The Entrepreneur / Business Owner's / Self Employed Lounge

(08-27-2018 01:24 AM)Spaniard88 Wrote:  

(08-26-2018 11:40 AM)Veloce Wrote:  I tried searching for a "Real Estate" or "Landlord" thread but came up empty.

I'm coming close to purchasing my first investment property. I already own my house (not paid off) and what I believe to be a great opportunity just came up. Tenants already in place. I've run all the numbers, they look good. Growth in my area looks amazing.

Anyone with experience as a landlord, give me 5 quick tips off the top of your head for a first timer.

What's your total cash down and total cost to take possession?

How much profit will it be earning every month?

They're highballing at $195000 but it's not worth that much. I'm going to offer 180, MAYBE stretch that to 185. Since it's an investment property I have to put down 20% so 36-37k.

Monthly profit will only be about $100-200 for the first year, it's currently renting at $1200. Appreciation on my current house has been insane these first few years and I don't see any reason for it to slow down when looking at the housing market in Vegas. This condo is in a very desirable location where there's not a lot of inventory at that price point.

I have a meeting to look at the place today. I don't even know the sq footage of the place yet. It's being offered by a friend of mine, same guy that sold me my current house which has been, quite honestly, an amazing investment.

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(08-27-2018 10:54 AM)Veloce Wrote:  

(08-27-2018 01:24 AM)Spaniard88 Wrote:  

(08-26-2018 11:40 AM)Veloce Wrote:  I tried searching for a "Real Estate" or "Landlord" thread but came up empty.

I'm coming close to purchasing my first investment property. I already own my house (not paid off) and what I believe to be a great opportunity just came up. Tenants already in place. I've run all the numbers, they look good. Growth in my area looks amazing.

Anyone with experience as a landlord, give me 5 quick tips off the top of your head for a first timer.

What's your total cash down and total cost to take possession?

How much profit will it be earning every month?

They're highballing at $195000 but it's not worth that much. I'm going to offer 180, MAYBE stretch that to 185. Since it's an investment property I have to put down 20% so 36-37k.

Monthly profit will only be about $100-200 for the first year, it's currently renting at $1200. Appreciation on my current house has been insane these first few years and I don't see any reason for it to slow down when looking at the housing market in Vegas. This condo is in a very desirable location where there's not a lot of inventory at that price point.

I have a meeting to look at the place today. I don't even know the sq footage of the place yet. It's being offered by a friend of mine, same guy that sold me my current house which has been, quite honestly, an amazing investment.

That same $200 HOA fee is equivalent of another $50-60K in purchasing power.

What about buying another single family residence (SFR) instead of a condo?

Personally I dont like condos as buy / hold investments for several reasons not the least of which is that in market corrections they are the first to "soften" and last to recover on the other side.

Not trying to piss on your parade...just sharing the same thoughts I have with friends and family when asked as I have 25 years + in REI

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I only have one building in Chicago, but i've been at it for a few years and have learned a few things.

I really never liked condo investing, the HOAs are a total wild card that you can't control. Most HOAs that i've seen are managed by monkeys and that can mean a serious increase (or spot assessment of huge $$) for 'unforeseen' expenses aka mismanagement. Plus its only one unit, so if you have tenant problems that means you're footing the mortgage bill 100% + dealing with them in court etc.

Multi's are superior for a lot of reasons, mostly because more doors means your tenant risk is spread. No HOA risk since the whole thing is yours. AND ontop of that, if you get a 2-4 unit building, you can conceivably finance it with a homebuyer loan and pay way less than 20% down.

I did also just notice you're in vegas? Probably one of the best multi-unit markets in terms of opportunity in the US right now. Big players are investing there buying the big (over 24 unit) complexes. I like PR too but that's a discussion for a more speculative thread

You are right about the long run potential for vegas, but plenty of condos there especially the near strip vacationy ones have gotten a little fluffy in terms of valuations. I looked into this pretty heavily over the past 6 months. The other thought if you aren't going to do the vacation rental, is that the majority of tenants there work in the industry so they are potential vulnerable to economic changes (a recession that inevitably will come).

There is a great market out there for government housing (HUD section 8 type stuff) where yes you deal with shittier quality tenants, but uncle sam keeps the rent checks coming without fail month after month.

If you're set on the condo, post up your analysis if you'd like and I can take a look. Happy to share my property analysis spreadhseets as well with anyone that's interested in evaluating investments.

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(08-27-2018 11:56 AM)selfreliantman Wrote:  I only have one building in Chicago, but i've been at it for a few years and have learned a few things.

I really never liked condo investing, the HOAs are a total wild card that you can't control. Most HOAs that i've seen are managed by monkeys and that can mean a serious increase (or spot assessment of huge $$) for 'unforeseen' expenses aka mismanagement. Plus its only one unit, so if you have tenant problems that means you're footing the mortgage bill 100% + dealing with them in court etc.

Multi's are superior for a lot of reasons, mostly because more doors means your tenant risk is spread. No HOA risk since the whole thing is yours. AND ontop of that, if you get a 2-4 unit building, you can conceivably finance it with a homebuyer loan and pay way less than 20% down.

I did also just notice you're in vegas? Probably one of the best multi-unit markets in terms of opportunity in the US right now. Big players are investing there buying the big (over 24 unit) complexes. I like PR too but that's a discussion for a more speculative thread

You are right about the long run potential for vegas, but plenty of condos there especially the near strip vacationy ones have gotten a little fluffy in terms of valuations. I looked into this pretty heavily over the past 6 months. The other thought if you aren't going to do the vacation rental, is that the majority of tenants there work in the industry so they are potential vulnerable to economic changes (a recession that inevitably will come).

There is a great market out there for government housing (HUD section 8 type stuff) where yes you deal with shittier quality tenants, but uncle sam keeps the rent checks coming without fail month after month.

If you're set on the condo, post up your analysis if you'd like and I can take a look. Happy to share my property analysis spreadhseets as well with anyone that's interested in evaluating investments.

Another good buy and hold market is multi family near large or growing universities. There's always demand for student housing and mommy and daddy are on the hook for the lease. I just did a JV with a couple of other investors on 36 units (mix of 2 and 3 BR) just off campus from a local uni. (One of the partners is a former dean at the school) We are doing a light rehab, and furnishing the units and nearly doubling the previous rent. Already have a waiting list for the units as they get completed

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Buying one condo is asking for trouble. Buy the whole building, otherwise you will get slapped with assessments and have to answer for problems that are not your doing.

You also do not want to buy on an appreciation basis. Appreciation should be the cherry on the top of the investment when you dispose of it down the road (and is purely speculative in any other timeframe less than a decade +). Buy on monthly cashflow and cap rate.

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(08-27-2018 12:51 PM)TheFinalEpic Wrote:  You also do not want to buy on an appreciation basis. Appreciation should be the cherry on the top of the investment when you dispose of it down the road (and is purely speculative in any other timeframe less than a decade +). Buy on monthly cashflow and cap rate.

+1

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Great input. Much appreciated.

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(08-27-2018 12:51 PM)TheFinalEpic Wrote:  Buy on monthly cashflow and cap rate.

What's your cutoff on cap rate that you would deem worthwhile? I realize it's one factor out of several but there must be a range you'd be willing to work with

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(08-27-2018 05:47 PM)Veloce Wrote:  

(08-27-2018 12:51 PM)TheFinalEpic Wrote:  Buy on monthly cashflow and cap rate.

What's your cutoff on cap rate that you would deem worthwhile? I realize it's one factor out of several but there must be a range you'd be willing to work with

I think most investors look for > 7% annually. It's a good way to compare similar properties in a comparable market place as well, so if all things are equal (similar location, year built, sqftge, etc.) it's a valuable metric.

Do realize that there are many REITs you can buy that return in excess of 7% annually, and you are not doing the work that a typical landlord would as well, although there is obviously inherent risk with a publicly traded asset as compared to owning a tangible asset such as a property.

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(08-27-2018 05:47 PM)Veloce Wrote:  

(08-27-2018 12:51 PM)TheFinalEpic Wrote:  Buy on monthly cashflow and cap rate.

What's your cutoff on cap rate that you would deem worthwhile? I realize it's one factor out of several but there must be a range you'd be willing to work with

Where I'm based, investors will consider something as low as a 4% cap. 5% is the average. However, its a completely different market. People take multi's hold for 5 years and then convert the units to condo's for big, big payoffs.

A quick glance at Vegas, average rent per BR door looks like $700-775. Mean of that on a 3 br would be $2212.50. x 12 months= $26550. And factor in your HOA and a 10% vacancy cost. You're rate in theory should come in about 10-11%. That's great.

Factor in utilties (who pays? If your renting to 3 chicks, you better ensure they pay for water)

Demographics are very important in renting. The most important really. It comes with tenants now. It is easily occupied again? What's the building demo's like?

Also, like PT said, read the HOA. Read about HOA in general. Some HOA's have rules about owner occupied for X amount of time or if x% of units in building is renters, the owners of those units have to pay a 3% HOA premium. Multi's are easier to control costs and offload.

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(08-27-2018 12:51 PM)TheFinalEpic Wrote:  Buying one condo is asking for trouble. Buy the whole building, otherwise you will get slapped with assessments and have to answer for problems that are not your doing.

You also do not want to buy on an appreciation basis. Appreciation should be the cherry on the top of the investment when you dispose of it down the road (and is purely speculative in any other timeframe less than a decade +). Buy on monthly cashflow and cap rate.

I've been into rental real estate for 16 years and this is solid input.

I'd never buy a condo unless there were no other way to get into real estate investing. If you can afford a small multi-unit building do that instead so you don't have to pay monthly condo fees.

Appreciation should never factor into your calculations, even though you know the value will go up.

Use the 200 rule to get a quick and dirty idea of the return: multiply net cash flow by 200 to get the maximum price to pay or divide selling price by 200 to get the monthly net cash flow. So for $185K it should get at least $925 a month after expenses and your mortgage payment should be that or less so you don't have to go out of pocket.

Also, if you live nearby, you can boost your return by learning to do handyman stuff yourself instead of paying tradesmen. Only do it if you enjoy that sort of thing as a hobby, not just to save money.

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After calculating closing costs I turned this one down.

I’m already pretty heavily invested in a couple REIT funds. Been interested in making the jump into owning investment properties for a while as I’ve got some cash to play with and the idea of just paying down my mortgage is kind of boring since I do that anyway.

Appreciate all the input, will definitely look into multi unit. On my budget it looks like the best option for that would be a triplex in the shitty part of town. And I do mean shitty; these are not tenants I would ever want to meet or interact with. I’ve got some homework to do.

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(08-28-2018 12:13 PM)Veloce Wrote:  After calculating closing costs I turned this one down.

I’m already pretty heavily invested in a couple REIT funds. Been interested in making the jump into owning investment properties for a while as I’ve got some cash to play with and the idea of just paying down my mortgage is kind of boring since I do that anyway.

Appreciate all the input, will definitely look into multi unit. On my budget it looks like the best option for that would be a triplex in the shitty part of town. And I do mean shitty; these are not tenants I would ever want to meet or interact with. I’ve got some homework to do.

Here's an idea that might work with the same amount of cash..assuming a single family residences (SFR) are around double what the condo was selling for.

You can apply for an owner occupied (OO) loan on a new SFR if you identify it as your primary residence. Obviously the advantage is in a lower down payment on OO loan. Most lenders will accept it if you show them a lease by a 3rd party on your current residence (and factor in that rental income).

Now technically you would be required to reside in the new property as your primary residence but there's no law that says you cant decide you prefer the old place and move back in later.

Another option is simply a home equity line for the other 10% downpayment. Again assuming a desirable SFR is around twice (or less?) what the condo was going to be then the service payment on that credit line would be comparable to that HOA payment

A good lender (or several) is a super important part of your REI "team". You want creative...but not crooked

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Just had a great chat with a marketing guy who is specific to the industry that I’m in.

It’s on my list this year to outsource my social media, website, seo to an expert so that I’m not wasting my own time with this stuff. It won’t be cheap but hopefully it will be worth it. I already outsourced accountancy and payroll whoich I also don’t like doing.

Going to try it as a 1 year experiment at least, I’ll keep you updated on the results.

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(07-31-2018 07:58 AM)Ski pro Wrote:  Question for you all who have businesses that are running.

Do you have a 5 year plan or some sort of long term planning document?

At the moment, I carry around a sort of plan in my head but essentially, I make it up as I go along, I just have some notion about the quality of the work that we do and that will generate growth in and of itself.

Curious to see if anyone does this kind of thing or whether its corporate bs. Most entrepreneurs I know don;t bother with this kind of stuff, they just get on with it.

I have a consulting firm (family owned). I thought once of a 3-year plan and wrote it down. Then I got carried away by a project.
Maybe it's time to edit it and try to run with it.

You are correct
Most guys have a plan, but corporate BS (done a lot of it) is happens the larger the business is.

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Just made £6.5k profit in on a job that took a week to knock out. Didn't really want it, costed it out and added 40% profit. Got lucky and didn't need quite as many materials as I thought. There's a lesson for me here- price higher. Who cares if I don't win as many, with profit like that I don't need to work as much.

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(09-17-2018 06:44 AM)roberto Wrote:  Just made £6.5k profit in on a job that took a week to knock out. Didn't really want it, costed it out and added 40% profit. Got lucky and didn't need quite as many materials as I thought. There's a lesson for me here- price higher. Who cares if I don't win as many, with profit like that I don't need to work as much.

Good call.
If I don't want the job I raise the price way up.
This way if I get it I'll have incentive.

If I'm very interested (say new type of work or smth to learn) - then I might lower the price and try to be highly competitive.

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For freelance writers - I secured an interesting, ongoing gig for a company that does local SEO. The company only does two industries.

The result is that after the first articles are written, I can basically recycle the same content over and over again and get paid hundreds of dollars per batch. I'm still just coming off my first payment but this can potentially turn into a $40/hr job, which is a nice work from home revenue stream.

Try finding gigs with these local SEO content marketers.

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(09-17-2018 06:44 AM)roberto Wrote:  Just made £6.5k profit in on a job that took a week to knock out. Didn't really want it, costed it out and added 40% profit. Got lucky and didn't need quite as many materials as I thought. There's a lesson for me here- price higher. Who cares if I don't win as many, with profit like that I don't need to work as much.

I read somewhere once that you should be a little nervous that you quoted too high everytime you quote on something.

What probably won you this was the ‘I don’t care if I get it or not ‘ vibe you were inadvertently giving off. Sales = game

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Hah Ski pro that was me -- and yes, absolutely true.

Non-neediness helps.

Great to hear some good news rolling into the thread.

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Just won a new contract with a school worth a lot of money. Been hoping this would come off.

Now I have it, we will do such A good job that it should be hard to lose. I’m going to gradually creep the price up each winter.

I’m looking out for signs of the phenomena of opportunities coming to you as you become more successful.

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Quick and random question. Have book sales dropped in recent years/decades? Is there still a demand for coffee table type books? I would be selling a book that has personal and local ties to the target demographic.

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(09-23-2018 03:08 AM)Luther Wrote:  Quick and random question. Have book sales dropped in recent years/decades? Is there still a demand for coffee table type books? I would be selling a book that has personal and local ties to the target demographic.

Mrs SP still buys photography and art ones

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I did my master's degree from one of the Ivy Leagues (Harvard, Princeton, Yale, Cornell <--- you guess, its one of these 4). I created a startup through the business/entrepreneurship department.

Anyone have tips on how I can receive funding for my startup from my Ivy League alma mater? They are flush with $$$$ in the millions and billions.

I can't reveal anymore info about me; as I do not want to risk being identified.

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Alright gentlemen, last time I was here, I had nothing; this time, I have something.

I'm capitalizing on both my digital design skills, my ability to do frightening amounts of research in short times, and my favorite niche in order to create an online print/merch shop (using PoD services) and also an amazon t-shirt PoD service to deliver my brand to the world.

I've already created a DBA and gotten most things out of the way, just waiting to set up my business account with the bank on thursday.
My greatest challenge at the moment seems to be marketing. It's a big field so all I'm doing at the moment is advertising my pre-launch on instagram; and tomorrow I'm going to use the tactic of following users that liked other posts in my niche in order to draw traffic to my instagram page.
At this point everything else sorta feels locked-down (read both 100$ startup, side hustle, and materials from ittybiz) but I'm a bit lost on how to do the marketing and create the drive and conversions to hit my goal of 20 sales a day.

Is there anyone out there in this same type of setup/market that could offer advice to a total newbie?

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