All Forum Posts by: Anthony Addessi

@Account Closed I would love to add a couple meet ups to my calendar, I will check it out.

@Account Closed would you sell any of your properties that are cash flowing to 1031 up to more units.   I am getting ready to sell one of my tri-plexs to trade into 5-6 units.   Would love your thoughts.    I started a thread here on BP. 

https://www.biggerpockets.com/forums/223/topics/35...

@Account Closed meet up.  My office is 10 minutes from my house (by design) and drive 1.5 hours once a month ON A FRIDAY to go to this meet up.  Great people and better ideas.  Like others I found a new business partner there.   My only regret is it took 6 months of putting on my calendar before I went.  Now I try to make everyone.  

@Samir Pathak The main reason I went with the 5/1 as I knew I would most likely cash out more over the next 5 years.   Also, since it is a residential mortgage it has a 30yr term the rate will just float, but no balloon payment.   Finally, 30yr fixed loans  are Underwritten to FNMA standards and with multiple LLCs/properties in different phases it can be a documentation nightmare. 

Send me a PM and we can get a coffee sometime. 

Hi @Samir Pathak 

For the purchase I did not use a conventional mortgage. I used a LOC. For the refinance, I got a IO 5/1 ARM for $900,000.00 therefore I have about $250,000 still left in the deal. This left me with a comfortable amount of debt to service and I can pay principal if I want or if cash flow goes down just interest.

One key to my investment thesis is that a property at stabilization must be able to handle a 15%-20% decrease in rents and stay cash flow neutral.  Since I am continuing to buy throughout the cycle, this will keep me from feeding multiple properties if we see the market slow down or even turn negative at some point.  

Monthly Rents are at $7560.00

Hi All,

I wanted to share one of my latest deals in Redwood City, CA that was a great success. It is a deal that on the day I bought it, I was the proud owner of a slum like property where tenants were not paying rent and a rehab was long over due.  Think missing tile in the showers and bugs coming out of the floor and dead cars parked in the yard.

Here is a summary of this investment.

• April 2015 – Purchased the property $1,000,000.
• June - August 2015 – Renovation ($110,000) completed and fully leased at market rents (EGI up 136%).  Renovation was a complete overhaul, new kitchens, new baths, new electrical, new plumbing, new floor, new doors, new paint, new fences, back yard clean up and more.
• October 2015 – Refinanced and pulled out cash (which allowed me to buy another property in 2016).
• August 2016 – Decided to put the property on the market for $1,500,000.

Yes that last bullet point was correct; I am going to be selling the tri-plex in the next couple of weeks. The plan was always to keep buying and refinancing, buy more and refinance…. as I am a buy and hold investor, but the market is so great right now I have decided to sell my tri-plex and 1031 up to more units.

Here is a list of pro/cons for the sale I went through while making my decision. I thought it would be nice to see discuss why people sell and why not to sell when the market is “hot”

Pro

• I am putting it on the market at $1,500,000.00 which would give the new buyer a turnkey property at 4% CAP. I am not sure even if the market continues to go up I could forecast a better time to sell.
• I can realize a +40% IRR over ~1.5yrs and 1031 that into a larger property. No taxes!
• From a value add standpoint, I am not sure there is much more I can do to increase the returns.
• I do not want refinance again as I feel it would eat up too much of the cash flow and would not leave me with more money. I always want to be able to take a 15-20% hit on rents and be cash flow neutral on all properties.
• My goal has always been to build out a large portfolio.

Con

• Right now I am realizing over 12% Cash on Cash return after the refinance
• I believe rents will increase 10% over the next two years on the street it is located due to gentrification.
• Property Tax Laws in CA (locked in at a lower basis)
• The property is truly hands off since construction; I have great tenants and have no issues.
• Finding the up leg of the 1031 will not be easy and if it is more than 5 units it will have commercial debt (not as favorable terms).
• Fees, commissions associated with the sale and purchase of new property.

I guess at the end of the day my decision to sell (if I can get my price, you never know) was based on taking the money now and investing in another value-add opportunity. I really enjoy building value and taking a distressed asset and bringing it back to life. Every deal I have done I have found something outside the box to bring extra value. I know a number of people talk about the Bay Area being too expensive or overpriced, but there are still deals to be done.

I look forward to hearing comments or thoughts.

@Justin Louie this past purchase was found on MLS, I went aggressively after it as the location was preferred as I have a building down the street. The sellers would not look at any preemptive offers, but we came in very aggressive on our terms and while we were not the highest offer were chosen based on our terms which were AS-IS with quick close. I am constantly looking at new property in the markets in which we target so I have the most up to date figures to make confident aggressive offers. I find that most people include to much contingency or fat in their numbers so they talk them self out of the deal. The key is to keep your numbers real and build in the necessary contingencies and reserves, but not extra just because you are unsure. If you are not confident in an assumption research is key. Hope this helps.

@John Aldea where are you investing?  Local in CA?  Are they flips only?

@Fred Weiller Have you picked up anything in Huston lately?  I know people have found it to be a good market in the past, where do you see it going?  What sort of Cash on Cash can you get out there?

@Justin Louie, l would start by attending Johnson's SJ Meet Up "SF Bay Area Real Estate Investing Club".  It is this Friday in Milpitas at 6:30pm.  It should be posted on bigger pockets or you can search meetup.com.  I have been going for last 6 months.  There are great investors that come do discuss local, out of state, and note buying.  I think it might be the best place to start so you can hear first hand what other folks are finding to be successful. 

As for me I buy multifamily buildings in Redwood City, I am a buy and hold investor, but looking to trade up some of my smaller deals to larger ones.  I find them through, brokers, MLS, and through other relationships.  I purchased a tri-plex in Redwood City in April of this year, so there are still deals to be done!  Building your network is key!  

Hope to see you Friday!