All Forum Posts by: Todd Anderson

@Lloyd Segal,

I would love to connect sometime about how we may be able to work together.

@Damien Davis,

Congrats on wanting to continue your REI journey. It is great that you are taking advantage of the BP community.

For myself and the investors that i work with the build to rent models offers may great advantages.  Keep looking down this road I don't believe that you will be disappointed.  I would caution you on one thing being newer and having a W2 that you like and want to keep.  Development is a full time job.  It is also very risky and has a lot of potholes that you can find in your first try.  I would suggest that you find a partner or mento who has done it before.

Many of the investors that I work with in your position find that buying New Construction investment property from a builder is a better option. Let the builder take the risk of the development and the cost of construction financing. Then the investor can come in at the end with final financing and get a new 1-4 unit investment property that is ready to rent. This way you can cut the time substantially to get to ROI.

One other advantage is that many of the builders that I have worked with are able to incentivise the sale with interest rate buydowns that make the deal work.

Best of luck moving forward.

@Nick Henry,

As others have said the answer has to be both.  

I work with investors from California all the time that are able to find good cash flow in a growing market where the appreciation is obvious.

I agree with @Jason Wray that many of the investors I talk with from the West Coast find that the markets in the sunshine belt work far better for their investments.  We are able to find many areas that are steadily in the top 10 in growth nationwide.

I would also tel investors like yourself to look at the new construction space.  with a new home in a growing market you will be able to get in the way of appreciation without having to put more money into the deal.  They also rent for a good rate day one which helps the cash flow.  let me know if I can help answer more questions.  

Best of luck.

@Ivan Castanon,

I have worked with a number of investors that have found the same thing in the Tampa area.  prices are so high it is tough to make things work at 7% interest.

What the investors that I work with have found is if you go a bit outside the Tampa area into smaller growing markets you will be able to find investments that work.  We have found this primarily with new builds.  Builders are able to offer incentives that you can't find on the secondary market.  Most important to investor rates as low a 3.75% interest.  

With this type of investment many investors find that they can get a new property that they don't have to put money or work into. It also performs well because the renters like a new property in a growing area. We are seeing all the properties on our inventory cash flow.  

Florida is still a good market because of the sustained growth and the landlord friendly atmosphere.   let me know if you want to talk more about the markets that I see investors liking best.

Best of luck.

@Dennis Silver, Congrats on the thought of creating Wealth through REI

I have worked with a number of investors in your situation.  For these investors the strategy of long term hold in a good growth market is the type of investment they are looking for.  This brings in a number of income streams.  Not only the cash flow, which you probably don't need right now, but is an important part of the investment.  You don't want to have to continually feed your investment. 

In the right market you can get in the way of appreciation.  Wen investing in a growing market you will not only have a long term tenant paying down your mortgage, but the new people moving in, With the right property,  will increase your value.  

There are also ways to get an income from depreciation of the property.  If done right the depreciation of the property could offset some of your W2 income.  

I would suggest that you stay away from STR/BNB and look more at the long term buy and hold investment. This can be done relatively passive if done with the right turnkey provider.

Best of luck.

@Benjamin Ying,

First off Congrats at making the decision to get started into REI and getting involved with BP. this is a great way to start.

As for your questions.  For OOS investing, one of the most important things to worry about is market.  With the investors I work with, finding a good growth markets in a state that is landlord friendly is the first step.  It is very important to find a market that has good population and job growth.  This will allow you to get in the way of obvious appreciation.  

The next most important thing to find is a good team.  You can do this by finding your own people to fill the positions or use a turnkey option.  I would say that it is very important to have a Property Manager for an OOS investment.  They are the ones protection your investment.  The other important thing that the investors I work with find is that having Boots On The Ground is very important.  This can help with pictures, video, or visits to the property. It will also insure that you are able to find the right submarkets in thew area that you are looking.  Being on the right street is important.   

Lastly, I would never recommend getting into an investment that does not cashflow.  This is the reason for the investment.  Appreciation is a good bonus for long term but the deal is not a good deal if the Cash on Cash return is not there. You will burn yourself out feeding the beast each month.  

I have found in the world that we live in today many of the problems of OOS investing are lessening.  Our world is getting smaller. 

Best of luck, and feel free to connect if you have more questions.

@Kaleb Johnson, Welcome to BP and REI.

 When I started out, I believe that investing locally was the only option. It was a lot harder to invest out of state 30 years ago. In today's world, with the tools we now have, I tell the investors that I work with to invest in the best market and best deal you can.

Do your research on markets and find one that is growing. This means growing in population, jobs, and real estate market. When you find a good growing market you will be able to get in the way of appreciation. This will be obvious appreciation in value and rental income. There are still some great markets for this type of growth.

After you find your target market then you can start looking for deals. For a the new investors I work with, I recommend to look for a turn key deal. Find something with someone who is boots on the ground, that you have talked to and built trust. This person can then get you set up with a builder, if necessary, lending, Insurance, and property management.

There are deals out there that cashflow.  You may need to look around but if you are looking in a good market, that is growing, you can find cashflow.  I do not recommend a deal to the  investors i work with that do not cashflow.  Unless you are planning on doing all the work for the property yourself, I see no reason to invest in your backyard.

Welcome and best of luck, let me know if I can help more.

@David Young, Welcome to the BP community and to REI.

I have worked with a number of first time investors that use a HELOC to start their investing. This can be a very good move if you have plenty of equity tied up in your house. Get that money working for you.

As for where to invest.  When I started out, I believe that investing locally was the only option.  It was a lot harder to invest out of state 30 years ago. In today's world, with the tools we now have, I tell the investors that I work with to invest in the best market and best deal you can.  

Do your research on markets and find one that is growing.  This means growing in population, jobs, and real estate market.  When you find a good growing market you will be able to get in the way of appreciation.  This will be obvious appreciation in value and rental income.   There are still some great markets for this type of growth. 

After you find your target market then you can start looking for deals.  For a the new investors I work with, I recommend to look for a turn key deal.  Find something with someone who is boots on the ground, that you have talked to and built trust.  This person can then get you set up with a builder, if necessary, lending, Insurance, and property management.  

Unless you are planning on doing all the work for the property yourself, I see no reason to invest in your backyard.

Welcome and best of luck,  let me know if I can help more.

@Preet Oberoi,

I would strongly recommend that you look to partner with someone who has experience in this.  A development project can have a very nice upside if done right.  It also is heavily full of risk.  There are pot holes at every step form entitlement to permitting to the vertical and getting CO.  I have done this before and now find the risk just to high.  

If you find someone at a REA or other investor meetup group that is currently in this space it can make your first time go much smoother. Moving from SFR to MF has its own learning curve without the development part.

I wish you the best of luck.  There should be a good number of people out there who would be willing to mentor or partner with you.

@Chase Calhoun,

Congrats of a project well done.  This is a growing trend that many investors are finding works well.  Fro the biggest reason, as you said, you own the home for the Best, First years of its life.  A time when everything works well.  Well done for making the project work out for you.

I have been working with investors in this space for a while. We have found that a strategy that many thinks solves for some problems. If you let the builder carry the construction and holding costs, the GC can get the construction financing. The investor can come in at the CO with end financing. The investors that I work with find this much less risky and a much faster way to get to ROI. They are able to See a COC return within weeks of the down payment, when the unit rents. This lets both the investor and the builder do what they do best.

I think this will continue to be a growing part of the investing landscape.  With the need for more homes overall, and it also gives the renter the ability to have a new home.

Best of luck to you on the next deal.