Has anyone used biggerpockets.com for investing?

[Quan]

I've been dinking around looking to get into real estate investments and ran across the biggerpockets.com website.  I was wondering if anyone used the site to purchase investment properties?  I never considered buying a place I could visit, assess, and manage myself, but the ROI on buying a house for <100k in the midwest and then having management company out there do everything makes more sense than buying and renting in my current location.

Just curious if anyone has any experience with the listing from there.  Some of the ROIs are 10-20% which definitely seems too good to be true.

[Zaphod]

They probably are too good to be true. I have done a lot of reading of that site, and basically havent visited in forever since they just bombard you with spam. Also, I find it disingenuous and this side of false advertising/scammish the way they throw together an ROI estimation using models of financing that are basically no longer allowed. That is, you see over and over again rates/terms for investment properties that are the same as owner occupied when new rules that have been out for years have basically made that impossible, and you now need commercial financing for most anything unless you get very lucky. So their assumptions are unrealistic to start, making it not shocking to get an unrealistic result.

I'd dive further into financing, management costs, etc...and do your own due diligence. I've yet to come across a BP "how to" post that didnt overly simplify the ROI and make it seem impossible not to be a billionaire if it worked remotely that well. Real world it simply doesnt work like that.

[Quan]

Most of the properties I saw listed are fixer upper rentals, and I just see many of the situations becoming money pits if I can't be there in person evaluating the progress.  I've also looked at turnkey rental places, but not sure how that would go either.

Honestly I'd rather buy in my local area and handle most of the rental and maintenance myself, but housing prices in my area are pretty high, and not sure if the rent would cover the the mortgage and have any profit.  I'm curious if anyone has looked into any turnkey investments?

Thanks for the input.

[NJDoc]

I really have no experience with BP, but I have years of real world experience with renting local single family homes , lease to own and rehab.  Not an easy game in my opinion, and takes a lot of your personal time. Over the years , I have found that larger commercial make such more sense, and for most of us  that means a syndicated deal. At that level you are dealing with real professionals instead of newbies and charlatans, and returns are not expressed in ROI, but in IRR and MIRR. In other words the level of sophistication goes up and thus the level of accountability and in some sense the level of safety. In addition, if your one tenant trashes the place and skips town and leaves you with a vacant SFH with repair costs and an ongoing mortgage kiss your 14 % ROI goodbye. Whereas, if you are part of a syndicate in a $10M multifamily complex, and one or two leases turn over, your 8-9% return is still quite safe. Pick your poison. For me, larger is safer and I like the logic of working with professionals.  Unfortunately, it is hard to convince younger Docs of my logic, as they all want to try themselves to win the game, and 99.9% of them lose . I wish there was a way beyond this Forum to help teach and help others to understand the big picture.

[BCBiker]

Bigger Pockets is really more of an information site where you can learn practical tips from RE investors. I like the podcast and have listened to basically every episode.

They do have a marketplace and they have advertisers but BP does not set up deals (unless something has changed that they didn't mention on podcast).

There are some really smart and successful people who have been on the podcast that I would definitely trust to partner with if you wanted to get going on REI.

[Zaphod]

I can see the logic in that. I really wanted to start a real estate company and portfolio this year and did a lot of research and spent some time on BP and looking at all their deals. The site seems mostly populated by younger people with limited assets trying to synthetically increase their net worth in the RE game. Frequently they are buying dumps for 50-100k and spending 50%+ per month on maintenance. No thanks. Talk about time consuming. Even if I did that kind of thing it would be at arms length through a property manager, I wouldnt advertise the doc owns the place, not worth it.

Which of course led me to a similar conclusion, only a large apartment really makes much sense, but complexity of course goes way up. Havent looked into the syndicate stuff yet, so we'll see how that works soon. Other projects going first though.

BP has "pros" that just randomly spam your inbox and try to get you to either use them or their company for part of the transaction or selling you some program or education. Seems like a nicely set up pond where bigger fish pluck at the naive and greedy. Theres some decent info on there, but nothing you cant get anywhere else.

[The White Coat Investor]

Quan wrote:

I’ve been dinking around looking to get into real estate investments and ran across the biggerpockets.com website.  I was wondering if anyone used the site to purchase investment properties?  I never considered buying a place I could visit, assess, and manage myself, but the ROI on buying a house for <100k in the midwest and then having management company out there do everything makes more sense than buying and renting in my current location.

Just curious if anyone has any experience with the listing from there.  Some of the ROIs are 10-20% which definitely seems too good to be true.

Click to expand...

I don't think 10-20% is too good to be true in real estate. Remember, that's a projected ROI, so it's usually a little optimistic. But remember these are leveraged investments, so that can really boost returns. I mean, imagine a cap 8 property that appreciates at 3% per year, that's a return of 11% right there. Add a little leverage and getting up into the 15-20% range isn't unreasonable.

Bigger pockets is a good forum, perhaps the best on the web for real estate. But there is a lot of cheerleading there, like there is in real estate investing everywhere it seems.

I think it is a mistake to directly own real estate in another state. If it is syndicated or via a REIT, I think that's fine. But I think if you're going to do direct ownership, do it in your home town.

[Joseph]

^^^^^^^^^ I like what that guy said.  *10000000

[Zaphod]

Sorry, to clarify, I did not mean a 10-20% return is too good to be true, rather the simplicity of the deals and ease of making it are vastly overstated on the site, cheerleading as WCI aptly points out. Lots of glossing over of special situations they may be in and events that may eat into that return even if temporary.

Most of the great cap rate places are places where doctors arent, aka the midwest, meaning you'd need a long range or turn key arrangement which I know some people do and seem to do ok, but just seems like a great situation for trouble or even outright fraud. I guess one could do it well but you'd have to have the time, another thing most doctors lack.

[PenguinMD]

Have used biggerpockets for education and a good user community. I wasn't aware they have there own sanctioned deals though unless that's the open marketplace.

Alternatively, I've been delving into real estate crowdfunding sites which lets you participate in real estate syndicate deals.

I have several investments which are seeing cash on cash around 5-8% and IRR of 15% to 18%.

The investment amount ranges from $5k to $50k with multi-year holds up to 5Y.

I too wanted to diversify into RE but didn't want to play landlord or spend weekends rehabbing a place. I'm okay being a passive investor and just getting a paycheck monthly .

But yeah if you are looking for the most upside (25%+ returns) then you need to take the risk with leverage and rolling up your sleeves and laying some flooring and painting walls .