How to Buy Multiple Rental Properties a Year + Auctions 101 (Rookie Reply)
30:52 Share

Let's get your questions answered. I'm actually care and i'm here with tony jay Robinson and welcome .

to the podcast where every week, three times a week, we bring you the inspiration, motivation and stores you need to hear to kick out your investing journey. And today, guys were diving back into the bigger pockets forms to get to our questions answer. Now guys, if you are a realised that are here, or even if you're not a rooky, the forms are the best place.

Free to quickly get all of your real, say, investing questions answered by so many other real, say, investing experts. Now today, we're going to discuss how to grow your portfolio and twelve months or less the best way to increase ance and and off market sourcing strategy that not enough people were taking advantage of. Now before we jump in, we want to think corporate direct, this episode is sponsor by corporate direct. We want you to protect properties with lc and like corporate direct, take care of the paperwork, go to bigger pockets to outcome, slash direct for a three fifty minute consultation and one hundred books off if you mention the podcast. Now let's go into the show OK.

So the first question we found this in the forum is how do people buy multiple houses a year? I'm new to investing and was curious how people buy multiple houses in one year. With my va homework on I have to live in the house four year before I move out.

Would be cool if I could split the va one and by two houses in the same. Yeah so tony, I have neither one of us are eligible to use A A V A loan. But um we do know a little bit about this. And yes, let's correct. You have to live in a property for one year with your va homeloans in order to be eligible for the V A.

On the part of the reason they don't let you split IT and buy two houses in the same year is because this loan is supposed to be for your primary residence to give you a place to live and not supposed to be so that you can invest in rental properties or whatever IT may be a. So the purpose is not to have an investment even though a lot of people do decide that once they move out of the property in a year to turn IT into a rental. So tony, besides A V A home alone, what are some ideas that someone could use whose purchasing, uh, primary resonance with A V A home loan as to how they could buy another house in the same mean not using a vo.

yeah. I think I would probably ask if you follow questions first like I think everyone situation is going to be slightly different. So is the person that ask this question where where do you feel your constraints?

Tis is your constraints on the ability to get approved for the additional mortgages? Is your constraints on the capital is needed to fund the deal? Is your constraint on you know like like where is the constraints?

Because there are some folks you have three hundred thousand dollars is sitting and they want to go to play that capital. Maybe you can buy two or three houses, just I plopped down twenty percent if you buy the right Price. Maybe you're in situation where you took all of your cash and put IT into that first deals, announced the capital, the constraints.

So I think the first question that i'd ask is here, what is that constraint? So let's just assume that you've got some capital and that is the debt, that is the potential constraints, and we will go to the cash piece afterwards. But just because you ve got your first with the va, I mean, every loan has to be a va. There are so many different loan products are out there right in every linders that you speak with probably has a different set of loan products. The next leader that you talk with, so I would say go out there network at both local lers and whatever market IT is tribes in now work with national folks, if you know people who play kind of of the national little, but talk to a lot of different lenders, explain your situation and see if they have a loan product of matches with what IT is you're looking for.

Yeah, I think that's a great point as to looking at the different loan options available. And you will have to understand your debt income ratio too, as you can. You even get approved for another type of loan to based on what your van is and then how much income you're bringing in, what that monthly payment compares to, how much monthly income you're coming in. So if you haven't IT is your va loan and you're trying to plan this out, be strategic with IT as to, okay, I want to use my violon for my primary residence, but I also want to go and to buy an investment property, search the the loan options available to you, figure out how much capital you would need, what is the debt income requirement for that type of loan to make sure that you can baLance out? And maybe that means you're not going to buy as big of a house or as much of a house with your va loan so that your that the income isn't affected as much so that you can go out and get another one product too.

So if you go to episode to one hundred and twenty seven, aci interviewed Angel Garcia, who is he's actually active duty, but he's leverage his va loan to help scale his portfolio. And he talked a lot about the nuances that come along with the vone. I hope you have to do a much Better job than national I can.

So just go back to episode ce twenty seven to hear from Angel. Now that's that's the mortgage piece of that was the constraint for you but said the constraints was the actual cash. Um there is a lot of different ways to get the cash that's necessary to fund your deals right um you can love a department erp right action.

I worked the book for bigger poke's an will say partnerships and you can have someone come in as an equity partner, you can have someone common as a debt partner. They're different ways to leverage the capital that other people have tell funder deals. Um so like if the cash is the issue, that's the lowest hanging fruit. But then the other thing, and this kind of depends on what you do for your day job, but sometimes just put your, you know your your, your petal to the metal I put in a little bit more elbow greece.

And if you can earn more your day job, right? Can you can you work over time and get twenty percent increase in what you typically make by working some overtime and take all that over time? Capital put that into your deal? Can you redo some of your living expenses, right? Can you save on which you pain on rent or mortgage or whatever IT may be? So if cashes the issue, look at yourself personally, are the ways to decrease expenses, increase income and if not, or if you max those things out, are the ways to go to happen to the network of the folks, as you know, and ask some of the capital they have before that next year.

Before we jump into our second question, rockies, we want to thank you so much for being here and listening to the podcast. As you may know, we air every episode of this podcast on youtube as well as some original content like my new series, rooky resource. We want to hit one hundred thousands subscribers, and we need your help. If you aren't already, please head over to our youtube channel at youtube 点 com slash at real state rookie and subscribe to our channel。

Want to invest in real state but don't have the time or know the best local markets. Rent to retirement, has you covered a to deal? They've helped thousands of investors, just like by turn key homes across the best U.

S. markets. And best of all, they do all the heavy living for you with over two hundred and fifty five star le reviews on bigger pockets.

Renter retirement expert help you build strategies to retire early, the real state. And right now, renter retirement offer some amazing senses on turkey. New construction properties like up to thirty thousand dollars off of new bill Prices, zero percent down loan options, three point nine nine percent interest rates. So guys, don't miss out these deals won't last text R E I to three three or visit bigger pockets. Outcome, slash retirements, start investing in top casual markets today.

You ever thought about dividends really, but that kind of circle word start mean, of course, you have you listen to this podcast or we've got something that might just kick start your journey into prop stream, your secret weapon in the world of off market properties with over one hundred and fifty five million properties of your fingertips, production lets you uncover hidden ms. Right from your phone, tablet or computer product got over one hundred and twenty search filters from pref closure of bankruptcy, helping you find motivated sellers faster than ever. And with public record data in sales, estimate accuracy over ninety nine percent, you'll know those comes every single time they're even daring in a learning academic to get you started on the right foot dive in with fifty freely ads during their seven day free trial at prop dot com slash B P. That's prop stream dot com slash B P, like bigger pockets. Hey, Henry washington.

hear from the on the market pod, you ever get frustrated while hunting for off market properties? Well, here are not alone. Just as alex, a fellow real state investor who was in the same boats strugling.

To find those hidden games, they need discovered deal machine. Now, alex effortlessly locate off market games, leveraging deal machines, free, unlimited contact data powered by the robust database used by nine one one and that s meal campaign seamlessly. So you ready to to revolutionize your realest game like alex visit bigger pocket that comes lesh deal machine, sign up for free and start transforming your property hunting today.

Okay, welcome back, tony. What's our our next question we got here?

So the next question here is about py four plex. So this says i'm closing only four plus in bridge port. All units are two beds, one baths.

And the current rents are under market at six hundred dollars against a fair market rent of twelve hundred dollars plus. So a lot of opportunity here is amazing. All of the other two beds in the neighborhood are wanting for twelve thousand and two plus. So I not to fair Price, I will be introducing myself as new landlord. Sun, i'm nervous.

I was thinking to increase rent by two hundred dollars over the course of three months to get to fair market Price their month to month and are free to leave, which is even Better, because I would like to renovate the place, one unit at a time. Does anyone have experience handling raising rents that are under market rent? Love this. Now all point to one resource. And I let you take here because you've got way more experience than I do.

Um but we did a an episode with diomede nearly episode four hundred and sixty three where dion talked about the binder strategy and IT IT was a very, I think, unique way to approach rent increases from your tenants and IT was so effective that don tenants would literally tell him here's what I want you to raise my rent to and he wouldn't have to ask themselves. So about four hundred and six, three, three ago, check out the band strategy with the amp nearly. But for you actually you even heard a lot of tenants you ve raise things. What if you found to be the most effective void to do that?

Yeah if i'd rather not do a turnover and i'd rather keep the tenants please um so that I don't have to spend the money to go in and run of IT, you know right away. When I close on the property, I usually do an increase. So I really like that.

That's already an option they're considering as to slowly increase IT over several months um and i've had a really good luck with that. I also like to show comparables as do if they did decide to move what seen out there available at IT problem, usually even a higher Price than what i'm increasing the run to. But if you would actually like them to leave because then you could go ahead and renovate the place um maybe you don't want them all to leave that once, but then you you're kind of in a no lose situation if they accept their increase.

great. You're getting what you want or if they I believe you're gonna get to run the vate the unit. So I think you got a look at IT as this is a business and your nervous because you don't want them to be upset, you don't want to hurt someone, you don't want to change their living circumstances, but also you have the bills to pay.

And this is an investment for your family, for your future, too. So you have to get over the fact that you may be hurting them. They may not be nice to when they realize that there is an increase, but you can't be nervous about that.

You just got to take that confrontation head on. And trust me, I am one person that does not like to have confrontation, and that's why I usually do not introduce myself as the landlord. I kind of do all but behind the scenes stuff, and a lot of communication has done through email, email, text, so that I really don't have to deal with that confrontation face to face.

So that is something that you're uncomfortable with. You can always handle IT that way too. And then pass. You have everything in writing, which I really like .

to yeah I think you you touch on a big part there to ask, which is you as a landlord like you bought this property as an investment and it's not like the person asked this question in a way that you know, hey, fair market, winter twelve, four hundred, but I want to charge in two thousand, right? This is a fair market.

When is twelve hundred word, fifty percent of that, right? So I don't think that as the owner, you should feel necessarily bad for trying to get them to where the rest of the market is, is spending, right? So just know why we bought these investments and there is you you're being fair with them.

Yeah and to if there on month to month leases, they have to understand that, that means and thirty days notice or whatever the state laws are like new york, if you've lived there for over year, it's sixty days notice.

If you've lived there for over two years, I think, and as as ninety days, so they have to understand that being on that mount mount leaves, there always is adoption that at any time they could receive a rent increase or that they could be as to leave the property with A A non renewal. So you know, much as people aren't really educated about that, often times is tenants. That is the way that IT is. And you have to think about IT as a business that even though this is someone's home in their livelihood, you have the right for your family to to to make the best decision based on you.

Actually let me ask you are just in terms of tn communication and general. Um what have you found like at least in that initial conversation as the best way to get off on the best possible footing, like even if you're not doing reading increases, but just in general, like how do you make sure that when you inherit tenants that you're really setting yourself up to have a productive and and I guess as as good of a relationship as you came with those tenants?

Yeah, one thing i've learned is to give them an option. So I always do uh, what the rent increases would be and so I give them that sign the newly agreement with the in increase or I send them the letter stating that you know that we're not going to renew new the at least after the state. So I give them the rent increase with the newly agreement, stating with the increases and when it's effective, what the terms are.

But then I also send them a non renewal. So stating that if they don't sign the new disaggregation, the least is no longer and there is gonna terminated and this would be their move out date. So I recently had my first push back on this, and the the person called our edman that answers the phone for us, our va, and he said, you know, this person is really upset.

He said she's on a fixed income and SHE can afford the increase. So the increase was, I think, fifty dollars. SHE was paying five hundred.

That was increasing to five fifty. Market rent still in that area is probably six, fifty, seven hundred for that property. And i've had the same time and since I ve bought IT, so and there was a very not a large increase.

And so I just had my va respond back to her and just say we understand please let us know what you decide. So as in it's your decision putting IT back on them. You can move out, you can find someone else or you can accept that and he ended up cepting and she's been paying.

So um I think that may go on with a binder strategy too is making IT their decision even though that kind of sucks like you accept them rent increase or you have to move out, but at least you are giving them options, I guess, and making IT on them. But um yeah I mean property taxes are increasing, insurances increasing, the water bills are increasing, which we do pay for that property. So that is A A large part of IT .

to a you you have to obviously baLance the human component with the business aspect of this and where we're real state investors who purchase these properties and hopes to get a return then. And that allows us to live, to feed our families and put roofs over our heads. And so we've got to much rebound from both of those things. We're going to take a quick break, but won't we get back our next question? We're be discussing an off market strategy that most people are sleep in on.

Hey, listen up, aspiring real state mocs. I've got a secret weapon for you, say goodyer to the traditional real ground and say hello to prop stream, the ultimate tool for finding off market properties where they wiping one hundred and fifty five million properties in their database, open stores you never even know existed. Proph also delivers public record data and ml cells estimates with pinpoint accuracy, making comes a complete breeze.

But IT is still the deal. Prop shame got lead automation, skip tracing and top notch marketing help you close deals like a pro. And the best part they're throwing in a free learning academy to help you level up your free schools.

Tried out with fifty freeloaded during their seven day free trial at W W W dot prop stream dotcom flash B P. That's W W W prop stream dot com slash B P, like bigger pockets. Hey.

hey, here from the on the market pod ever feel stuck while searching for off market deals, will let me introduce you to sera, a savy al state investor who turned her fortunes around with the machine, now taps into free, unlimited contact data powered by the same databases used by ninety percent of U. S. Color R, D.

systems. SHE easily since automated mal campaigns. And thanks to deal machines, new private investigator sir can even track down those elusive corporate leads.

This powerhouse come back keeps her steps ahead of the market. One to invest like sera had, the bigger that comes. Flash deal machine and senate for free. Start turning hidden opportunities into your investment. Success with just a few .

colleges need new glasses or want a fresh new style. Warby Parker has you covered glasses started just ninety five books, including anti reflective, scratch resistant prescription lenses that block one hundred percent of U. V rays, every frames designed in house, with a huge selection of styles for every face shape. And with worby Parkers free home try on program, you can order five pairs to try at home for free. Shipping is free both ways to go to warby Parker dot come slash covered to try five pairs of frames at home for free, warby Parker dot com slash covered.

Okay, so welcome back. And our last question is about an auction buying a property at auction. So this question, seats, I found a deal through auction is a three bad, three bad fourteen hundred square foot house in colorado, and the purchase Price is one hundred and seventy seven thousand.

I wondered if anyone had purchased this way before. In what landmine should I be aware of? So the first thing, tony, I think of is the one hundred and seventy seven thousand.

Is that the buy out right bid? Or is that the starting bid? That's what i'm unsure about in this question, but I think that we can go ahead and talk about the process of this. Have you ever bought a property adoption?

I've never bought a option. I ve actually never been been to an auction. Um we've interview quite a guess that I know you've done on yourself before as well actually. So yeah good call the ones 7k like if that surprised you're seeing typically that's where where things we're starting you know to go from there。

Yeah so i've done online bitting and then i've gone in person. I've never actually bought um I think the website that we had used that was actually um uh handy man of mine when I was managing in a private gun legs he wanted to do by his own property fixed up and we bid on auction dot com on this property and IT was a super dapitan needed a lot of work but he ended up winning the auction on auction 点 com but this was like a really long process because IT wasn't meeting the minimum bed。

So no matter what, I would start out, say at one hundred thousand and then people would bid IT up. But if I didn't reach one hundred and fifty thousand. They would just close the option and nobody would get IT and then theyd listed again, we glad and you have to go back and bid.

And like sometimes they would adjust what the minimum bid was that they actually needed. And finally, he he got IT, but you don't get to go to the property. I mean, this was this property was vacant and we differ. He walked around the outside. He might have shot mean the window too.

I I can't remember exactly to see the inside, but a lot of times you're not getting access, especially if it's occupied home because it's probably going to auction because the bank goes IT or there's back taxes recover IT may be and it's going to be your responsibility to evict the people that are living there because if it's you know maybe there's a tenant in place or maybe it's that people that actually used to went before the bank or the county took IT over an insoluble in to so you won't be able to get inside of IT. So I think that's like the biggest thing is how much access to do you have the have to the property, especially as a working investor, not knowing a time about purchasing property, about about the option process, but also the rehab costs. What goes into doing a rehab by just looking at pictures, if there's even detailed pictures up there, but lot of unexpected costs can come up when not being able to view the property or having someone view IT for for so that would kind of be my first thing.

Yeah can not agree with more because when we talk actually about investors buying site sine remotely, well, we suck about well hey, you can mitigate that risk by having your real ter walk you and give you the a their perspective, having a property inspection on and letting them in a very detailed manner point out all the things bigger, small that maybe an issue with this property, having a contractor walk you and give you a bid and you lose how in some actions I know there are some options where you, you you actually can get access.

You know where it's going but does where you can so that you've lose out on all that risk mitigation. So I think for me personally, if I may, Ricky and i'm doing this for the very first time, I would I would be difficult for me to have the confidence jump in to a an auction property site unseen, right, the zero access until I hold the keys because you could underpin the property. You know what if I know I was just with an investor this weekend, and they had to replace their main shoreline, and that is a big expense.

So I imagine if you buy a property at an ocean and you ve got to replace the main store line connecting to the city's store system, massive, right? They could blow your whole budget. So I would be somewhat hesitant to think, jump in in as a very first time worker to buy something at auction.

okay. So let's say you, you know you can expect the worst that everything needs to be rehabs into the property because you can't get into add your count on a new furness and new how water ten can do on dry while everything um then you know you have your continency for even more unexpected than maybe that makes sense to you that you don't have to go to the property because you already have this huge rehab budget expecting the worst.

But let's just assume for this, you are able to get access to the property through the auction process and now it's actually time for the auction. So what are some things that you have to watch out for when going to option? Tony, I think the first thing is, is that you know what your maximum bit amount is and you stick to IT and you don't go over that where your number is do not work anymore.

Most options they're going to want to you either have you know like i've seen some options where it's like a big deposit up front and then you've got to come with the entire amount within like forty eight hours or some it's like, know we talk, we get in the past before or it's like you've got to bring like a certified funds to the option even be able to get right. So totally agree. Knowing what you're upper, that is what who are kind of catch you can actually bring because last thing you want is like you're there at the auction, you give some kind of non refundable earnest money deposit and no OK, you need the whole baLance tomorrow. You don't have IT when I you're scrambling ing or maybe just .

lost out on this funds and that is a huge deal to is understanding the process. So what happens once you win the bid? What happens next? So i've been typically it's like a thirty day close where you have to actually bring cash, maybe that's even from a hard money lender or off your line of credit, whatever.

But if you can't go and get approved for a loan than paper with a loan, there are sometimes i've seen on auction websites where they do allow you to use some kind of long product to purchase these properties. But a lot of times you have to have the cash within the thirty days or whatever that time here IT is. And you're bringing certified funds to the auction.

Or if you're doing an online auction, you're linking your credit card and you're paying that deposit by your create card, which you get your create card reward point. So that's a honest, but you have to understand what that process looks like to make sure that you can actually meet that. Um in new york state, we have a turney involved with every clothing.

So I think that is also a bonus as to you can go out and find an attorney that specializes in dealing with auction properties and closing on them. But as far as the title work, so a new york's take my attorney is pretty much take care of that. They review all as I do work for me and i'm pretty hands up patton's an new experience um are there things that could happen with title for an auction property? Yeah i'm trying to think through .

of what that process might look like. Again, i've never purchase sing a thing at auction even here in california. But um I would assume that even through auction, we still would have to go through some kind of esco entitled company here as well to facility that transaction and that title company still should be doing a search against that tattle to make sure it's it's free and clear. I guess worse case, like you could maybe just pay a title company yourself to go that process. I definitely would not purchase a property without having cleaning like a cleaning clear title and having title insurance um actually uh investor we both know uh he's flipping a house daron on instagram but he told me about an appropriate the heat purchased where during the closing process the tattle company missed that there was some previous lean but because you had tattle insurance IT was the tittle insurance that kind of covered all of the legal expense to get that title issue cleared up. I would definitely make sure especially purchasing at auction, cleaning, clear title and entitle insurance.

Yeah i'm actually closing on I A property that i'm selling right now and I got my closing seat ment. I went into sign and I was getting away larger check than I expected and I was neither attorney accounted for the lean that was on the property and it's actually a front of hours that was a private money lender. And I can't wait to tell him that I was just got to walk away with everything.

But yeah, so you want to make sure there's no means no judgments. Contractors leans. You can even go to county records to and do some kind of due diligence I had time before you actually offer on the property and make a bed to look up the properties.

I also like to look up. You can look up owners to so you go to your coming clerk database and you search the owners name. IT will show you, you know, is differs to what they have a available online. But like any mortgage that was taken out by that person, any deed that was transferred into their name, any lean or judgment against them, two is in there. So you can kind of maybe piece those together to see if there is anything for that property out was standing OK.

Well, thank you guys so much for listening or watching if you're on youtube to this episode of real state reply reply, if you have a question of your own, make sure to join bigger pockets and you can post into forms to ask a question, or you can go in there and answer some questions. You'd be amazed at what you know just from listening to episodes like this. I'm actually in his tony and was you guys next time on real estate, Ricky?