All Forum Posts by: Alex Sanciangco

Without diving too much into the numbers, my initial thoughts are you could also

C. Bring on another capital partner for this deal to cover the gap and receive some of the profits, or

D. Find a private lender to cover the gap (ideally with favorable terms!)

I would definitely be cautious about “sucking it up” just to make the deal work - if the numbers work out then go for it, but if it’s too much risk than you’re comfortable with then you’re better off being patient and passing on the deal. 

There’s also an option to combine some of the above: bring in some of your own capital then cover the remaining - now smaller - gap from a private lender or additional partner.

Again, it all comes down to the numbers and the affected parties’ risk tolerance. But especially for your first deal I wouldn’t take unnecessary risk just to make it work unless you can tolerate a worst case scenario.

Another idea might be to find a small multifamily that rents to students in need of property management. You could provide value to the landlord by being an on-site manager or even handyman if you have those skills. In addition to the experience of property management you might be able to negotiate a discount on rent as well. 

At the very least a Joint Venture agreement could be useful to outline each partners’ role in the project. From Investopedia’s page about JVs:

One thing to keep in mind when deciding which structure you use is that it might affect your financing. I've heard that some banks are more restrictive with loans to an LLC, especially if that LLC doesn't have any other assets it can use as collateral.

If you’re not in any rush, meeting with a lawyer might also help ensure you’re starting off your partnership with a strong foundation. Best of luck! 

@Wilson Lee have you been doing renovations as part of your rental acquisitions? It sounds like you might be if you’re able to do a cash-out refi. I guess they could have also been turn-key and you just let the equity grow until you could cash out refi.

If you are doing renovations, then flipping might be a solid option to accelerate your capital growth. The renovation designs will be different for a flip vs rental as will the market considerations, but the rehab process is similar and rather than refinancing you’ll just be putting it back on the market. 

I’d be happy to run some numbers with you if you want to throw around some ideas, I have a calculator that I’ve made that simultaneously analyzes a property for rental vs flip. What’s nice about that is if you find something that works for both, you have multiple exit strategies which is always a good idea. Feel free to PM me!

Hey Wilson - I haven’t personally done this myself but I’ve been keeping these ideas in my back pocket for when I do get to that point. 

The two strategies I come across a lot in my research are the 1031 exchange and the HELOC (Home equity line of credit).

In general, the 1031 exchange enables you to sell a property and then use the funds to purchase a similar asset without paying taxes on the profits. (I’m not a lawyer / CPA so I recommend speaking to a tax professional about this since there is a specific process). For you, this could mean selling one of your properties then using the profits for the down payment on a larger multifamily. You could do this again and again, rolling that small multifamily into larger and larger apartment buildings.

From the stories I’ve heard about HELOCs, you could potentially wrap up all your properties under a single umbrella and borrow against the combined equity of all of them. This can potentially enable you to do multiple projects at once, or make that jump to larger multifamily projects since you’ll have a larger bucket to pull from. 

Hope this helps!

Congrats on the completion of a successful project! Sounds like an awesome deal.

Now that you're hooked, what's the next step for your team? Looking forward to seeing some more success posts like these :) 

Awesome thread! Congrats on sticking it out through those hurdles, as you've mentioned it sounds like you've learned a lot throughout this entire process. It's also really nice to hear your genuine enthusiasm coming through in your posts. Can't wait to hear out this turns out, sounds like the end is in sight! 

Thanks for the detailed journal! Truly inspiring for us newbies. 

I'm curious, how much time does managing all these projects take up? Few hours per week since you have the team in place?