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Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31109 posts
 Online 

Information for my fellow Real Estate Investors
I figured i would start a pure real estate thread only here for those who would like to add to it. Here are some helpful links. To start i will put some funding options like this: gorilla capital then information, education and possibilities below

bigger pockets

struggling investor

hipster investments

do hard money

flipping junkie

invest 4 more

afford anything

clever investor

learn RE investing

must know investing

RE tipster

Here also is a helpful hint snippet from PREI magazine:

"2016 is upon us and everyone is telling you to get your goals set right? When it comes to those goals around investing, I always like to share with my investors some good practices to include in their investing endeavors. I have found with hundreds of conversations each year on acquiring a set number of properties, or perhaps properties that will generate a certain return, that probably the most important elements of those objectives get overlooked.

The Average Person’s Objectives
While return on investments, cap rates, and number of properties to acquire are great goals to have, I have found that people unknowingly have deeper objectives. When I ask them why these goals are important to them, I get answers like these: It will give me a nice retirement, or I will then have the cash flow I need, or if I continue at this pace for 5-10 years, then my investment plan will be accomplished.

The Seasoned Investor’s Objectives
Seasoned investors take their objectives to a deeper level. They understand that to have good cap rates and great ROI or accomplished investment goals, they will also need to ensure the properties are going to be able to perform over time. They do not just look at how properties perform today; they want to ensure they perform tomorrow, next month and next year. To seasoned investors, “buy and hold” means doing proper diligence to ensure the property will be worth holding long term. They understand they are investing in more than just an investment property; they are investing in a city or a market they trust to provide an economic foundation to support their investments.

7-Point Checklist to Ensure Sustainability on Investment
1. Are jobs being created? Many have invested in cheap properties only to later find vacancies and stalled cash flow. Investing in markets with job growth is paramount to ensuring you have a steady stream of renters who can afford to make their rent payments.

2. Is the population growing? This, of course, goes hand in hand with job growth. If a market is creating jobs, it should also be growing its populations. When you have rental property in markets that are growing in size, this also lends to a steady stream of tenants who will want to rent from you.

3. Are homes considered affordable? This is a big one—and often overlooked. Investing for buy and hold purposes suggests you will cash flow today with an exit strategy to enjoy a nice appreciation and sell to the retail buyer. To further help your objectives, buy in affordable markets where the home cost of a median price home is no more than three times the median income. Markets where you can acquire the median home price for three times median income or less provides for affordability and ease in finding retail buyers when you prepare to liquidate. The job growth and population growth will help to raise both the income and the home prices, ensuring you sustainability in your anticipated growth.

4. Are insurance premiums and property taxes low? Managing expenses is the number one task for any business owner, and investors are no different. Insurance and taxes are those uncontrolled expenses that you want to make sure are as low as possible. Cities that are not prone to disasters like tornados, or hurricanes or winds or mudslides, etc., are able to keep the rates in these areas low. Likewise, cities that have strong and financially responsible management in place and have a strong and vibrant , growing city with multiple streams of revenue also are able to keep their taxes lower. Expenses such as insurance and taxes that are outside of our controls for expenses can indeed be minimized by investing in areas where they are organically low.

5. Is it a landlord friendly state? Coming from a tenant friendly state where I grew up in Minnesota, investing in landlord friendly states are a pre requisite of mine. Any investor who was forced to do an eviction will tell you that a state that favors a tenant can be costly. To sustain great ROI you want to invest in states that are landlord friendly and understand you need to run a business and getting paid on time is important and has consequences when this does not happen.

6. Diversification: A variety of jobs in different industries is paramount for survival. We all know what happened to Motor City (Detroit) when the auto industry left. They are still trying to recover. This city relied on this one industry. When it left, there were not enough other businesses around for the city to thrive. A city thrives, survives or dies. Where do you want your investments?

7. Are things in place to drive future growth? All of the above are important and sustaining it is something you will want to be comfortable with. Does the city have a 5, 10, 15 or even 20 year vision plan for growth? All markets are cyclical and you want to invest within the cycle for sustained growth. Check into where the city is heading and ensure growth is ahead.

There are a number of other attributes we like to look for to ensure sustainable investments. If we lived in a perfect world, we would find cities with all the shining stars shining brightly and casting light on the investments. We do not unfortunately live in a perfect world, but a darn good one though. I have found, however, that if the property you wish to invest in encompasses these seven must-have attributes, you will have an investment worth holding on to for long term buy and hold investments.

Make 2016 count. Happy investing."






This post was edited on 7/19 at 11:43 am


DisplacedBuckeye
Ohio State Fan
Member since Dec 2013
28327 posts

re: Information for my fellow Real Estate Investors
Great information. I've been looking at getting my first investment property, but it's been slow going. Hopefully in the next few months, we'll be in position to pick one up and go from there.


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poochie
LSU Fan
Houma, la
Member since Apr 2007
3463 posts

re: Information for my fellow Real Estate Investors
Happy this thread was made, I’ve been working on analyzing some properties and have a question about calculating ROI. Example:

Purchase cost: $100,000
Down payment: $20,000
Monthly Rent: $1,000
Mortgage+Insurance+tax: $600
Maintenance: $100
Repair Contingency: $100
Vacancy Contingency: $50
Positive cash flow/Month: $150
PCF/Year: $1,800

Do I judge your ROI on my cash flow before contingencies or after? Is my ROI $1,800/$20,000 or ($400x12)/$20,000 or somewhere in between?


Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
671 posts

re: Information for my fellow Real Estate Investors
Great post. Thanks, man.


boosiebadazz
Member since Feb 2008
59924 posts

re: Information for my fellow Real Estate Investors
In a purely analytical sense, your ROI is what you clear divided by what you put in. I see you have a lot of contingencies in the equation. Are you taking money out every month for those contingencies? If you are, then that is a 'debit', or money you don't put in your personal pocket, and needs to be in the ROI calculation. Now, you may find that you build up a nice safety net over time if you don't have to draw on the contingency account, and you may want to tweak how much you're saving a month for contingencies, but I think you keep it in the ROI formulation at this point.
This post was edited on 1/15 at 12:21 pm


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Teddy Ruxpin
LSU Fan
Austin, TX
Member since Oct 2006
30515 posts

re: Information for my fellow Real Estate Investors
It's about time there was a dedicated thread.


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30
yellowhammer2098
Alabama Fan
New Orleans, LA
Member since Mar 2013
3676 posts

re: Information for my fellow Real Estate Investors
quote:

Happy this thread was made, I’ve been working on analyzing some properties and have a question about calculating ROI. Example:




May want to page ILoveBama to this thread. He had a good spreadsheet that showed how he analyzed his investment real estate.


Azazello
Duke Fan
Member since Sep 2011
2286 posts

re: Information for my fellow Real Estate Investors
bump for spreadsheet


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Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31109 posts
 Online 

re: Information for my fellow Real Estate Investors
quote:

Great post. Thanks, man.


no problem. Hope it helps. Everybody feel free to post any useful info for all of us RE guys here. We will never know it all! This thread can also be used to update us with your latest dealings and so forth. This economy has definitely put my dealings on hold for now.

I was about to pull the trigger on a couple properties, but It would have put me at my minimum reserves for my other properties so I'm holding off especially not knowing about me or my wife's job situations.

I will say the RE income is a lifesaver (haven't had to use any of it yet thankfully) and this downturn proves I did the right thing getting into RE years ago expecting this as it is all cyclical.


theoldwiseone33
University of Louisiana
Member since May 2012
408 posts

re: Information for my fellow Real Estate Investors
I'm saving as much cash as possible right now to be ready for the deals about to be on the market in next 2+ years.


Iowa Golfer
Iowa Fan
Heaven
Member since Dec 2013
8175 posts
 Online 

re: Information for my fellow Real Estate Investors
Cap rate, cash on cash and NROI are defined, and to a large extent closely follow portions of how commercial real estate is appraised. There are some free online calculators.


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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
35942 posts

re: Information for my fellow Real Estate Investors
I may need to backchannel you soon. I'm having MAJOR insurance issues. I got dropped on two houses this week with tenants still inside. I have got to find someone who isn't charging three times what my rate was last year.


I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
35942 posts

re: Information for my fellow Real Estate Investors
quote:

May want to page ILoveBama to this thread. He had a good spreadsheet that showed how he analyzed his investment real estate.


Poochie has agreed to set up the shared drive. We should be able to add other things as the thread progresses.


This post was edited on 1/24 at 2:56 pm


poochie
LSU Fan
Houma, la
Member since Apr 2007
3463 posts

re: Information for my fellow Real Estate Investors
I can post it to my google drive...



Edit:

All, here is a link to I Love Bama's spreadsheet (note, i hate that i had to type "i love bama", crap did it again!!!)... anyway, link:

https://drive.google.com/file/d/0B_I9NECji00NUmhoM25VTmlVOEE/view?usp=sharing
This post was edited on 1/24 at 3:02 pm


I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
35942 posts

re: Information for my fellow Real Estate Investors
That is a link to the excel sheet. Can we set up a folder so other users can add things as we go? Should be easy from what you have done so far.


poochie
LSU Fan
Houma, la
Member since Apr 2007
3463 posts

re: Information for my fellow Real Estate Investors
Try this. it's a folder for TD Money Board folks interested in sharing REI Spreadsheets and whatever else. I've set it to "anyone can edit" so i assume anyone can drop things in. If that's not the case, i can adjust the settings.

https://drive.google.com/folderview?id=0B_I9NECji00NTWRIeFF0MXF4RUk&usp=sharing


Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31109 posts
 Online 

re: Information for my fellow Real Estate Investors
quote:

I may need to backchannel you soon. I'm having MAJOR insurance issues. I got dropped on two houses this week with tenants still inside. I have got to find someone who isn't charging three times what my rate was last year.



ok


stevengtiger
LSU Fan
Member since Jul 2013
2624 posts

re: Information for my fellow Real Estate Investors
quote:

Fat Bastard


Thank you for making this thread. Didn't like bumping my old thread.

If anyone is interested, I flipped the mobile home we rehabbed in mid-December. Sold to a buyer on an FHA loan and it was a pain in the ass. Made a good profit off of it, so I can't complain much.

Under contract for the fifth property (4th rental and 1 flipped mobile home). Found a great deal in a different part of town than our first three homes are in. I started my thread in Feb. 2015 inquiring about REI and didn't think by Feb. 2016 we would be this far into the game. It is a pretty addictive hobby.


Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31109 posts
 Online 

re: Information for my fellow Real Estate Investors
quote:

It is a pretty addictive hobby.



it's like crack isn't it?

glad to see your successes! Keep us informed and keep sharing info.

I'm just sitting on the sidelines waiting out the economy. Maybe things will change when we elect a new POTUS. I think I will play it safe until then and save my money. Maybe by that time I can buy 3 properties at once to add to my portfolio.


stevengtiger
LSU Fan
Member since Jul 2013
2624 posts

re: Information for my fellow Real Estate Investors
quote:

Keep us informed and keep sharing info


Will do. After we had our third closed on and got lease signed with tenant, I was ready to sit on the sidelines for 6-12 months and see how things played out. My dad (partner) decided that since we set our goals in 2015 to purchase 2 properties and ended up with 4, we should make our goal 3 properties in 2016 and see where we end up.

He can't slow down. Put an offer on our fifth one on Jan. 8 and will probably close in early Feb. So much for relaxing for a while.
This post was edited on 1/26 at 3:29 pm


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