Real Estate Quotes
House hacking is the idea of combining your investment property with your personal residence. The phrase is more often used to describe the practice of buying a small multifamily property (a duplex, triplex, or fourplex), living in one unit, and renting the other units out. When you plan to live in a property for at least one year, financing becomes much more friendly for the borrower. [2015] - Brandon Turner
BRRRR stands for Buy, Rehab, Rent, Refinance and Repeat. It's the strategy that involves buying fixer-upper rental properties, repairing them, renting them out to great tenants, refinancing them to get your money back, and then repeating the process. This can be a powerful strategy because it allows you to acquire numerous properties without running our of capital to invest. [2015] - Brandon Turner
The 70% rule states that the most a flipper should pay for a property is 70% of the after repair value (ARV, what the house is worth after it has been fixed up) less rehab costs. So, a house that has an ARV of $150,000 and needs $30,000 worth of rehab could be bought for $75,000, because $150,000 x .7 = $105,000 and $105,000 - $30,000 = $75,000. How can I do this? It may require direct mail, Craigslist, driving for dollars and it's going to take some hustle. Most lenders are unwilling to loan money on a fixer-upper and you'll probably have to look at options such as hard money, private money, cash, home equity, and other strategies. [2015] - Brandon Turner
I found one of the best handymen I have after we placed a free ad on Craigslist asking for local handymen who could do occasional tasks for our real estate investment company. We received several responses, hired each to do a small task, and quickly found a great guy we now use often for small tasks. [2015] - Brandon Turner
When you invest in real estate, it's not a matter of "if" you get sued but "when." A good lawyer will help make sure your lease and other forms are legally binding, as well as guide you on (and prepare) the best legal entity for holding your properties. Having an attorney who either invests in real estate themselves or specializes in this kind of work is best. Attorney rates typically start at $200 per hour and can climb as high as $600 an hour, depending on experience and what they are doing for you. You will not likely be using your attorney for dozens of hours of work--usually just 15 minutes here, 30 minutes there, and so on. [2015] - Brandon Turner
I recommend finding an insurance broker, rather than just an agent at a specific company. A broker can shop around at different companies for the best rate and coverage, and can switch your policy if necessary without your having to take your business elsewhere. [2015] - Brandon Turner
Most commonly, a property manager will do the following: Advertise vacancies; Take phone calls from potential tenants; Show units to prospects; Hand out and accept applications; Screen tenants for rental, career, and criminal history; Choose a tenant and sign a lease; Accept maintenance phone calls and schedule needed appointments; Prepare monthly reports concerning the property; Supply the owner with a year-end summary; Manage problems as they arise; Stay in constant communication with the owner about problems; Pay property bills (sometimes, depending on the manager and the bill) [2015] - Brandon Turner
Property management fees differ depending on the size of the property and its location, usually ranging between 8% and 12% of the monthly rent, with 10% being the most common for single-family and small multifamily properties. Also, management companies have a "placement" fee that is typically equal to one-half of the first month's rent (or even the entire first month's rent) upon a lease signing. Some management companies also charge a "renewal fee" each year when the tenant renews their lease, but this is not as common. [2015] - Brandon Turner
A good property manager can be a great source of leads for your next property. They can also help you better understand the market, such as vacancy rates or current market rent. [2015] - Brandon Turner
The 50% Rule: A rental property's expenses tend to be about 50% of the income, not including the mortgage principal and interest (P&I) payment. The formula looks like this: Cash Flow = (Total Income x .5) - Mortgage P&I [2015] - Brandon Turner
"Meeting the 2% rule (the 2% test)" means that a property's monthly rental income must equal 2% of the purchase price or greater. The value 2% could easily be replaced with another number to test that as well. For example, many people look for "the 1% rule (test)." You might hear people talk about the .5% rule (test), the 1.5% rule (test), the 3% rule (test). In my local real estate market, I know that if I can find a property that gets close to 2%, it's probably going to cash flow well. Yours might be different. Maybe you'll discover that 1% is plenty to get you enough cash flow to create a solid return on investment. [2015] - Brandon Turner
The purchase closing costs are all the costs associated with the purchase transaction. Included might be loan points, loan origination fees, prepaid insurance, prepaid property taxes, title and escrow fees, recording fees, attorney charges, and other fees custom to your area. In my experience, these purchase closing costs usually average around $1,500 for a $100,000 property, plus any fees added by your lender. [2015] - Brandon Turner
Location is still key in any real estate investment. I'm referring to the middle-class neighborhoods on the outskirts and in the suburbs. Generally these areas are found 20 to 40 miles outside the city center, in smaller towns and communities. [2015] - Brandon Turner
Turnkey investing is a loosely defined investment strategy in which the investor buys, rehabs, and has a property managed through a third party, usually from a long distance away. All you need to do is "turn the key". There are hundreds of turnkey providers in America (and across the world), and no two companies are exactly alike. Some will buy, rehab, rent and then sell a property to you. Others will simply help you find the property and let you do most of the heavy lifting on the rehab side, then manage the property for you. Many people who live on the East or West Coast of the United States, as well as many who live outside the country, rely on turnkey companies (usually in the Midwest, where cash flow tends to be higher) to invest in great markets. [2015] - Brandon Turner
Small multifamily properties are any property that contains two, three, or four units. Large multifamily properties, therefore, are those with five or more units. Smaller multifamily properties are considered "residential" to most lenders, and are thus seen as no different from a single-family residence (SFR). Large multifamily, however, is considered commercial real estate, and the rules change drastically. [2015] - Brandon Turner
The terms "REO property" and "foreclosed property" are often used interchangeably, but both refer to the same concept: a bank-owned property. Today, REOs are usually listed on the MLS. The homes are listed through local real estate agents and sold to the higher or best buyer. REOs can be exceptionally good for investors for two reasons. 1. There is usually something distressed about the property. Many people simply avoid these properties, because they don't want to deal with the problems. 2. Banks are not likely to get offended by a low offer and will look at your offer analytically, not emotionally. For this reason, banks are often willing to drop their price fast to get the property sold and off their books. [2015] - Brandon Turner
Offer on deals on Friday, when most agents and investors have already begun wrapping up for the week and are planning their weekend fishing trip or barbecue! The same principle applies to holidays and especially to the end of the year. Savvy investors know that this is the best time all year to find deals, for two reasons. One, during this season, banks are in a hurry to unload their properties before the new year; and two, there is less competition for properties! [2015] - Brandon Turner
Perhaps the easiest and most passive way to use Craigslist is to simply search the site for real estate postings in your area. You can even automate the process so new posts that contain certain words that you choose are sent directly to your email inbox (you can do this through IFTTT.com). You can use Craigslist to search for rental listing that appear to have been placed by "mom and pop" landlords (not professional property management competencies). Call them and explain that you are looking to invest in real estate in their area and may be interested in buying a property. [2015] - Brandon Turner
Wholesaling is one of the most difficult real estate "jobs", because you have to be great at almost every aspect of the transaction (marketing, analyzing, communication, sales, negotiation, etc.). However, if you are able to connect with a great wholesaler, you truly can get hot deals delivered straight to your inbox. To find wholesalers: Call the numbers you see on those ugly "bandit signs" on the side of the road; Go to every real estate club in your area; Create a Marketplace posting on BiggerPockets; Train your own wholesaler on how to find you deals! [2015] - Brandon Turner
It's hard to get long-term tenants in a one- or two-bedroom house. In my experience, three- or four-bedroom houses tend to make the best rentals because they attract long-term tenants. Furthermore, three-bedroom houses are generally the best kind of property to sell. If you are looking for a multifamily property, two-bedroom apartments are acceptable, and incredibly common. Single-bedroom and studio apartments are also common, but they tend to attract a more transient tenant, so expect more turnover in that style. [2015] - Brandon Turner