant.

Both local banks/credit unions and mortgage brokers in Tulsa will do "consumer" loans on investment properties:

Mortgage broker: Typically lowest available rates. Loans are often sold to national banks (Chase, US Bank, etc) so you will end up dealing with a 1-800 number. Good if everything goes as planned, probably a pain if you ever need to do anything besides make your monthly payment.

Local banks / credit union: May have slightly different terms than a mortgage broker, rate probably slightly higher. You deal with a local person, can go to their office and meet face to face. Probably have better customer service in the event you need to do something outside the norm.

I have thus far used a mortgage broker for all of my SFR permanent financing. I am planning on holding the properties long term and I'm not planning on coloring outside of the lines in the future, so I don't mind dealing with a large bank when the note gets sold. I set up auto pay and enjoy watching the principal balance amortize out.

@Jeffrey Vandagriff

You can finance a duplex or triplex just like a single family house with a conforming loan (30 year term, fixed interest rate). You will probably get the lowest rates by using a mortgage broker. The downside is your loan will get sold to one of the larger banks. The credit unions will do these as well. If you go local bank or credit union, they will probably hold the loan in house but you will typically pay a slightly higher interest rate.

@Hermilo Garcia

Here are some ideas to help you break into the field:

1.) Get your real estate license first and foremost. This will demonstrate your level of commitment to becoming a professional and will be attractive to a property management company.

2.) Check out the National Association of Residential Property Managers and their educational offerings. I don't believe you can join NARPM until you are engaged in the field of property management, but you can take their courses as a non-member. Again, this self-study and completion of a few courses will be attractive to a property manager who is looking to hire.

3.) Network, network, network. Attend local real estate industry events and get the word out that you are interested in entering the field. 

4.) Tailor your resume to demonstrate that you have the skills required to succeed in the field - customer service, decision making, conflict resolution, budgeting, accounting, etc.

Don't give up. Commitment to one's chosen path is the most important indicator of future success!

Hi @Jason Kennedy and welcome!

@James Post

Yes, of course. Just click the link in my original post to the tabular data, there are several New York metros listed in the data.

The National Association of Realtors just released some very useful rental data for 70 metro areas showing information like the % change of income for renters from 2009-2014, % change in number of renter households, and % change in number of owner households.

For example, in Tulsa, Oklahoma, rents increased by 11.03% from 2009 - 2014 while renter income increased by 17.05%. The number of renter households increased by 5.69% while the number of owner households decreased by 11.59% during the same time frame (a lot of people moving back in with family or sharing housing!).

Here is a link to the original article and tabular data.

Edit: I tried to post the tabular data but the forum doesn't display tables correctly. If anyone knows how to post tables to the forum and maintain the formatting, please PM me.

@Jeff Neblett

Try

http://www.formsforrealestate.com/pdf_files/MANAGEMENT_AGREEMENT_(SAMPLE).PDF

Regards,

Nate

@Jeffrey Vandagriff 

Welcome to BP. Sounds like one heck of a journey!

@Martin Yung

You said your "leveraged annual return" will be ~9%. This is incorrect. Your cash on cash return would be about 9% with the example you gave.

Your "Internal Rate of Return", or IRR, will likely be somewhat higher than that, depending on several assumptions, esp. regarding the sale of the property and capital expenditures, but I would bet it would pencil out to 15% or so based on the example you gave. IRR includes non-cash items such as principal pay down, tax advantages, etc.

I won't try to convince you that turn-key, class A or B properties will offer significantly greater returns than the stock market. They won't. The barriers to entry for turn-key properties are low enough that anyone that can get a mortgage can do it. If everyone is capable of participating in a certain investment, then the returns will normalize.

So why do people still buy real estate vs. the stock market?

1.) They might consider it less risky than the stock market.

2.) They might want to take advantage of the tax treatment of real estate (passive income losses, depreciation).

3.) They might want to hedge against inflation by owning something tangible.

4.) A host of other reasons, usually peculiar to real estate.

How can you do better than the stock market?

Dig, dig, and then dig some more. Learn about real estate by engaging in it. Study it. Observe what others are doing, befriend them, and learn from them. Minimize your mistakes and protect your principal.

Then apply your time, network and superior knowledge to participate in investments that are inaccessible to the general public and you will (hopefully) generate outsized returns.