All Forum Posts by: Zach Lemaster

@Sam Rexford welcome to BP!  It sounds like you have already done quite a bit of research on important things to consider when looking at a new market to invest in.  The US is a very diverse space with many different markets to consider.  I think all the criteria you've outlined are very good data points.  Additionally, we like to look at rent trends over the past 5 years, average leasing times, % of homeowners to tenants for the market as a whole and specific neighborhoods, tax structure for both properties and income and affordability.  We like to invest in areas below the median house price which sits around $400K.  We've found the most success the midwest and southeast in markets that still cash flow very well, but also see strong appreciation in both rents and home values.

I think you are off to a great start to research a new market to invest in.  Don't get caught up in analysis paralysis as we all can over analyze markets forever.  Really it comes down to investing in a growing market, in a good neighborhood & building a great team to support you.  That can be a lot of time and work if your are doing on your own.  An easier path to break into a new market might be investing in turnkey properties with a reputable team.  That is what our team at Rent To Retirement has been helping investors do for a decade now BP.  We are happy to answer any questions you have about analyzing markets or getting started.  Most importantly, choose a market that aligns with your goals!

Wishing you the best of success in your market research!

Zach

@Deal H. that is great to hear you are in a position to make your first investment into real estate. Could you expand more on what other things are important to you in this investment? Why type of price point are you looking, what anticipated ROI/cash flow, how much time do you want to be involved in, what is your risk threshold, how long do you plan to hold the property, are you looking to invest locally or open to exploring other markets, etc.? Both can be excellent strategies, but one option may be significantly better for you based on the answers to these questions.

@Robert Portal thank you for the mention of Rent To Retirement.  You had great advice in this thread!

@Tiffany McKinney Thanks for the interest in my company.  We have been on BP for about a decade now and have thousands of reviews from many past clients.  I've posted some of those links below to help your research.  We are proud of the 253 5-star reviews we have on BP, which we feel like we've earned.  Please note that we focus on new construction properties mainly, which is different than the traditional "turnkey" model.  We've found new construction homes to offer more predictable returns, better tenant quality, higher appreciation in values and rents long term, etc.  However, price points can be a bit higher than say a 1950 rehabbed home.  Just depends what you are looking for.  I highly recommend you set up a call with our team to learn more and answer all your questions.

@Greg Scott had some great perspective on when TK may make sense based on our goals, experience level and how involved you want to be with your investment properties.  I recommend thinking on these topics to determine the best way to get started investing.  Just keep in mind that even though this is "turnkey," you are still real estate.  That means you may have to deal with tenant turns, some vacancy, some variance in rents, etc.  While mngt is in place to handle these things for you, all real estate investments come with things from time to time.  However, this is a great way to access markets all across the country that offer decent returns to acquire long term hold properties.  Please do reach out with any questions you have at any point of time as we are here to assist however we can.

-Zach Lemaster - CEO Rent To Retirement

Here are some past threads that may help your research: 

https://www.biggerpockets.com/users/ZacharyCole/references

https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review

https://www.biggerpockets.com/forums/92/topics/1116050-a-huge-win-with-cori-from-rent-to-retirement

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

https://www.biggerpockets.com/forums/88/topics/1047543-big-profits-from-new-construction-sfr-build-in-cape-coral-fl

https://www.biggerpockets.com/forums/92/topics/983659-first-investment-property-with-rent-to-retirement?

https://www.biggerpockets.com/forums/12/topics/1122318-quality-turnkey-companies?highlight_post=6413855&page=1

https://www.biggerpockets.com/co/RentToRetirement

https://www.biggerpockets.com/forums/92/topics/929410-rent-to-retirement-updates?highlight_post=5508807&page=1#p5508807

https://www.biggerpockets.com/forums/92/topics/893621-rent-to-retirement-review?highlight_post=5222888&page=1#p5222888

https://www.biggerpockets.com/forums/311/topics/915728-experience-with-rent-to-retirement-turnkey?page=1#p5345200

Thanks James!

Great summary James!

@James Wise Great run down! The attraction to Poinciana from an investment perspective is the proximity to Orlando. This area is significantly less expensive than Orlando, but rents are still high and it's close enough to commute to Orlando. Many families are moving to these adjacent markets for more affordable cost of living causing high rent demand and growth. We are happy to discuss this with anyone that has any questions.

I appreciate everyone's input on this thread!  We are always here to answer any questions anyone has.

@Erik Browning for which loan product?  The 5% down credit union investor loan?  There are many unique options available, but I assume you are referring to that one.  I am not the lender, and I don't have a product matrix.  We are the seller with many different lender resources that we share with our buyers.  The buyer can ultimately use whatever lender they want.

Here is what I know on the 5% down investor loan.  We've had over 100 investors close loans with this product.

-Portfolio loan unwritten and held with local credit unions

-No pre-payment penalty and no PMI

-Non owner occupied, this is a true investment property loan, and you can do up to 5 homes at once with it!

-30 yr am, 10 yr term

-Each individual can buy up to 5 homes at one time with this product

-As little as 5% down, but you can put more down if you want to.  You can combine this 5% down option with our 10% kickback on select new build homes to actually get paid 5% to invest in a property with no money down!  That is where it gets really creative!

-Available on SFR and Duplexes

-Available in about 30 states, but not all

-Below 43% DTI, min 680 credit, rates vary based on credit, etc.

This is about all I know on this loan to the best of my memory. We've had many investors that used this product to rapidly scale their portfolio by buying more REI with less money down on each property. For example, instead of putting down 25% on one property, they put 5% down on 5 properties to spend the same amount of capital. This allows to 5X tax benefits this way, especially if doing cost seg. Obviously each person needs to determine if this is right for them & they need to actually qualify for the loan. Also, cash flow will be lower with a higher loan amount on a property. It's our goal at Rent To Retirement to bring the best turnkey deals across the country to our marketplace and to help our investors find the best financing options that meet their goals.

Hope this helps.  Reach out with any questions.

@Sara Conner Fantastic!  He will be able to give you absolute clarity on this and ensure you have a full understanding of all the different inputs/outputs for each specific deal as they all vary.  Having a call with the team to gain clarity and directly answer your questions is the best thing you can do!  We look forward to speaking with you.

@Sara Conner This is very helpful. Thanks for sharing details. The pro forma the builder put on our page shows 11.5% CoC ROI (if you look at the bottom of the page where the ROI is broken out). The 16% ROI includes the loan pay down after year one coming from the amortization schedule along with breaking out other ROI considerations. I think the other discrepancies are likely from these inputs:

-closing costs at 5% would be too high for this type of home.  We are not seeing closings costs at the $8K range on a $150K home.  You are likely about half of that if (unless you pay points to buy the rate down).  Please note the builder on this is buying the rate down for you already some.

-20% down vs 25% down will affect ROI as well.

-Property management is 0 for first year since mngt is covering that, but you would want to increase it to 8% for year 2.  However, you would also need to increase rent by 4% for year 2 since the team builds in a 4% rent increase year two.  Don't forget to increase rents over time just as you would increase maintenance, etc.

-Insurance seems accurate.  You certainly could include 5% capex, but this seller has not as the home has been recently renovated or newly built, meaning you would not expect large capital expenditures within the first 5 years at least.  I think after that timeframe it would make since to include capex.  Completely up to you of course, but on a new construction home or renovated property, the first few years should limit capex unlike a home that is not new construction or renovated.  I assume that is where a good portion of the variance is coming from.

Great job diving into the numbers on the properties as that is always good practice and allows you to better understand what numbers you want to input on the various types of assets you explore investing in.  On the RTR website under education, then tools, we have a free portfolio calculator that I highly encourage you to play around with as well as that allows you to evaluate both individual properties, but also a portfolio as a whole.  Most importantly, it helps you future project anticipated equity, cash flow and net worth based on whatever variables you want to input for things like appreciation, rental increases, loan terms, etc.  We developed this out of necessity for our own investment planning as we simply could not find a portfolio calculator online that also allowed for this.  I'm sure that will be a very valuable tool.

Hope this all helps.  Don't hesitate to reach out with any questions at all.  We are here to assist you with any properties you are looking to invest in on our site or anywhere.

To your success, 

Zach