Real Estate Investing: Learn from my mistakes, going from self-management to using a property manager. 50% loss in cashflow! |
- Learn from my mistakes, going from self-management to using a property manager. 50% loss in cashflow!
- Has anyone flipped properties out of the country Or invested in multifamily out of the country?
- As an owner, why would you master lease when you can always find management take care of your properties.
- Can anyone expand on personal experiences in remote and out of state investing?
- This ‘house’ on my street.
- Properties appraised higher than expected, what should I do?
- Please advice. Rental properties strategy for passive income
- Beginner real estate investor
- Has anyone ever used a FHA 203k loan to finance a deal? Would you be willing to illuminate the process?
- Turn primary home into rental while looking for a new primary one
- Could I convince a lender that a dorm is one dwelling unit?
- If you had to pick one- buy in best high school or elements school district?
- Buying my first condo primary residence in NYC - using a 10 year interest only, 7/1 ARM
- Cash & Cashflow
- How do you approach Mello Roos?
- Duplex and SFH Renovation Estimates?
- Real Estate Investment Triplex
- Still haven't gotten a contract??
- Building Repurposing
- How to research areas for ease of renting out a house?
- ADU amortization
- Investing in commercial property
- Talk to me about your favorite locks
- “Real Estate Bubble?” I don’t know
| Posted: 10 Jan 2021 07:30 PM PST As the title suggests, I figured this would be a great place to post about the realness of being a real estate investor. We see a lot of awesome success stories, but we don't see many of the failures. I have had many successes too, but for those that are really serious about doing this, please read this as it might help manage your expectations when you get in this "game." A little bit about my portfolio and story. From 2017-2020, I went from 0 properties or real estate experience to 10 properties, becoming a licensed realtor, and successfully self-managing while still holding on to my day job. Things were going very well and we got (at least in my book) very good at finding and buying deals, had a great team (minus a property manager), and just things seemed to be going so smooth and was making a ton of money. Here were some of our numbers at the height of self-managing: $10,500 combined rental monthly income, 2-week average vacancy, and very minimal turnover for new tenants. Things were going really well and making a ton of money. We were cash flowing $4.5k-$5k per month after all expenses. All loans are 20% down, 30 year, fixed-rate, conventional loans, etc. However, I was still working my 9 pm to 5 pm day job and I liked the money I was making from real estate, but I knew I didn't want to make a career out of it. Managing 10 SFRs was hard and I was starting to feel burn out. I had known one day if I wanted to grow 15+ units any beyond and to do that, I knew I needed to learn how to hire and manage a property manager. The opportunity came, I was given this huge promotion from my day job (70%+ salary increase) and it was a chance to move out of state to a really beautiful part of America. I was very excited and thought this is our chance, this is a great transition time to go from self-management to a property manager. Our plan was, starting in Fall 2020, as our homes became vacant, I would transition them to a property manager to take over. Despite doing all the homework, calling references, checking systems, etc it was and has been very challenging. I had always heard the phrase "no one will manage it as good as you will" and I had no idea how true this was. Now, I know what you might be thinking if I was micro-managing, etc, and trust me even though I was still in town for a brief period while we were moving, I gave distance and whatever the property manager needed to be successful. In short, after implementing a property manager here is our numbers: $8,500 combined rental monthly income (24%~ loss of income), 5-6 week average vacancy, 2x-3x the cost to do the makeready on the property. Plus when you count the 8%-10% monthly management fees + the 50% first-month's rent leasing fee it is so tough. We went from making $4.5K-$5k a month in cash flow to now $2.5k-$2.7k, or almost a 50%~ LOSS in cash flow!!!! Note: We are not being charged for fees like calling a maintenance person, our property manager has "in house" maintenance that is cheaper than normal contractors, no red flags at all, and from our homework and hearing stories on this site, on paper, the property manager is very good and has very good references. COVID-19 did not have an effect on our rental market, all tenants paid on time and are essential workers. Lessons learned: Am I still planning to continue to invest in real estate? Yes absolutely. I had to remind myself that cash flow is just one of the 4 ways (cash flow, appreciation, principal pay down, and tax reduction) that people make money in real estate. Our entire portfolio went up close to 10% this past summer due to the low-interest rates and appreciation. Having a property manager does reduce some of the day to day headaches, but it does come with new headaches. BUT, after this experience with a property manager, I now have the confidence to want to invest out of state and or make the leap from single-family to multifamily. I am swaying towards multifamily because of the scale of the units and cheaper property management rates because of the volume which would tip in favor over single-family now. Plan moving forward: continue to grow cash, possibly sell a few of my SFRs to put into a 1031 exchange, and start buying larger properties. A famous quote I read that I think really applies to us trying to grow from an African proverb: "If you want to go fast, go alone. If you want to go far, go together." Like I mentioned, having this experience and learning how to manage a property manager will take my earnings potential so much higher versus if I tried to control and do it myself. If you made it this far thanks for reading and would be curious on your thoughts on this and how you transitioned to gt bigger. TL/DR - hired a property manager, cash flow dropped 50%, but still wanting to stay in real estate investing! Appologies for the typos and grammar mistakes Edit #1 - another thing we are optimistic about is coming summer 2021, we will have better market timing in our lease cycles. In addition, I am also hoping our property manager can use some of the security deposit to do these make readies. Thus, hopefully better lease cycle, improved security deposit management, and higher demand timing for renter it will get back to normal. Plus hopefully lesser impacts COVID!!! [link] [comments] |
| Has anyone flipped properties out of the country Or invested in multifamily out of the country? Posted: 10 Jan 2021 03:51 PM PST Any tips or strategies that have worked? Looking at rehabbing and flipping Carribean properties to AirBnb/Vacation Rental. [link] [comments] |
| Posted: 10 Jan 2021 07:32 AM PST |
| Can anyone expand on personal experiences in remote and out of state investing? Posted: 11 Jan 2021 12:49 AM PST So I've gone through the search bar plenty, and in a lot of ways this topic has been beaten to death, but I feel there's a lacking of in depth personal experience here. A lot of the comments are either "I'd never do long distance investing" or a check list of David Greene's book. I own and self manage 28 units. I live in a VHCOL area, so my units are all between 1-2 hours away, long enough where I delegate any work that I can, but not so long that I can't drop everything and get over there if the need comes, as well as visit the properties regularly (around 6 times a year). As is typical for many of us, deals are getting sparser and margins thinner, and I'm ready to seriously entertain the idea of breaking into a new market. But, I want to go beyond just a summary of David Greene's book before I make a final decision. This would especially be a challenge for me because anywhere I invest would be a blank slate-I don't have any friends in any of the cities I'm considering, and the only family I have are addicts so I don't trust them. In particular, I'm looking for the answers to a few questions: 1. How do you zero in on a neighborhood? 2. Do you use a property manager or do you self manage? 3. Are you still able to cash flow with a property manager? How much? 4. How do you be sure you're not getting ripped off? 5. How do you deal with vacancies/turnover? 6. The general consensus seems to be turnkey providers aren't worth it, do you agree? 7. Do you do any rehab? 8. Anything else you think should be considered or stories to tell? Like I said, I know this topic has been beaten to death, but scrolling through the sub a lot of it feels "light" [link] [comments] |
| Posted: 10 Jan 2021 06:30 PM PST Decided to kick off my REI career by flipping a house this year to gain momentum towards a multi fam down payment since CRE is a little out there for a beginner. Every day I walk past this house on my street that just doesn't fit in. It almost reminds me of a really nice shack that is 600 sq ft with no driveway. The surrounding houses range from $250 - $400k and built in 2001 while this random home was built in 96 and worth 1/3 of that - assuming the first on the street. It's currently being rented. I see a lot of value in this lot, but as more of a tear down I'd assume. One drawback is it's a few houses after a bend on a 30mph road…not ideal. From what little you know about this 'shack', do this sound 'worthy' if the owners are willing to part? Assume I have no money for a down payment, I'd like to use creative financing. Thanks [link] [comments] |
| Properties appraised higher than expected, what should I do? Posted: 10 Jan 2021 07:45 PM PST Both appraisals came back higher than expected: Property #1(primary): Current loan 332k @ 3.85%, Appraised 528k Property #2(duplex): Current loan 488k @ 4%, Appraised 675k Short term goal would be to purchase another investment property in 2021 as more opportunities are popping up in my town. Would you HELOC or cash out refi for this? These are my first refi's, looking to do the correct thing financially. The duplex is the only question mark since I purchased with FHA loan so there is $350/mo PMI that I'm looking to get rid of. Any advice is appreciated. Thanks. [link] [comments] |
| Please advice. Rental properties strategy for passive income Posted: 11 Jan 2021 01:38 AM PST Looking for guidance and how to materialize my plans to potentially invest in a number of real estate properties. At a high level, I have outlined it below. Would like to understand where it will fail, cons to keep in mind etc. 1) I currently own 1 condo (150k, 15yr mortgage) which is a rental (1200$ rent, 1210$ mortgage). Would like to build out a portfolio in such a way that I would buy similar priced condos (potentially 5-10) in 3-5 years. I will be okay from credit perspective. Based on my current credit status I will be eligible for 1.5 to 2M in loans. All 15 yrs mortgage. 2) this doesn't include any other investments that I do in 401k or other areas. Goal of this venture is to generate passive income for me. Hopefully this will generate about 120-150k per annum in rentals. 3) I understand I will need to spend 5-10% on property management. Anything else? 4) certain reserves for damages and repairs.say 10%. 5) reserves for potential vacant properties and mortgage for those. 6) i am yet to figure out a location. Currently I live in east coast but looking to do this in either pheonix or Florida. Any other recommendations? What else am I missing? Is this plan feasible? [link] [comments] |
| Posted: 10 Jan 2021 07:05 PM PST Hello y'all, Young Canadian male(21 year old) looking for some practical ways to make money from Real estate with out using much money of my own. If some of you experienced home owners/real estate investors have some useful tips or suggestions I'd like to hear them out. Thanks! [link] [comments] |
| Posted: 11 Jan 2021 12:13 AM PST Hello, I was researching FHA loans and came across the 203K loan. Essentially I want to build my own multi unit property while living in one of the units. How realistic is this and are there additional things to consider for the 203k loan? [link] [comments] |
| Turn primary home into rental while looking for a new primary one Posted: 10 Jan 2021 12:03 PM PST Does anyone have experience with turning their primary home into a rental while looking around to find a new primary home? You're basically having two mortgages, but the second mortgage would more or less be at a regular rate rather than an investor's rate (if that makes sense)? EDIT: The reason why I'm asking is because normally lenders asks for a 25% down for an investment property, but they are more lenient if the property is a primary. I'm seeing if anyone has anecdotes on something similar. [link] [comments] |
| Could I convince a lender that a dorm is one dwelling unit? Posted: 10 Jan 2021 11:51 PM PST I'm looking at a property that I'm having a hard time finding a lender for. It occurs to me that without private bathrooms or kitchens or anything like that, and if you squint at it just right, a building with 60 dorm rooms, six shared bathrooms, and one big kitchen looks a lot like a sixty bedroom house. Is it at all possible that I could find a residential loan for a property with two of those? [link] [comments] |
| If you had to pick one- buy in best high school or elements school district? Posted: 10 Jan 2021 02:04 PM PST |
| Buying my first condo primary residence in NYC - using a 10 year interest only, 7/1 ARM Posted: 10 Jan 2021 08:32 PM PST I'm buying my first one bedroom in NYC, putting down a little over $950k with a $600k loan. It's in a new luxury condo building downtown Manhattan and will be my primary residence. As mentioned, I will be using a 10 year interest only 7/1 ARM to finance the purchase. I locked in an interest rate of 2.625%. I've also already gained some equity with a price adjustment increase after an appraisal. My current plan is to live in the apartment for 7 years and make some capital improvements as needed. Beginning year 8 when the mortgage adjusts, I have several options and am wondering what some of you might recommend in this scenario:
Which of these four options would you choose? (FYI I know it's a lot of capital to lock up, but it's also fully a lifestyle investment and not - financial one necessarily.) Thanks! [link] [comments] |
| Posted: 10 Jan 2021 08:26 PM PST So I just bought my first multi family property with low money down(owner occupied). Currently living here rents cover expenses. With all three units rented the property free cashflows $15k. My 5 year goal is to have 15 units or 75k Cashflow annual. Let's say I wanted to do it faster. For those of you who did not take hard money. What did you guys do to come up with the cash? Another side hustle? Aggressive saving? PS I work full time as a financial analyst. What kind of deals got you the most bang for you buck? I bought this property more or less turnkey. Could I save money doing the renovation myself? [link] [comments] |
| How do you approach Mello Roos? Posted: 10 Jan 2021 06:58 PM PST Do you factor this into the purchase price of the home? (Example: 600k house with 300 per month MR is like buying a 660k house because of the extra monthly payment?) Do you ignore it because mello Roos is an indication that the area is developing and property values will increase? Is a new mello Roos even any indication that the area will develop and grow? Do you just avoid it altogether because it's not worth getting involved in? [link] [comments] |
| Duplex and SFH Renovation Estimates? Posted: 10 Jan 2021 06:51 PM PST Experienced investors and house flippers, how much do you usually put towards a SFH (ex. 3bd 2bth) or Duplex (ex. 2bd 1bth + 1bd 1bth) renovation assuming it doesn't need a complete gut job? I'd hope to restore and repaint any cabinets, etc. and maybe paint the walls & install flooring myself to try to save on costs, but I'm not exactly handy so I'd have to learn how to do it if it made sense to. The more I do research on REI, the more I feel like I know less than when I began. Ideally I'd like to buy a cheap property in a really nice area that needs little work. I'm starting to see just how difficult this is to find (in NJ). I was originally committed to doing an FHA 203k (with BRRRR method), but I hear they're a nightmare to deal with for all parties involved. In this situation, I'd hope to find a property for 150k and put 35k-50k into it. Then hopefully get it reappraised for 205-220k+(?) as a way to build instant equity. I'd still want to do the BRRRR method now, but I'm starting to realize maybe a Conventional 3-5% loan and saving 30-40k in cash for a renovation may be better for me. Unfortunately, this would wildly affect my estimated timeline for when I would be able to buy. I currently have 15k saved I could put towards a property, but I'm estimating now that I'd need closer to 50-60k if I'm going to be paying for renovations out of pocket (originally I was going to save up 25k for the 3.5% dp, closing costs, 6 month reserves, upfront MIP, HUD consultant, and any other FHA / 203k fees). I think I would like to do a House Hack for my first property. It'd be preferable to get a Multi unit as I'd need to live there for a year and I highly value my privacy, but I'd be willing to get a SFH to maximize profit. I'm 23 and single so I don't really need the space, and I'm not really looking to change that for the time being. (I also likely wouldn't be there too often anyway as the area I'm looking to shop in is close by my parents house that I could likely continue to live in for "free"). I am essentially clueless about this all. Any resources, tips or advice anyone could offer would also be appreciated. TIA! [link] [comments] |
| Real Estate Investment Triplex Posted: 10 Jan 2021 06:26 PM PST Hi Everyone, i have a scenario below and wanted your thoughts: [link] [comments] |
| Still haven't gotten a contract?? Posted: 10 Jan 2021 02:37 PM PST I found a home a few weeks back and quickly scheduled a look at the house, got an inspection, put an offer on the property and got it approved within a few days at what I'd consider a good deal when looking at other comps. It's now been over a week and I've been reaching out to my lawyer who keeps giving me the same story about how the seller's attorney still hasn't sent a contract and we are just waiting on that. I don't know what to do because I've been checking in every day and he's been telling me everytime that the seller's attorney expects to send the contract "by tomorrow". I'm getting pretty frustrated and losing patience but have no idea what to do. Is the seller/seller's agent just making me run in circles wasting my time? I didn't think sending a file through email could take over a week and it feels a bit insulting especially after being on top of everything and already investing time and money on inspections, etc. Anyone face similar situations? [link] [comments] |
| Posted: 10 Jan 2021 05:42 PM PST I have been doing my research on building repurposing and I wanted to know if any of you fine ladies and gentlemen have been involved in a deal like this. I am looking at repurposing office buildings into apartments. Your experience does not have to be this but I would love to hear about someone with some experience in this increasing trend. Cheers. [link] [comments] |
| How to research areas for ease of renting out a house? Posted: 10 Jan 2021 05:21 AM PST I'm a total beginner, have never rented out property. I'm in middle of deciding where to buy a house in few places in Los Angeles area near my job. I'm looking for a house with a roughly 0.3 acre lot to satisfy my gardening hobby and maybe later on add an ADU to rent. After a couple years I will likely move out and want to rent the house. The locations I'm looking at from nicest/most expensive to kinda dumpy: Arcadia, Monrovia, Azusa, West Covina, La Puente, Baldwin Park. All I could find was using AirDNA occupancy rates to estimate how easy it to rent out in these areas. They all have like 68-80% occupancy according to AirDNA. So doesn't seem insanely different ability to rent out in these areas. I'm thinking the quality of renters will also be a lot different goin from kinda upscale to middle class to dumpy place but otherwise not really sure how to research if one of these locations is way better for renting out. How would you go about deciding/researching locations? I'm open to renting out as ~ 1year leases or airbnb. [link] [comments] |
| Posted: 10 Jan 2021 10:50 AM PST Hi and thanks again in advance. I am building an ADU on the grounds of a triplex and it will be put into use sometime in 2021. The construction started in 2020. How should I report this on Schedule E? Do I start the amortization schedule in the year the expenses are paid out, or, do I start the amortization the year the ADU is put into use? Eg: 2020 - Installed mechanicals 20k 2021 - Completed the rest, 20k (It ISN'T important that the HVAC cost half the house, I also don't care about comments about why HVAC is installed first. It's a fishing example. You know. Bass.) Question 1: Do I put the HVAC into use (amortization schedule-wise) starting 2020 and the rest starting 2021 or, do I start amortizing everything in 2021? What are the key considerations? Question 2: What if the whole project fails and there is a bunch of costs, like, HVAC that never gets used. How are these expensed? It's like a bucket of paint that happens to be the wrong color and painted over. It can still be expensed. Does the same apply to failed capital projects? My thoughts: From a purely financial standpoint, starting it right away allows me to utilize the tax shield more effectively assuming constant marginal tax rates across years, but is this the "right" thing to do? How should I approach this? What questions should I be asking? Thank you all very much. [link] [comments] |
| Investing in commercial property Posted: 10 Jan 2021 02:56 PM PST So I'm 22 about to be 23 and I invested in stocks and made a good amount for me. I'm be investing in real estate in single homes and multifamily homes. My dad and uncle are good with residential homes. But I want to invest in commercial property mainly a warehouse or office. Any tips? And important information? If you have time tell me everything if you can thanks you [link] [comments] |
| Talk to me about your favorite locks Posted: 10 Jan 2021 11:06 AM PST Seriously, please! I used to have a bunch of property with only one user -- the renter -- and one door that needed multiple people to have access. But I'm looking at renting a house with individual bedrooms being rented. So, what is your favorite smart lock-style system that allows multiple people to key in, and have you run across any great smart systems for, say, giving people access to both a shared door and an individual door? [link] [comments] |
| “Real Estate Bubble?” I don’t know Posted: 10 Jan 2021 10:33 AM PST What determines this? Homes in my area go for around 150/sqft. Cost to build is around 130/sqft for basic finishes plus the cost of the land. People are able to afford mortgages based on 25% of their income. I just don't get how the real estate market is overvalued. Is it dependent on the region? Like my area could still be reasonable, but yours is insanely overvalued? Or is it a nationwide thing? Maybe because when rates start to trend up, people won't be able to afford the same prices based on 25% of their income? [link] [comments] |
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