Real Estate Investing: How to run a market analysis

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• How to run a market analysis
• Property management fee questions - am I getting ripped off?
• Bought my first investment property last year and have renovated during the pandemic, trying to navigate if to refi and how to leverage it!
• What are your ideal boxes that a property should check before investing in it?
• After trump's tax return reveal, do you think real estate investors will start being demonized?
• Multiple payment security deposit legality
• Looking for some insight from people with first hand experiences with SFH and Multifamily(2-4 units) rental properties. Which do you prefer? What’s some positives and negatives?
• First rental deal...advice needed.
• Keep my condo and buy a SFH or sell for a duplex?
• Can you share your experiences with Mainstream Voucher program?
• QBI and Rental Income
• Closing Cost
• Whats the process you use to analyze a property?
• Pro bono advice for one real estate legal question?
• Good place to start?
• How can I make a property in a rough neighborhood more appealing?
• Bank foreclosure?
• Combining mortgages?
• What to do in my situation?
• Best exterior improvements for top-dollar appraisals?

How to run a market analysis Posted: 28 Sep 2020 09:20 AM PDT DISCLAIMER: If you are a new investor I highly encourage starting off in your own back-yard. If you do decide to expand out of state than its crucial that you have folks on the ground that you trust with 1,000's of dollars. The Initial Silo Before you spend any serious time analyzing a market you need to understand what kind of investor you are; financially and emotionally. Are you risk averse? Limited capital? Looking for day one cash flow? Short term appreciation? Investment strategies and metrics can vary by region. If out of state and starting from from ground zero. Begin with choosing a region (i.e. mid-west, west coast, sunbelt, east coast) based on your investing style. Then narrow your search to metros, and then neighborhoods. Now on to research. Important Demographics I break demos down into three categories. (1) Demand Drivers, (2) Economic Health, and (3) Supply & Demand. Demand Drivers. Insight into past & present growth. Population Growth (historical and current) Household Income Growth (historical and current) Job Growth (historical and current) Home Value Growth (historical) Economic Health. How costly, temperamental, and diverse the economy. Unemployment Rate Median Household Income Cost of Living Poverty Level Economic Diversity Supply & Demand. Insight to how competitive a market. Rising supply over demand = lower prices. % Renter Occupied Inventory Vacancy Under Construction Units (as % of inventory) Absorption Delivery Once you understand the supply side of the equation you can layer the demand numbers on top. Be sure to read up on local legislation and zoning to find/understand supply constraints. Example of how supply effects rents: Let's say a metro has 750,000 households. 25% of the population are renters, or 187,500 renter households. 50% of the renter households live in multifamily units (93,750 units). Vacancy rate is 5%. So, there are 89,063 occupied multifamily units. AKA Demand = 89,063 rental units. (750,000*.25 =187,500 ; 187,500*.50 =93,750 ; 93,750*.05 =89,063) ​ Year 1 Year 2 Year 3 Year 4 Year 5 Inventory Units 93,750 93,750 93,750 93,750 93,750 Vacant Units 4,688 2,016 -736 -3,571 -6,491 Multifamily Renters 89,063 91,734 94,486 97,321 100,241 No New Supply How many units per year would need to be built to keep up with growth? With a population growth of 3%, developers would need to deliver 3,000 units per year to keep up with demand. Here's what the forecasted supply would look like if 3,000 units were brought online per year. ​ Year 1 Year 2 Year 3 Year 4 Year 5 Inventory Units 93,750 96,750 99,750 102,750 105,750 Multifamily Renters 89,063 91,734 94,486 97,321 100,241 Vacant Units 4,688 5,016 5,264 5,429 5,509 Vacancy Rate 5.0% 5.2% 5.3% 5.3% 5.2% 3,000 New Units Annually Applying these demographics You now understand what kind of investor you are, what region fits that style, and what demos to keep an eye on. It's time to apply this knowledge. The first step is identifying the metro. Start by compiling a list of possible metros and use Neal Bawa's rule of thumb guide to filter**.** Metros: Population Growth Large cities (i.e. LA/NYC) = 10% growth since 2000 Smaller cities (i.e. Phoenix, Orlando, Las Vegas, Columbus) = 20% growth since 2000 Income 30% growth since 2000 Median House/Condo Value 40% growth since 2000 Crime Sub 500 on the city-data crime index Major Employers No one employer has greater than 20% market share Time to niche down to neighborhoods. Neighborhood: Household Income Between $36-$70K Poverty Level Sub 20%. Unemployment Rate Not 2% greater than the metro rate. Diversity No on race is 75% or more of an entire population Path of Progress Next – identify the path of progress. This further solidify's what neighborhoods are of the best quality and which neighborhoods you can expect to see growth. Use the Wendy's Model. Wendy's historically followed McDonalds in order to attract demand. Like Wendy's follow the national retailers. They will find and create demand. Let them do the dirty work for you. The best tool for this is Google My Maps. You can search major retailers (i.e. Target, Whole Foods, Costco, OrangeTheory Fitness, etc.) and pin them to your map. Be sure to keep the pins to a minimum. Be selective. By adding too many tenants you will muddy the map — defeating the point. Comps and KPI's You now know what neighborhoods are good or bad and where growth is headed. Time to focus your attention on the real estate -- comparable's and key performance indicators. Key performance indicators in real estate Vacancy Cap rate Annual rent growth Absorption Delivery Market rent/unit Market sales price/unit Rent Surveys & Sales Comps First, run rent surveys on each neighborhood you identified as "good". There are a myriad of resources for this — craigslist, apartments.com, hotpads.com, etc. Build out these surveys in excel. Make sure your noting things like Class A vs. Class B and renovated vs run-down. Next, run comps using actual sales data and rents at time of sale. This will give you an average sales price, average rent rate, gross rent multiplier, and cap rate. Make sure date of sale is within a reasonable time frame (2 years). Use this info alongside your underwriting and you over time you will be able to clearly see good deals vs bad deals. Done. submitted by /u/bigmoneysine [link] [comments]

Property management fee questions - am I getting ripped off? Posted: 28 Sep 2020 06:11 PM PDT Hi all, I have been working with a property management company (remotely, I don't live full time in the area) on two of my properties. I'm just trying to get my feet under me, and I haven't been super impressed with their performance so far, but given the current situation with COVID and everything, I figured some leeway was in order as they probably were meeting crazy times. However, they just sent me over a new agreement they want me to sign as we onboard some new houses, and my gut tells me it's looking bad, and that I should negotiate down some of this stuff or take my business elsewhere. I have some cashflow cushion on the properties, but the amount of fees they have in the agreement seems ridiculous to me. I may be busy, but I can still do math. The rent on these houses is about $1000 per month. Here is the full list of stuff: They didn't even mention it when discussing with me in email, but the management fee as a % of rent per month was increased from 8% to 10% in the agreement. ($50 minimum) A $99 "set up fee" will be charged to me when the agreement is completed. (?) Supposedly for setting up bank accounts, software systems, resident introduction packets, and so on. What? A $40 annual tax preparation fee to cover the cost of tax administration will be charged. A $75 "Property Visitation Fee" will be charged if they need to meet someone at the property "outside of their scope of management". What? A $75 "Collections Filing Fee" will be charged if I choose to pursue collections with a tenant. A $75 "Court Appearance Fee" will be charged if they are required to appear in court on my behalf. Not a fee, but there is a bunch of language about not dealing or negotiating directly with tenants concerning any matter related to the management or leasing of the property. Seems excessive. A $10 per month fee if they are not listed as "Additionally Insured" on my insurance within 14 days of completing the agreement. (Will this affect my insurance cost?) 50% of one month's rent to place a tenant (previously this was done for me in two houses for about 25%) $150 fee each time a tenant renews or extends their lease agreement. They will keep all fees such as late fees. $100 charge for "turning over all documentation, accounting for all funds, archiving all files" and blah blah blah upon completion or termination of this management agreement. Big fees for early termination for this agreement. "There is a one time early termination charge of $300. Owner will reimburse Manager for any refunded applications, or unpaid fees caused from this early termination. Cancellation Fee during the first twelve months = $600". Rates for skilled labor, I'm not sure if market but worth mentioning. $45/hr for labor and maintenance handled by in-house maintenance staff. OK, this seems shady too: "Owners should consider this notice that on occasion without accounting to Owner, Manager may receive incentives, reimbursements, referral fees, or cash payments from business associates including cable companies, internet service providers, contractors, and vendors to refer or participate in joint business arrangements relating to repairs, inspections, improvements, maintenance, referrals, or group marketing efforts". So, they're going to also farm out all that stuff for kickbacks on top of all the other fees? $85 fee for a requested home assessment $85 fee for an 'Initial Home Inspection' for each property that does not have a Move-in inspection when they begin management. The back of the agreement has an addendum trying to sell me on "Landlord Protection Insurance" (with no mention of how much it costs by the way) and requiring that I explicitly opt out of it. "As part of our risk management protocol we require the Landlord to sign an opt-out declaration if you choose not to be protected". 🙄 ​ Am I being unrealistic about the cost of property management? This seems like a rip off and fee mess waiting to happen to me. Considering I'm up to five doors now, I gotta figure I'm at least not a tiny size account, and it feels extremely shady that they just tried to slide all these ones by me in a quick contract. I'm not even sure I can still make money on these things after all these fees, but I haven't called any other property management companies in the area to check out their competition. submitted by /u/EarthquakeBass [link] [comments]

Bought my first investment property last year and have renovated during the pandemic, trying to navigate if to refi and how to leverage it! Posted: 28 Sep 2020 08:58 PM PDT Hey all - I'm a lurker here and a newbie to real estate investing, so please excuse my ignorance. I bought a foreclosure in November 2019, my first real estate purchase ever - a two family house that needed a lot of love in a ski town destination for $105,000. I financed $85,000 of it and currently owe about $82,000. My rate is 4.250% and I have healthy credit. Since I bought it, I've put about $45,000 of my own cash into the two vacation rental units and should have some decent equity built into the property now. Furthermore, real estate in the area is very strong with people fleeing the city. My question is quite basic - since it's my first mortgage, should I be looking to refi now on a smaller mortgage like this? If so, what do fees look like for someone in my position, and should I take cash out of the property? If I take cash out, are there any different stipulations as to what I can do with it? Anything else I should know at this stage? Other notes, the property is now generating enough cash flow to cover itself at partial capacity, and should throw off double what is needed when all is up to speed. I'd like to find my second property in a year or so once that is the case, or explore buying my own home (I currently rent a place with roommates that's cheaper on me than the property taxes alone would be on a house in my area). Again very sorry for my elementary knowledge. I appreciate the feedback. submitted by /u/cayenne444 [link] [comments]

What are your ideal boxes that a property should check before investing in it? Posted: 28 Sep 2020 09:25 AM PDT Some brief context, my wife and I have been diligently saving for the last several years and plan to have about $50k in cash on hand by spring of 2021. We both are extremely interested in investing in real estate as the first house we bought to live in has done well for us over 5 years and we believe that it is a viable area to grow our wealth. We live in Texas and are outside of the Dallas suburbs market. Tried to glean info from this sub but a lot has been more general. I'm interested in what specifically you look at before making a purchase on a rental. Appreciate any and all insight! submitted by /u/coltonmusic15 [link] [comments]

After trump's tax return reveal, do you think real estate investors will start being demonized? Posted: 28 Sep 2020 10:48 PM PDT It looks like a lot of people just have W2 income and have no idea how deductions on a business or real estate work, do you think people will soon start targeting real estate investors and accusing them of paying no taxes on their rental income because of all of the deductions they are able to take? I wonder if they will say we are no better than amazon because we can make it so that we pay no taxes on rental income. submitted by /u/soi7isdead [link] [comments]

Multiple payment security deposit legality Posted: 28 Sep 2020 06:36 PM PDT Is it legal to have a tenant pay into a security deposit over time (e.g., 4 months). This would be particularly appropriate for rentals in a low income area. I would want to charge the maximum legal security deposit, but it's unlikely they would be able to pay that as a lump sum. submitted by /u/maraschinoBandito [link] [comments]

Looking for some insight from people with first hand experiences with SFH and Multifamily(2-4 units) rental properties. Which do you prefer? What’s some positives and negatives? Posted: 28 Sep 2020 09:59 AM PDT I'm saving up for a rental property. I'm looking to get into SFH and/or multi family investing. I'm just thinking of what to expect from each and which would fit better for me. Thank you! submitted by /u/tmoney1297 [link] [comments]

First rental deal...advice needed. Posted: 28 Sep 2020 03:12 PM PDT Hello Reddit Community, I've been looking around the community for a while now and listening to podcasts. I finally decided to take some action. I got preapproved and start placing offers. My first few offers fell through and I finally landed one that's in contract. I'm nervous as hell so I thought I'd share the details with you guys and see if I can get some reassurance or at least some advice. It's a 4 unit property for $150,000, fully occupied. One studio ($375/month), one 1-bedroom ($515/month), and two 2-bedrooms ($695/month each) Total gross rent: $2,280 Morgage ($550) + Tax ($300) + Management ($200) + Repairs & Saftey Fund ($200) = $1,280 So from my understanding, I'm going to make about $1,000/month Am I missing something? I know some things out of my control are possible like evictions or misc repairs. I'm also kind of nervous because the building was built in 1898 but the two 2-bedrooms have been completely renovated. Also, another thing that is making me nervous is their counter. I placed the offer for $150k and they countered with this. "Hi Jared, Spoke with my partners and here is our response. 1. We added a 48 hour period directly after full execution of a contract, during which you and/or your clients need to walk through the property and determine if you are going to move forward. 2. We shortened the Inspection period to 10 days and the post-inspection period to 4 days 3. We changed the tax proration to short (very heavily traditional in Montgomery County) 4. We added an assessment that Buyer's will be responsible for after closing on the property. It is a sidewalk assessment that was revealed in the RPD and runs through 2027 at approx. $200 annually. 5. We eliminated Dishwashers from the inclusion list, as there are not any dishwashers belonging to the Seller. We have left our counter offer open until 8:00 PM this evening. Please let me know if you have any questions. Thanks, Kevin" I told them shortening the inspection period was a no go so we were able to negotiate to 7 days. Does anything in their counter offer seem alarming? I would like to thank the community to getting me to where I am today. I wish you are all doing well during the pandemic. Have a great day! submitted by /u/MatthewKhela [link] [comments]

Keep my condo and buy a SFH or sell for a duplex? Posted: 28 Sep 2020 04:16 PM PDT I'm a bit stuck right now and would love some advice on which option makes more sense, at least financially. I currently own my condo and am in a place where I really need some more space. I've wanted to get in to owning investment property for quite a while, but I'm trying to decide what the best option is. My preference would be to own own & occupy a duplex for a couple of reasons; the convenience of the rental property being right there, and minimizing risk by only having one roof and foundation to worry about. The problem is I'm in a competitive market and duplexes in my price range are somewhat rare, I've been watching listings come and go since February, and I'd guess that I MAYBE see one I'd consider viable a month, I'd also need the cash from selling the condo for the down payment, which makes the whole process tricky. I could also just keep the condo to rent out and buy a SFH, which I have enough cash to make work. Not losing the money from the sale would be nice and would be WAY less stressful, but I think there's a more than decent chance that there are going to be some repairs needed for the building coming soon that the reserves can't cover, also, I've done some renovation work myself that I, quite frankly, question the longevity of and would love to not have to worry about falling apart. ​ My mortgage, HOA, tax and insurance payment on the Condo is $1400 and the $50 pmi will come off in a year or two. the last unit in the complex to be rented out was for $1600/month, while a lot of the duplexes I'm looking at have somewhat similar profit margins, with total payments being about $2500 with comps between $1400-1600. submitted by /u/gamblors_neon_claws [link] [comments]

Can you share your experiences with Mainstream Voucher program? Posted: 28 Sep 2020 06:55 PM PDT I am trying to do research into it. Ive had a few people request that I take it. For the most part it seems pretty simple. But most of the things I read about it are from the program itself so of course it makes itself sound great. Im not really sure what some pros/cons would be other than a reliable monthly income paid for by the state. I would appreciate any of your experiences or opinions with the program. submitted by /u/Aggravating_Market [link] [comments]

QBI and Rental Income Posted: 28 Sep 2020 02:53 PM PDT Hello REI, ​ Anyone taking QBI on your rental income who doesn't qualify as a real estate professional but have multiple properties? submitted by /u/Tellmewhatingon990 [link] [comments]

Closing Cost Posted: 28 Sep 2020 05:14 PM PDT I am looking at my first investment property and got a letter of approval with the estimated closing cost and etc.. but doesn't seem right here. My closing cost is going to be around. Here is the bottom line break down, let me know if you need the details. Purchase Price 70,000 Total Estimated Closing Cost: 6,700 Total Estimated Reserve/prepaid costs 1700 Discount (if borrow will pay) 1,120. ​ Total Cash to settle 21,000. ​ Does this seem right to anyone? ​ Edit: Correct closing fee from 6500 to 6700 submitted by /u/player_1111 [link] [comments]

Whats the process you use to analyze a property? Posted: 28 Sep 2020 04:47 PM PDT Hey everyone, Wanted to know how you would analyze a property to ensure im doing it correctly Example duplex for house hack or a out of state single / duplex rental submitted by /u/Mario092992 [link] [comments]

Pro bono advice for one real estate legal question? Posted: 28 Sep 2020 11:44 AM PDT Hey Ya'll, just wanted to hear if any of you have ever gotten pro bono legal advice on a simple question. I want to ask some real estate attorney: I am a non US resident and made a US LLC to invest in US RE. Can I use the monthly rent as "salary" to my personal account. That would effetely eliminate income tax. Property tax would still be there though submitted by /u/DarwinsTulipTheNovel [link] [comments]

Good place to start? Posted: 28 Sep 2020 03:30 PM PDT I am completely new to the investing world and plan to start as soon as possible, I currently have a idea to get a house and rent it out to other people and expand from there. I don't know if there's a specific term for that, but for a noob can someone direct me to some guides or places with resources? How much money would I have saved up to start? I currently reside in the New York area submitted by /u/TwoFaceT [link] [comments]

How can I make a property in a rough neighborhood more appealing? Posted: 28 Sep 2020 02:15 PM PDT Currently looking at buying a duplex in a pretty rough neighborhood. Both units are already rented out, but just thinking for the future. Are there any specific actions I could take to make this place more appealing? It has a garage which is nice, because many of the places nearby don't. It doesn't have any kind of security, I was thinking something like having a Ring system installed could be a nice have? Are these kinds of things worth doing? Do you do it? Thanks submitted by /u/bin-c [link] [comments]

Bank foreclosure? Posted: 28 Sep 2020 01:02 PM PDT How does one find the bank foreclosures or auctions listings? I dont know where to start. Is there website just for this kind of listing? Location : Canada, Ontario submitted by /u/Thatway1998 [link] [comments]

Combining mortgages? Posted: 28 Sep 2020 08:51 AM PDT Is it possible to combine mortgages? For example: you own a property that is paid off 50%, and another property that is only paid off 10%. If you combine both mortgages, your equity would be below 80% in total. Hypothetically, would a bank let you refinance and combine the two like this. Ultimately, it would eliminate PMI and the rates have also come down. submitted by /u/jacove [link] [comments]

What to do in my situation? Posted: 28 Sep 2020 11:39 AM PDT Military member here. What would you do in my situation? I just moved to Denver and want to live downtown so I rented. - Just lost 80k in a sale of a 4 plex. (needed to off load financially and mentally)- 3 current properties -- 1 paid off house w/ property manger, generates about 1k a month-- 1 Condo, no Property manager, mortgage $164k @ 3.5%. Good tenant Rent covers all bills but no money made. Will raise rent to market once he leaves -- 4 plex. Mortgage $188k@ 4.25 as investment and barely breaks even over the year between snow and lawn care. High bills because units are not metered. (lol seem'd like good idea at the time) What should I do with 70k? I am in the military so I have IRA, retirement, etc. I tried to refinance both places but 'juice not worth the squeeze' for closing costs. The $80k loss made me want to swear off realestate investing for good but I'm in a stable spot now. Save for buying a place in a year? Put the 70k towards the 4 plex or condo? submitted by /u/Echomatrix [link] [comments]

Best exterior improvements for top-dollar appraisals? Posted: 28 Sep 2020 09:23 AM PDT I'm doing my first refi and I'm trying to improve my home's exterior to get a better appraisal. Fortunately, I've got some obvious eye-sores from a lack of maintenance (my fault) that will be an easy, but laborious, fix: sloppy sidewalk edges, vines on house, sticks on roof, weedy/non-existent flower beds. So I'm gonna do those things. Any other ideas that might help? It's a mix of brick exterior and vinyl siding. I know a privacy fence might be nice, but I don't want to drop $5k~ to get one done, and no one in the neighborhood has one. It's a C class, chain link fence kind of neighborhood in south Dallas. submitted by /u/djporter91 [link] [comments]

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