All Forum Posts by: Zach Hoereth

I hear investors pose this question often, but I can only speak from experience. In the past, I have noticed most agents will not pull the trigger on good opportunities. However, I cannot say the same for property management companies. @Jason Tressler touches on a solid point that unless you are a REIT, hedge fund, or syndicator most times we all face the same problem... we run out of capital.

That said, to address your first question I do not necessarily believe having a team that also invests is a major problem. Each party will have varying investing criteria. 

Secondly, I have noticed investors wiling to share contacts with others who are interested in the same area or utilizing the same team for a number of reasons:

1.) At one point or another that person who is sharing was "new" to the game and is willing to pay it forward to the next person. Believe it or not, I have seen this happen many times before and continue to see it today. 

2.) Investors who have had a bad experience with vendor(s) like to share with friends, family, or fellow investors so that they do not run into the same troubles. The same can be said about having a good experience. Again, speaking from experience, but usually when investors refer others to a particular vendor they do like... it further develops the relationship with that vendor. 

Keep in mind that at the end of the day real estate is competitive, but there are more than enough deals to go around. Good luck! 

Cheers,

Zach 

@Chris Fuhs Feel free to PM me and I will provide a few recommendations! Additionally, BAM does a nice job. 10/10 would recommend for multi-fam mgmt. 

@Eric Clement I won't beat a dead horse here and harp on what everyone else has about the map haha. I will say that @Sterling White has a nice map that helps folks understand the Indy area a bit more. Check it out :)  

Can be tough to find decent stuff in this range! I have a couple of properties similar to what you are describing, but finding the right kind of management company can be tough... unless you plan on self-managing these properties. That said, a ton of coastal money is coming into Indy right now and people are overpaying for properties because out of state investors can make sense of it. Happy to chat in more depth.

Congratulations @Brandon Payne! Check out MC2 Home Inspections! I use them for all of my stuff and they have done a great job so far. Good luck moving forward! 

https://mc2homeinspections.com/

Cheers,

Zach 

@Vincent Chen I am happy to provide you with a few referrals. Not sure whether you are looking on the MF side or SFR, but will help where I can!

I wrapped up the week having a conversation with an out of state investor interested in purchasing a few properties that would fit the BRRRR criteria. I have found myself having the same conversation time and time again with investors who are in search of these dilapidated properties in which they can go in and add a bit of value to pull all of their cash out and then some. While in theory this sounds great, I have now come across multiple investors in the last couple of months who have lost their shorts to say the least.

I share this because as a local I know how hard it is to find decent labor at this time in the market. Not only are individuals having issues, but larger property management firms are struggling with the labor shortage as well. I am witnessing out of state investors purchase "BRRRR properties" for tens of thousands of dollars over what they should be purchased for. Just because a property is being bought "off market" does not always mean that you are getting a deal. Make sure you do your due diligence and get a few bids on the project prior to pulling the trigger. Don't be the guy/gal that has to throw together a sloppy remodel and complains to your contractor(s) that the final figures are too much simply because you made a mistake on the front end by paying too much.

That said, there is nothing wrong with purchasing buy and hold properties to get your foot into the market. Upon gaining some confidence and learning who some of the reliable vendors are, then perhaps take a stab at doing one.I am not saying that I am completely opposed to the BRRRR method, but I would suggest having all of your ducks in a row before doing so. Get a great team behind you so that you are not shooting in the dark. If you are in the Indianapolis market reach out to @Ross Denman he will shoot it with you straight, similar to how I do.  

Cheers,

Zach

 

 Amil, how many current properties have you purchased with this criteria? Now I could be missing something because I have not been doing this for 50 years, so I can only speak from personal experience. I thought that I was picking up a home run 2/1 rent ready for 28k in 2017. (Rented for $650 & later sold for 48.5K) Later that year I purchased a few more 2/1s that needed a bit of cosmetic rehab that put me closer to the 35k mark. I turned around and was able to rent these for $650-700. (Also west side) These were on market deals that I happened to be at the right place at the right time. I was purchasing all of these cash and was not refinancing because most of the lenders that I had in my network would not touch anything under 50k or wanted to fee me to death.

That said, in 2018 I sold a few 2/1s for the 32-35k mark which needed another 5-7k to some clients of mine who were able to put section 8 tenants in place and get closer to $750. (Also on the west side) 

Just before the end of 2018 a partner and I picked up a 2/1 for 16k that is in pretty rough condition. The tenants have been there for over 10 years and pay $550/month. We have not touched the place since closing last December. This place will easily need another 15k in renovations to get it up to decent shape. Again, only speaking from experience, but not sure where you are developing this criteria. It is rare even for a local to find 2/1s in great condition and be all in at 15-20k let alone a 3/1 all in at 30-35k. If you do happen to find these kinds of properties and run out of money please call me because I will buy as many as possible, or if you'd like I sell you the one I bought for 16k in December for 35k.

Perhaps reach out to @ClayManship or @EvanManship :) 

Cheers,

Zach 

At the end of the day I am a buy and hold guy. I am not a REIT or a large syndicator just yet, so I do not dive as deep into market analytics. Don't get me wrong I ensure I underwrite conservatively, but I have noticed many investors over analyzing. Prior to getting properties under contract I get a feel for what PM companies are in the market to see if they will be a good fit for what I am looking to do. I am a big believer in you live and die by your management. Once I have established who I will utilize as a PM I begin to drive the market from properties that I have already identified as potential targets.

These deals do not come from brokers as I am the one who procures them. Too many new investors want to call every broker in town and attempt to source deals and having little to no experience will not get you very far. I would encourage folks to take a week or so and go visit their target market. Meet with other investors, talk to PMs, drive the area, etc. It says a lot about an investor who is willing to spend time in the market that they will be investing in. As a broker myself, when investors do this it proves to me that they are serious and ready to move on property, so when I come across something they are the first person that I call when I find an opportunity. 

Keep in mind be careful with getting yourself into a one horse town as it will be tough to attract tenants and decent vendors. Tertiary does not always mean population: 1,000.  Hope this helps! 

Cheers,

Zach  

 Hey Amil,

Glad I could share some insight! I personally own mid size multi-family in tertiary markets about an hour outside of Indianapolis. In 2017, I was purchasing SFRs on the west side of Indianapolis in C/C- neighborhoods. I like the west side of Indy because I know it best from growing up around there. I was able to utilize my local market knowledge to get into deals that cash-flowed very well for me. I was purchasing 2/1s for buy & hold. As I noticed the market begin to jump up I sold everything and moved into multi-family. 

Keep in mind that locals often do not have the cost of PM and may have a network of direct contractors to perform maintenance & repair on their properties. Out of state investors usually have to lean on their PM to get these done hence the fees they pay therefore decreasing returns. My numbers will look a little different than yours because I am able to buy in my back yard if you will. 

Cheers,

Zach