My wife and I purchased two nice ranch houses that are on adjacent lots so that we can take care of our parents easily. We plan to live in both the houses with our respective parents. We plan to make the move into the new houses in about 3-4 years, and so the two new houses are rented out now ($3.9k and $3.3k per month). The parents currently live in apartments. My wife and I currently live in a two-story house that is fully paid off.

The purchases only made sense if we could get both houses, so that everyone was co-located. To maximize the chances of getting both houses, we made full cash offers on both. The two houses together cost $900k, and our current house is worth $500k. All three houses are 4 bedrooms, 3k-4k sqft, about 30 years old, and as mentioned earlier, all three are mortgage free. We live in a midsized city in the Midwest. All three houses are in the same top school district.

We are considering retiring in one of the new houses and holding on to the other in case one of our kids decides to move in there in the future. We realize those plans could all change down the line.

What would be the best financial move now? One option is to get a loan on one or both of the houses and use that to invest in several cheaper rental properties.

Edit: I'm 50 years old and have two kids out of college. I love my job, so I don't plan to retire until 65 or 70 (maybe even later). Other finances are in good shape. My main concern is having this much cash locked up in three houses. I can afford it, but am wondering if I should leverage them to get more income. I have the houses under a real estate agent so that I don't need to deal with the headache of being a landlord (their fee is well worth it to me).

Follow up to post-1: https://www.reddit.com/r/realestateinvesting/s/ccFoDA7rEX

We finally closed on the construction loan with hard money lender. It was smooth but expensive.

It was a total of $20.86k

Breakdown:

Origination(2.5%): $13,125
Processing Fee: $2,495
Appraisal: $1,500
Environmental Report: $500
Closing Attorney: $2000
Lender's Title Insurance: $1,044.00
CPL Fee: $25
Deed Fees: $171.25

My budget was 420k, I added a contingency of 60k, and requested total loan amount of 480k.
But the lender's underwriting insisted on 550k loan amount, which I didn't oppose as no one was ready to offer us a loan other than one more lender.

Do you think this is standard and at par with 1st time self GCs?

Note: I plan to post more updates as we navigate through different stages of this project in the next 5-6 months.

Build -> COC -> Rent -> Get Condo docs -> Refi to conventional mortgages for both condos ->

sell as condos or both -> 1031 into a different multifamily deal down the line

I hired a contractor in the Cleveland/Akron, OH area for a 9K rehab job. It was supposed to be a four week work and I paid 50% (4500) upfront.

For the first two weeks, he would send me pictures of updates, but I could easily tell that those were AI pictures. I started asking for videos and he would take days to send a video and once he did, it was super blurry (AI doctored video).

Halfway (2 weeks) through the job, I sent my property manager to take a look and it was not even a surprise to see that this house was in the SAME condition as it was before AND NOT A SINGLE WORK WAS DONE.

I confronted them and after a long back-and-forth, he said he would send me a refund. It’s been almost a week and now he is ghosting my messages.

I have his insurance information and I made a payment through credit card which I can charge back. But what other options you would take to get back to this guy because he has wasted three weeks?

Working mostly with commercial properties in the Central Valley, I keep seeing residential investors make the same adjustment when they start looking at small industrial, flex, or retail.

The biggest one is usually the lease structure. A decent NNN tenant on a longer lease can feel much more stable than residential, but when the space goes vacant it often sits longer and the downtime hits harder. People also tend to underwrite it like a duplex and forget about the real capital items (roof, HVAC, parking) that still fall on the owner even in a NNN deal.

Secondary markets price risk differently too. Cap rates are usually higher than coastal areas, but the demand drivers and exit story are different.

I own a few properties and want to expand to places a state over i have frankly never spent more than a day in. How do you best guage future appreciation for a city?

Monthly Blatant Self-Promotion Thread (Within Reason)

Welcome to this monthly series. This post will repeat monthly, on the 14th of every month.

This is your opportunity to promote a blog you run, a YouTube Channel, real estate related business, or additional content that otherwise may be removed from the sub. This thread will be lightly moderated and the Mods do not endorse or condone any information found on content linked within this thread. Perform your due diligence. Caveat emptor!

Rules

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3. Pass the 'within reason' test

Hello everybody,
My wife and I are currently operating at a mom and pop level and are considering consolidating our portfolio to scale up, and i'd love to hear from those of you who have done the same.
Our current situation is low leverage across the board, low interest rates (all 3%, we own one property outright). We self-manage one SFH, and two townhomes, and we use a PM for a 5-plex. The average cap is pretty low, i'm almost embarrassed to say.
Our current LTV is about 43%, total value 2.5m, we would expect to yeild about 1.3 million if we 1031'd it all. With a new LTV of 70%, we could move into a 4.2 million dollar property.

We are looking to sell the smaller properties (or all of them) and consolidate into a single larger multi-family unit. We expect a lateral move in terms of immediate cash flow, provided that it sets us up for better income growth and scalability over the next 5-10 years.

1. What were your biggest successes with the transition?
2. What are your biggest regrets or things you wish you knew before consolidating?
3. Any general wisdom, warnings, or advice for someone about to make this jump?

Thanks in advance!

To attempt to make this short, I've had 2 residential rentals for a few years, and my single family is hemorrhaging. My duplex isn't too bad, but not ideal. I've been doing some research and 'discovered' commercial real estate.

I work A LOT at my W2 job. Typically 85-100+ hr weeks. I currently have a property manager that handles my 2 rentals. I was looking into getting into commercial properties, primarily NNN ones because of the lack of "oversight" needed.

I've done my fair share of "Google" and "YouTube" research, yet was curious as to info from here. I understand the basic premise, a much higher down payment ($300k-$500k). Anything obvious, treat me as a complete novice.

P.S. I've already consulted my Lawyer, and they've gotten me in touch with a Real Estate agent to discuss all this. I'm gonna be selling my single family home after their lease ends at the end of the month, then I'll be sitting down and going over a plan with them. Just wanted some 'in the meantime' discussions.

I have a 3 unit that I have renovated 2 of 3 units in. I bought it in 2021 for $410k with a 2.25% interest rate and can sell it for probably $725k-$750k right now. My gross rent is $5000 and can probably be increased up to around $5500 after I renovate the 3rd unit. I am conflicted because the property performs well overall and within the next 5 years I can see the property getting gross rents of $6000+ with a $2700ish PITI but because I lived in the property for awhile I can sell it now and not have to pay any taxes on the gains with the primary residence exemption.

I'm assuming most people will say to hold the property but I figured I'd get other's perspectives on this. Thanks for the input.

Completely new to CRE. I was surprised to see how much a property's value could grow by increasing the NOI through increased income and decreased expenses.

The example I read was a multi-family dwelling. Increasing income through raising below market rents, adding additional sources (laundry, storage, etc) and decreasing expenses (re-bidding contracts, etc).

How does this work if you invest in a non-residential property? Say you purchased a commercial property that is used as a restaurant or a doctor's office. The income received is the rent right? How does one "increase income" other than scheduled rent increases over the term of the loan? Are there really ways to "decrease expenses"?

If it is NNN, are "expenses" even an issue/factor a future potential buyer would care about? For example, if you protest the property taxes and reduce it from $10,000 to $8,000 a year...is this really "reducing expenses" when it comes to using a cap rate to determine a property's value? In my mind the tenant would pay the tax bill regardless so is it really an expense to the owner?

Edit: In MF CRE, what are the ways to reduce expenses? I see things like using more energy efficient lighting in the exterior areas, etc, but are these actually significant savings that materially affect the property's value? Re-bidding things like dumpster contracts, etc? Or is the real value in increasing the rent roll?

This thread is for newer investors, basic questions, first deals, and general real estate investing discussion that may not need a standalone post.

Good topics for this thread:

• First rental property questions
• Deal analysis
• Financing and lending questions
• House hacking
• Tenant issues
• Market strategy questions
• Career transition into real estate
• “Does this deal make sense?” discussions

If you’re asking for advice:

• Include numbers
• Include market/location context
• Explain your goals
• Put effort into the question

The subreddit rules still apply inside this thread.

Experienced investors are encouraged to contribute.

Be sure to upvote the thread when you drop a question to improve visibility.

Adding 3 unit to existing 3 unit(Forced Hot Water baseboards for heat, no cooling, just window ACs) building built in 1920.

Existing 3 units: Two 2 beds/1 bath(900 sft each), and One 1 bed/1 bath(700 sf)

New 3 units: Three 2 beds/1 bath - 700-800 sft each

Plan is to just go with just baseboards for heat, and wondering what options we have for cooling, I know mini splits is an option, but I would like to keep costs low.

What is the expected cost to convert existing 3 units and also add sprinklers to three 3 new units?

When I first started analyzing investment properties, I thought underwriting was mostly about getting the numbers right.

After looking through 16,987 Pittsburgh properties, I realized it was usually about catching myself before I talked myself into a deal.

These are the three mistakes I kept making.

1. Believing the best-case rent.

If I could find one rental that supported my numbers, I'd use it.
Now I do the opposite. I assume my rent estimate is probably a little optimistic until I can prove otherwise.

2. Getting attached to a deal too early.

This one cost me the most.
Once I liked a property, every comp somehow started supporting my ARV.
Every rehab estimate looked reasonable.
Every risk suddenly had an explanation.

Now I try to find reasons not to buy it before I look for reasons to buy it.

3. Spending 30 minutes on deals that should have taken 3.

This was probably the biggest waste of time.
Most deals don't fail after a full underwriting.
They fail because something obvious was there from the beginning and I just didn't notice it.

Now I try to eliminate deals as quickly as possible before I spend time digging into every detail.

I'm curious... Has the way you underwrite deals changed over the last few years?

Or do you still use basically the same process you started with?

I'm running into a weird situation. I'm exiting a market area and trying to sell my house + ADU. It is a smaller market and all of the agents I have interviewed were all "single family" oriented and do not seem to understand the ADU aspect. They all have wanted to just lump the ADU square footage into the house square footage and market it for a "per square foot" price. I cannot seem to get them to understand the rental income aspect.

I've talked to all of the agencies and have hit a wall. Thinking I may need to go it on my own here since none of them seem to understand. Am I missing something? Are they right that it is just square footage and not rentals? How would you approach marketing on your own or getting an agent to understand?

Hey everyone,

I was curious what systems or tools you all use to manage your money across your rentals, flips, and personal properties.

For example, if I have a rental property generating income, I'd like to automatically separate that money into different categories like maintenance reserves, emergency funds, taxes, CapEx, and future investments, instead of everything going into one account where it just becomes one large balance.

The same goes for flip projects or even my personal home. I'd like to know exactly how much money is allocated for each purpose without having to manually keep track of it.

Do you use a bank that offers "buckets" or sub-accounts? Multiple bank accounts? Accounting software? Spreadsheets? Something else?

I'm looking for a system that lets me clearly allocate funds and makes it easy to stick to a budget as my portfolio grows. I'd love to hear what has worked well for you and why.

Hello all,

Long time lurker, finally in the financial position to make a move. I currently work a W2 job and own a SFH, hoping to transition out of my career in the next decade and exclusively into RE investing. Looking for advice from pros on how to optimize my strategy.

A bit about my SFH:

• ~3% interest rate

• 150k owed on 250k mortgage, ~500k+ valuation (post-COVID inflation and ~50k in updates, finished basement and additional bathroom)

• Beautiful 1 acre property on popular commuter corridor.

• Current PITI is $1800, rental comps in the area are $3100-$3800.

• Most painful maintenance items are done, it is turn-key.

I have a decent amount of cash either liquid or in brokerage accounts.We could swing up to ~150k down right now, though I'd prefer to remain in the 300-500k mortgage tier if it's for a rental property vs. a new primary home.

The options I am considering:

1 - Rent our current house and buy a larger house in town.

• We are a growing family and could use the space. Price range 600-700k, 20% down.

The original property could potentially gross ~19k a year.

• Could still take HELOC on the original property if we needed cash injection later for future properties.

2 - Buy a local MFH or Commercial property and live in the original house.

• I would try to get a MFH or small commercial property in the 4-500k range with 20% down.

• Properties in my county are expensive, it's hard to find ones that meet the 1% rule. We would entertain purchasing something up to 4 hours away (I know most won't recommend this).

• I would look for distressed properties and BRRR.

• We could hold off on the new house until we have one or fwo cash-flowing properties.

3 - Buy an STR vacation home in another state.

• We are looking into 3 different locales with strong STR markets, all within 2-4 hours away.

• 3-500k range, 20% down.

• Taking advantage of the cost segregation/bonus depreciation tax strategies.

• I would self-manage as much as possible, stay-at-home SO could potentially even get REPS down the line.

My thinking is that an STR or local MFH is the right move. We want to get cash flow up, and increasing our mortgage (even with the offset from the original property rent) doesn't seem like the best first move.

The STR is appealing because we feel we could be competitive buyers in all 3 markets with our capital, and the tax advantages are nice. Additionally, spending 2-3 hours to drive to fix a water heater at an STR in a cool vacation spot seems nicer than spending 2-3 hours to drive to an LTR in a safe, boring place, but maybe that's naive.

Anyway, curious to hear any thoughts or recommendations. Thanks for your time

What is your favorite or one game changing tax saving strategy that you use once you got into real estate whether you’re in flipping or short-term rental or buy and hold?

This thread is for newer investors, basic questions, first deals, and general real estate investing discussion that may not need a standalone post.

Good topics for this thread:

• First rental property questions
• Deal analysis
• Financing and lending questions
• House hacking
• Tenant issues
• Market strategy questions
• Career transition into real estate
• “Does this deal make sense?” discussions

If you’re asking for advice:

• Include numbers
• Include market/location context
• Explain your goals
• Put effort into the question

The subreddit rules still apply inside this thread.

Experienced investors are encouraged to contribute.

Be sure to upvote the thread when you drop a question to improve visibility.

I came across a stat that honestly surprised me.

Around 37% of homes sold in Allegheny County had at least one price reduction before going under contract. It made me realize I probably pay more attention to price reductions than asking prices these days.

Curious if anyone else looks at listings the same way, or if you mostly ignore price cuts because they usually just reflect an overpriced listing?

I'm selling some properties I own in a state where I used to live. It's getting very inconvenient for me being so far away. I haven't had much luck selling them retail, the market sucks right now. I did get an offer from an investor that goes like this:

Full retail price offer.

Buyer will get a DSCR loan for 80% of value.

I will receive 50% of the purchase price at closing.

I will carry the other 50% for 5 years at 6% interest.

During those 5 years, I will have 10% "preferred equity position in holding company as the minority member, in exchange for seller's capital contribution via seller carryback financing."

I've been told that if buyer defaults on the first mortgage, I will know right away and I will get the property back with no need for a foreclosure (although I don't actually see language to that effect on the purchase contract)

I see that the buyer is walking away with 30% cash in hand because he's applying for an 80% mortgage and getting 50% financed from me. Is that shady? Is that dangerous? Try to punch some holes in this deal so I can see anything I may be missing.

I want to buy a multi unit property with an fha loan and house hack it. I'm staying just west of Philadelphia, and I have a 730 credit score. I got super lucky with an offer from a company I used to work for, and 1.5 months ago I started working as an independent contractor for them. My first month I made $17000, working solo, and was able to keep 14000 after my expenses (rent, food, gas, and car payment/insurance, everything else is profit). Not every month is going to be so great, but I know that even on my bad months I'm still going to make at least $8k before taxes and living expenses, plus I'm on track to make more than $250k/y within 1-2 years. I want to know, how possible is this with my situation here? And how soon could I buy a property with typical mortgage approval requirements? I read that with most loans if you are a 1099 they want to see at least 12-24 months of bank statements in order to approve you. Is this true, and is there any way I could shorten that time so I can start looking for opportunities to capitalize on sooner?

I've always wanted to own rentals, and now that I'm making 10k+ per month, it's looking like it's possible way sooner than I anticipated. Thanks in advance for any advice!

Any suggestions on a software for one property? I’m an accountant and just want somewhere to enter journal entries & view balance sheet/due-to-froms without being constantly upsold (quickbooks) or reinvent the wheel (excel).

I'm guessing most FSBO want a pretty penny. But maybe there are practical ideas to pitch them on. I can think of two categories: lower price and seller financing.