Real Estate Investing: AMA (Back Again!): Professional Real Estate Investor with $25M+ in Assets, AMA about investing in Multifamily, Mobile Home Parks, Assisted Living, Self Storage, Syndications, RE strategies, etc..

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• AMA (Back Again!): Professional Real Estate Investor with $25M+ in Assets, AMA about investing in Multifamily, Mobile Home Parks, Assisted Living, Self Storage, Syndications, RE strategies, etc..
• Help dealing with a tenant that screwed us over - first timers into this business
• Have you ever purchased a property that you didn't fall in love with, but proceeded anyways because the numbers made sense?
• Should you work with an realtor who also invests?
• First remodel/rental
• How does this look for an investment? I have never owned a house and want to start small. Im 24
• Anyone doing the BRRRR method?
• How to find out if 3 piece bathroom is legal in attic of a legal duplex (NYC)
• Must haves and any underrated terms in lease agreement.
• Release of Earnest Money
• Investing in San Juan, Puerto Rico (Miramar)
• Investing on fractional vacations places
• HELP A NEW INVESTOR ANALYZE HIS FIRST RENTAL
• Triple Net Lease Investing
• Hot market! My Advice?
• Primary Residence in LLC - New York
• Deal analysis help for new investor
• House Hacking Checklist Help
• Really weird/bad deals you've seen actively advertised
• Out of state investing
• Renting where you live while investing in rentals?
• Is selling my current home to purchase a new home the right way to go?

AMA (Back Again!): Professional Real Estate Investor with $25M+ in Assets, AMA about investing in Multifamily, Mobile Home Parks, Assisted Living, Self Storage, Syndications, RE strategies, etc.. Posted: 17 Jul 2020 08:13 AM PDT Update: 3pm EST - Great questions from everyone, I was able to get to most of them, but I've got to get back to the real work. Go ahead and post anything else, I'll hop on tomorrow and answer anything remaining. ​ I'm back! My last AMA on this thread was 2018 and since then, the market has obviously changed. At that time I strongly voiced an opinion that the real estate market was demonstrably over-valued; further, I argued that despite the great returns since 2012, the appreciation gambling style of investing exacerbated by BiggerPockets, HGTV, and even well-known syndicators will leave many investors walking away with little more than they put in. All this said, I think it's a good time to re-visit best strategies and aspects to ensure that you're still making money in real estate, avoiding the missteps of others, and building a long-term portfolio. Below are some Question and Answer type thoughts that I think you might find helpful. You can also refer to my first AMA in 2018 where I talk about different market types, the influence of capital markets, and the mathematical importance of cash flow. ​ What type of Markets should I buy in? While the headline real estate trend is often about targeting Millennials moving to major US metros, internal US net migration is actually at a 30 year low. More importantly, for the migration that does persist, runaway rents and home prices in US metros have shifted the migration pattern of middle and lower income cohorts away from urban metros towards less expensive suburban markets. Study: MIT Economics, 2019 - Work of the Past, Present, and Future Study: NY Times, 2019 - Why Workers Without College Degrees Are Fleeing Big Cities" Study: Pew Research Center, 2018 - Demographic and economic trends in urban, suburban and rural communities Only 1/3rd of the US has a college degree, and of those with the degree, an increasing percentage have degrees that will not plug into the increasingly complex global economy. Technology induced income inequality will likely continue, further increasing the portion US renters that respond primarily to price. My conclusion: Secondary and Tertiary Markets will likely have better economics, outlook, and competitive advantages. From a competitive standpoint, smaller markets also offer shielding from larger institutions as they are too small for S&P backed owners with shareholders that seek no more than de minimis returns. In other words, as an individual buyer or small syndication, your local advantages will usually go much farther. ​ What type of real estate projects are best right now? Consider More Complex and/or Distressed Projects – With BiggerPockets and syndicators abound, there is an over-abundance of "standard" projects. For example, I see probably 100+ examples a year of a of 150-350 unit Multi-Family Value Add project in semi-growing markets with a third party property management company. This is not a coincidence. It is the result of a variety of training programs that exist throughout the RE community that over-emphasize one particular strategy. This also means that projects that are deeper value add, require re-purposing, have an environmental component, or virtually any other aspect that requires extra work and expertise will likely be universally avoided and have a much better risk adjusted opportunity. If investing and managing yourself, consider partnering with a construction team. Give them a slice of equity to join the project and go after projects with foundation issues, environmental problems, repurposing needs, deep cleaning needs, etc... Avoid Over-developing Multi-Family Projects – It's extremely rare to find a property that is truly "under-market", and if you truly believe that you have the ability to consistently find these properties, you may want to consider brokerage. Buying and raising rents is not easy without providing some value to the tenants beyond luxury finishes. Instead, you may find properties in the C class market where the tenants are not treated by management very well. Some paint, cleaning, and general respect to the tenants will go a long way in reducing long term cost, decreasing turnover, and allowing modest rent bumps. That will go much farther than trying to add $100/mo for some unnecessary luxury. If investing with someone else, seek groups that are vertically integrated with construction or their PM and doing something unique to the assets. I like the asset roll-up model where many small nearby assets are purchased and centrally operated at a cheaper cost than the previous owner. ​ How do I think about current and future assets as they relate to Covid? There are many ways to look at Covid or any potential problem for that matter, but my conceptual framework is pillared on two levers: cash flow and exit caps. As for cash flow, multi-family rental collections are demonstrably more stable than the S&P and home prices. As the economy goes down, there are less buyers and more renters. As the economy goes up, asset prices go up and again less buyers. There is thus somewhat of a state of equilibrium. This is why rental rates have stayed relatively steady through previous downturn, and more importantly, why multi-family is perceived as so valuable. Covid-19 shouldn't be disastrous to your cash flow, and if it is, than that would likely be indicative of a horrific crash in the broader economy, in which case your returns would likely be doing far better than other market or RE strategies. As for exit caps, this is essentially your exit price. This is a very nuanced discussion, but a simple take away would be this: as long as you have very high cash flow, you can hold the asset, collect your returns, and steadily paydown principal. If you have to hold an additional 2-3 years for the market to stabilize it won't be a problem. Alternatively, if you are doing a flip project of some sort where you need to get out of the asset, than you'll likely need a much more nuanced consideration of the market, debt rates, valuations, etc.. Happy to answer questions on this. ​ 3rd Party PM, Direct Management, or Syndication? It depends on your location, if in a High or Very High Cost of Living area, than I would consider syndication in a portion of the country with better returns/value. If not, you should look to buy and manage directly assets that will generate substantial cash flow to protect your investment. I never recommend using a 3rd Party PM. We are simply too late in the cycle. There is very little value in simply owning an asset. u/somecats had a great post about this here:https://www.reddit.com/r/realestateinvesting/comments/hgdyom/i_am_a_failed_real_estate_investor_heres_what_i/ . I can dive deeper into this as needed. ​ If purchasing directly, what can I do to improve the likelihood of solid returns? I've touched on these aspects above but here are few easy takeaways in short form: Tenant Respect Models - All too often in B/C class assets, especially in smaller markets, the tenants are not very well respected. Out of state owners essentially mail them notice of increased rents and the 3rd PM could care less. Instead, considering doing things like 6 month inspections where you walk through and listen to their experience on what could be better, occasional gift cards, staff training on how to speak to the tenants, and most importantly, when something isn't working fix it quickly! This model will keep tenants staying with you through downturns and respecting your units. Through Covid, my assets that utilize these models actually have higher occupancy than before. Keep the unit under market - don't chase the highest return, chase stable occupancy. Keep substantial extra cash on hand to weather any kind of storm. This will smooth out returns and prevent the likelihood of needing an expensive injection Align your entity with your broker - by getting them into the deal, you can usually get a better price. Consider Floating Debt - There are many out there stuck with fixed debt that they thought would be the best rate for the next 10 years. By utilizing floating debt, (you can often buy rate caps too to prevent it from going over a certain threshold), you can prevent the likelihood of the being stuck with an asset that needs a huge prepayment penalty to exit. ​ What returns are realistic, what should I target? 7% cash on cash return as absolute minimum in Y1. 10% by year 2. 2X over 6 years, this equates to about an 18-20% yearly IRR. If you are directly managing in a low cost area, you can likely beat the above numbers. If you aren't or you can't, then a basic syndication should have at least those numbers and may offer better protection and diversification. More sophisticated syndication strategies will have higher returns. Should I have others invest with me? Should I invest with others? Over time, it's probably best to do both. It doesn't really matter the size, but it's more about the experience. If you take on investors, you should have a clearly articulated strategy for not just the current aspect but the next few. 95% of my investors either came through someone who has already invested with me, or they started with a small amount and we built the relationship over-time. So if you have just 1 asset you're looking to take down, that's not that compelling to an investor; but if you want to buy 3-4 multifamily assets in an area over the next few years and manage yourself, well, that's something we can build on. If you invest with others, a few quick things to look for: minimum 8% preferred return, no catch-up provision, 7%+ in Y1, and an understanding of how the group can own/manage the asset more efficiently than the previous owner. ​ Final Thoughts It's a really tough time right now in Real Estate. The youtube videos, blogs, websites, podcasts, etc.. are selling an easy idea that's primarily dried up over the last few years. However, if you work to develop more sophisticated strategies now you can still do very well; and when the market does eventually turn, you'll be able to keep snowball rolling and building your empire. submitted by /u/HobbesNYC [link] [comments]

Help dealing with a tenant that screwed us over - first timers into this business Posted: 17 Jul 2020 11:09 PM PDT Hello there awesome people, I have a situation and I am looking for advice. We acquired a multi family unit in March this year, and we had one tenant who was very very very hard on us, that already lived there when the sale happened. The previous owner had all the tenants on a month to month "lease", where he did not really document anything (Oh the way he went about with the property can be a good long story, he basically did 0 maintenance for a couple of years which rendered the units needing a lot of TLC), no leases were actually written, no documentation preserved, and he used to collect cash from these people around 10 -15th of every month and no documentation nor reciepts. Thereby, there was very little information on the leases during the sale. So we tried getting the tenants on leases after we took over and 3 out of 4 agreed upon leases with the same rental price. And this fourth tenant never agreed to sign the lease, so here is the modus operandi. She, inorder to sign the lease first complains and asks about a new range, we give her one, new refrigerator we give her one, then complains that the previous owner promised her with a new washer and dryer, we got her stackable frontloaders. Now she complains she needs dedicated parking spot where in the community no one gets one, she complains her AC needs fixing and we send technicians out. She often locks her unit when we come for inspection, we feel sometimes intentionally. We tried our best to keep her but we figured out she was just taking us for a spin and gave her a 30 day notice to vacate. So she overstays 15days into her move out date, does not pay rent for the 15 day portion, and after she finally moved out, we go into the unit, find the flooring pretty badly damaged, cabinets broken, the place infested with roaches, many electrical fixtures badly damaged and needs replacement, and the baseboards literally ripped off. We only know her name and a phone number (remember the first thing we were trying to do was to get her to sign a lease and she simply does not do it) How do we hold her accountable. I think she has rendered the unit in such a terrible state where it needs almost 6 - 10K in repairs to make it even livable, and the deposit we have does not even cover basics, and we cannot think of any way to hold her accountable. TLDR: How to deal with tenants from hell, especially when they are on month-month or almost no lease. Could not get them to sign the lease, told her to leave and discover that the place was a mess submitted by /u/mwmwmmw [link] [comments]

Have you ever purchased a property that you didn't fall in love with, but proceeded anyways because the numbers made sense? Posted: 17 Jul 2020 09:19 PM PDT Hi investor friends, Basically I'm on the market for my next rental property, which would be my second one. so I checked out a 3 unit rental property today, It was in great shape but I was less than impressed with how it looked, it was a bit smaller than I expected. Even though each unit is 3 bedrooms they were fairly small! It needs minimal work, mainly cosmetics, paint, new door trim, and one pair of windows, and has a 5 yr old garage(2 and half car) Rents are fairly high, the metra train station is a 5 minute walk which takes you to downtown, it's in a B+ neighborhood. I walked away feeling iffy about the place, mainly the small bedrooms turned me off, when I got home I calculated the numbers again, and they made sense and met my goals, and that's when I snapped out of it. wait a second, why do I care that the bedrooms are small anyways? I'm not living there anyways! This is purely an investment property. Anyways, i'm probably going to place an offer on the place but it's an interesting feeling knowing this is a great investment property, even though I didn't fall head over heels for the place. Extra info: rents average ~1400 for a 3bedroom unit.COC return is roughly ~27% 2/3 units are currently rented. Does anyone have a similar experienced when you purchased a rental property? submitted by /u/zero_limitz [link] [comments]

Should you work with an realtor who also invests? Posted: 17 Jul 2020 06:17 AM PDT I always wonder about realtors who invest -- if they find a good deal, why wouldn't they just take it themselves or to a funding team, especially if they know my area and niche? submitted by /u/REIapocalypse [link] [comments]

First remodel/rental Posted: 17 Jul 2020 08:39 PM PDT Okay so I made my first offer today on a run down duplex. It needs a new roof, one side has cat piss smell and needs to be takedown basically to the studs, other side has long term smoker too so about the same. New roof kitchen furnace ac units floors kitchens garage doors walls trim windows doors etc. I'm thinking best case scenario 50k worst case 80k. I made the offer for 105 and think I could appraise it out 205 after aol of those updates. Cash back refi would be about 1200 a month and I think I could get 850 each side. I could also pull out. If I can keep the budget under 60k I can pull all of my money back out and then buy a smaller single family cash or do another multi family. Do those numbers make sense? I'm also moving in doing 3.5 FHA owner/occupy and pay $915 a month in rent right now so that would also help the numbers. submitted by /u/Brochaho [link] [comments]

How does this look for an investment? I have never owned a house and want to start small. Im 24 Posted: 17 Jul 2020 09:49 PM PDT Annual Income Analysis Purchase Price $67,500 Down Payment 30 years $13,500 - 1st LTV 80.00% $54,000 - Mortgage Payment 4.75% $282 Property Taxes $138 HOA Fees $0 Property Management $83 Insurance $25 Other $0 Total Monthly Expenses $528 Low High Rent Range $825 $825 Cash Flow $297 $297 Annualized Return (Based on down payment) Cash ROI $3,568 26.43% Principal Reduction $833 6.17% Tax Reduction $490 3.63% Appreciation (Rate used is 3.00%) $2,025 15.00% Total ROI $6,916 51.23% Idk why we can't post photos but yeah. Tenant is already there and it's right outside st. louis MO. Ask questions for more info and i'll look at the page. This is from an property management investment website where they find the houses for you and stuff. submitted by /u/zachrf1 [link] [comments]

Anyone doing the BRRRR method? Posted: 17 Jul 2020 08:30 PM PDT I am new to real estate and I was wondering how the BRRRR method works. If I renovated, rented and refinanced the first property, how will I finance the second house? If I use the money from the refinance for the downpayment and get a mortgage from the bank, wouldn't they be financing the house 100%? Is this how the BRRRR method works? If so, why would the bank agree to this if they are financing 100%? I apologize in advance, I am still new to real estate. Thanks! submitted by /u/vivalacarlo [link] [comments]

How to find out if 3 piece bathroom is legal in attic of a legal duplex (NYC) Posted: 17 Jul 2020 08:09 PM PDT Just bought a 2 family house. It is 3 floors, with the first floors as unit 1 and the 2nd and 3rd floor (attic) as unit 2. The CofO is from 1972 and the 3rd floor is legal to be occupied as a duplex. Back then, the CofO doesn't list any the number of rooms and bathrooms like they do now. My question is, is there any other information that the Department of Buildings inspector can access besides the CofO to see if a bathroom is allowed on the 3rd floor or should I not even be worried? Also what about a 2nd kitchen in the 3rd floor (sort of like an mother in law space) Thanks submitted by /u/soyeahiknow [link] [comments]

Must haves and any underrated terms in lease agreement. Posted: 17 Jul 2020 11:01 AM PDT What are some must haves on a lease in order to secure yourself and property from anything down the road ? submitted by /u/USCTrojans93 [link] [comments]

Release of Earnest Money Posted: 17 Jul 2020 01:06 PM PDT I had an offer on a residential property but the financing didn't go through by the loan contingency date. I let the agent know, and we got the and extension from the seller (signed document) for 7 days to try to work it out with the lender. We couldn't so I let the agent know and he sent me the docs but the residents are saying they don't want to sign unless they receive a "payment" for their time. They had previously received $100 but they want a part of the %1 earnest money. Is there any recourse? EDIT: I am already out for the inspection and the appraisal, I don't want to lose any more money on the deal submitted by /u/hiddenonion [link] [comments]

Investing in San Juan, Puerto Rico (Miramar) Posted: 17 Jul 2020 07:01 PM PDT Hey guys, I live out in the US and have been eyeing a property over in PR. It appears to be in a good location (lots of businesses near by) and the it seems like I may get a good deal. However, this would be my first investment in PR. I was wondering if anyone else has any experience with long term rentals over there? I saw an article that claimed there's a 29% tax rate on rental income for nonresident investors and I'm not sure how accurate that is. If anyone has any info on this, I'd really appreciate it. I'd also love to hear your thoughts on real estate investing over there in general. submitted by /u/DaBoriPRodigy [link] [comments]

Investing on fractional vacations places Posted: 17 Jul 2020 02:45 PM PDT Have any of the investors here looked at the model of investing on fractional ownership in highly demanded areas? Any recommendations or experiences? Looking currently in Mexico PUerto Vallarta area. submitted by /u/figuebittar [link] [comments]

HELP A NEW INVESTOR ANALYZE HIS FIRST RENTAL Posted: 17 Jul 2020 05:53 PM PDT Hello! This might be kind of long winded so I apologize in advance. I was given a deal by a family friend and want to know what investors with more experience than me think about it. Here are the details.. Quick background, the house is located in Denton, TX & has been used as a rental for at least a decade. Its also easily worth 250,000 - a smaller house (1 less bedroom, & about 500 sq ft) across the street sold for 255k a few days ago. The owner selling to me is a family friend & realizes they are taking a loss but want me to have the house to use as an investment with owner financing. My plan is to house hack this property and use it as a rental in the future. It is a SFH but the garage has been converted to an efficiency with A/C & closet to be used as an additional room. Also has a small "kitchen" with fridge but no dishwasher, or oven. It does have its own full bathroom. Purchase Price: $189,000 Rehab cost: $21,000 Down payment: $0 Interest rate: 5% Monthly Rent: 1650 (while living on one side) $2350 fully occupied. HOA: $0 PMI: $0 My girlfriend and I both have jobs that are essential, take home of about 4,300 between the two of us.. and about 15k in reserves between the two of us after all house expenses are paid. Our plan would be to refinance in the first 6-12 months to lock in on these low rates and increase our cash flow significantly. Im not sure if im leaving things out, but Im sure that I am forgetting something. Any reviews, analysis, tips, or advice is greatly appreciated! submitted by /u/bruhparker [link] [comments]

Triple Net Lease Investing Posted: 17 Jul 2020 10:15 AM PDT My family is selling some property, and I'm considering doing a 1031 exchange to avoid large capital gains taxes for my share. One thing our attorney alerted me to was Triple Net Leases where you own the property, but the tenant is responsible for property taxes, most maintenance, insurance, etc.... I guess the thing I'm worried about in the long term is what happens to the principal of the investment over time. Once the lease expires, or if the tenant leaves, what kind of situation are you left in? Can you get your initial investment back out? If I wanted to hire someone to advise me on a Triple Net lease property, who should I approach? There's nothing in my price range locally, but about two hours drive away, in a smaller city, is a business condo in a popular downtown with a well-established fast food chain that just signed a new lease. submitted by /u/Astabledivider [link] [comments]

Hot market! My Advice? Posted: 17 Jul 2020 05:07 PM PDT We have been in the house only one year. Bought it for under 250,000. Neighbors are selling for 290,000 and the don't have central air, they have base board heat. We would be fine to move out of the city for a comparable house and price to what we originally paid. I've heard you should keep a house at least 5 years. But does that take into consideration the market around? Thanks for any advice submitted by /u/gojireh [link] [comments]

Primary Residence in LLC - New York Posted: 17 Jul 2020 01:16 PM PDT Hi, What are the tax reasons for/against having a primary residence in an LLC? I can see the benefit of having rental properties in an LLC but what about for primary residence? Thanks submitted by /u/merton23e [link] [comments]

Deal analysis help for new investor Posted: 17 Jul 2020 07:55 AM PDT Hello! I'm interested in getting started in real estate investing with house hacking. I found a duplex in my area that roughly fits the 1% rule which is rare enough for my area. When calculating the cap rate I only get 2.61% using full market rent (not accounting for me living in the other unit). I can't help but think I'm doing something incorrectly and would love it if someone could double check my numbers (and strategy, for that matter) for me. Purchase price is $155,000 Monthly rent $1550 (The other half of the duplex pays $775) Property tax ~$127/mo Insurance ~$92/mo Mortgage $762/mo Vacancy (10%) $155 Maintenance (5%) $77.50 In the end I get a cashflow of $336.50/mo or $4038/yr divided by the purchase price of $155,000 and I get a cap rate of 2.61% Cash on cash return looks better because I'm using a loan product that requires 0% down and has low closing costs ($2500). I'm intending to only live here a year, but want to get in the game with as little money out of my pocket as possible. Is the higher mortgage what's killing me? Thanks for all your help! submitted by /u/Joe_Bee [link] [comments]

House Hacking Checklist Help Posted: 17 Jul 2020 01:18 PM PDT I would love to get people's opinions/help with my house hacking checklist that I'm putting together in an attempt to guide my investing. Background (feel free to skip): I'm 26 yo and have my first home. I rent out the bedrooms & live in the basement. The home is near DC (where rental rates are FAR from the 1% rule), 340k value, 2.2k monthly mortgage/escrow, 1.6k in collected rent, 1.9k if entire house were rented. I want to create a system in order to keep buying & renting out the previous. My initial checklist: -neighborhood appreciation of >4% -buy <75% of ARV -repair cost to ARV of 5% -renting BR separately gets 125% of mortgage -renting whole house gets mortgage +$200 /mo What else should I be adding for a simple checklist? submitted by /u/RoyalT408 [link] [comments]

Really weird/bad deals you've seen actively advertised Posted: 17 Jul 2020 01:10 PM PDT Just saw this on Zillow in a small town in Alabama where similar houses go for $80k, they want $62k: FOR SALE IS An Undivided ONE-HALF INTEREST in real property subject to a deed restriction of JOINT TENANCY WITH RIGHT OF SURVIVORSHIP. Property located at xxxx, The other joint owner?s interest is NOT for sale. House is occupied by prior owner who lives there rent-free, DO NOT DISTURB TENANT. ​ Was wondering what other weird or terrible deals you've seen advertised.... submitted by /u/Nouseriously [link] [comments]

Out of state investing Posted: 17 Jul 2020 12:51 PM PDT I think that there is a generally high level of discussion and practical advice given on this subreddit. This is the one area that gives off a clear r/wallstreetbets vibe, imo. Out of state ownership has a very different risk profile. Professionals or high net worth individual can handle that risk. I'm not arguing against the strategy, of course it can work. And people are free to buy wherever they want. I am suggesting that we can do our own community a better service by offering a little more skepticism around the narrative that this is a viable asset class for practically anyone in a HCOL area. Anything remotely close to that narrative is insane financial advice to give the average person. submitted by /u/OilersMakeMeSad [link] [comments]

Renting where you live while investing in rentals? Posted: 17 Jul 2020 12:32 PM PDT Is it a popular idea to rent while you invest and never occupy a property you own? I don't often see/hear people talking about this, but maybe I'm just not looking in the right places as I usually come across more house hacking or live-in flip topics. submitted by /u/IncomePwobwem [link] [comments]

Is selling my current home to purchase a new home the right way to go? Posted: 17 Jul 2020 12:22 PM PDT I would like to get some feedback on my current situation. I currently own a home that's valued around $500k with $60k mortgage payments remaining ($700/mo Mortgage). I'm interested in purchasing a brand new home in a better location. Here are some of the options running around in my head. Keep my current home and rent it out for $2000-2500/mo. I may need to put in $50k on repairs. Sell my current home and cash out approx. $400k to put towards a new home. The new home would be around $800k (Est. Mortgage payments of $2000/mo) I'm stuck on which we'll be better in the long run. The new home could possibly increase in value due to location and feel my current home value is at a standstill. Current home: 93033 Zip, Built-in 1966 New home: 92618 Zip, New development Any wisdom and feedback is greatly appreciated submitted by /u/abstraxxstandalone [link] [comments]

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