Real Estate Investing Tips

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onsolidated list of tips from myriad of resources.

Tips

Finding a good realtor helps, but you don’t have to use a realtor to find investment property. If you can avoid using a realtor, you can typically get a better deal since the 7% that would be paid out can be used to negotiate a better price
You can find properties outside of realtors in a variety of ways, non-realtor.com websites, FSBO (for sale by owner), foreclosures, etc
The best realtors might not be good (and a lot of times aren’t) for finding investment property. Look for a specific realtor that deals with investment properties and understands what to look for, knows how to analyze a property, etc
Finding properties in markets that are growing (look at last 5 to 10 years population growth) have huge potential
Military bases are a good suggestion, I would also recommend properties around college campuses, college students might be somewhat hard on properties but typically pay on time and are willing to sign year-long leases, also you can get parents to co-sign
When running numbers, ALWAYS use most conservative/worst-case scenario, don’t be afraid to walk away and don’t ever tweak numbers to make something work
You typically have to analyze lots of properties to find 1 that will work (for me I would say rough analysis of probably 100 and in-depth analysis of about 10 for every one to purchase)
Always assume at least 10% vacancy
If looking at multi-unit properties, I wouldn’t say to look for only fully occupied. You can get a much better deal if it’s partially vacant and if it’s a solid property that’s just dated and needs a cosmetic rehab you could really crank up the rental revenue and get it fully leased with a little bit of work
I’m a big fan of finding properties that need cosmetic rehabs. Older properties that are part of estate sales and similar can have great potential. You want to get a thorough inspection to make sure there aren’t any major issues that could be costly to repair, but outside of that you can really bring the properties up to date for not much money.
Cosmetic rehabs on existing rentals can be great too. A lot of times you can really up the rental rate if the property looks modern and up-to-date and these types of rehabs aren’t that expensive to do
I wouldn’t start with 4 units are less and get some experience before looking into properties with more units
+1 for Bigger Pockets
I love the book Rich Dad Poor Dad. I read it high school and it’s what sparked my interest in all of this
Find a good realtor ask questions like: "What's a good realtor for investors to you?"
Run your own 'title' do not get caught with extra Liens on the property
Near Military bases are usually pretty good
Personal property insurance and CLEP policy
Use home equity loans to have available cash ready to buy next one
GRM- reveals value of property as multiple of it's annual rent. The lower GRM better for an investor aka how annual rent into your purchase price. Stay below 8 GRM.
1)Always hold Property longer than year to get long term capital gains tax.
2)***1031 exchange roll profit into next property
3)***live in one of the units for 2 years to get the first $250k tax free!!
Bargaining: find out real value then go at 89% of that meet in middle
Deposit 1% purchase into escrow if want more say promissory note. Add clause "upon expected by seller. Until sign don't deposit the check. Depositheck with independent law firm.
How choose tenant: 1) job history, look, on time, wear, by talking to them
1)Always hold Property longer than year to get long term capital gains tax.
2)***1031 exchange roll profit into next property
3)***live in one of the units for 2 years to get the first $250k tax free!!
Pay your plumbers asap once confirmed with tenant via any means (e.g. venmo)
Google county foreclosures

What Should Look For

-quad, tri
-‎good location (yuppie, upcoming, beach, lakefront, not to busy)
-‎fully occupied
-‎could use some cosemtic rehab
-‎reasonable taxes
-‎grm (gross rent multiplier)..grm = purchase price / gross scheduled income (see above screenshot). General rule stay away from properties> 7.5. depends though on market.
-‎put enough down so don't have negative cash flow usually 10% is key
-‎Cash ROI (profit/Intial Investment) >8% is good.
-‎margin..100-(expenses with debt /gross income) ( >15 ..20+ ideal). Higher the more cushion.
-‎Cap Rate (Noi/purchase p). If buyer >9% and seller below. Keep in mind this only for commerical or greater than 4 units. You'll use this instead of a GRM.
-‎repairs And maintenance be at .09
-‎property tax .015
-‎insurance .005

High Level Steps

1) buy property one with little down
2) ‎ clean up
3) ‎increase rents
4) ‎refinance and buy property #2 using equity
5) ‎rehab property #2
6) ‎wait year
7) ‎buy #3

Resources

Is it better invest in real estate or stocks?
Kiavi
ROI, GRM, NOI Property Calculator
Kanban Board to Keep houses
City-data
Tiffany McKeethen Realtor in Tennessee who is excellent
Each state/county has historical taxes to project
Auction.com (most those will require cash to buy)
Cozy | Free property mgmt
HUD website
Bigger Pockets, Passive Real Estate Investing (Marco S)..
The Book on Rental Property Investing: How to Create Wealth With Intelligent Buy and Hold Real Estate Investing
What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures