All Forum Posts by: Allyssa McCleery

@Daw’Neichell Moore Good for you! Where were you able to find financing for only 20% down with such a large property?

@Account Closed you can find the millage rate on your county website. Just google your county + millage rates. Divide the purchase price by 1000 and then multiply it by the millage rate (ex: my county is ~$23)

Looking forward to this again next week!

Definitely a good strategy. A comp is not a comp until it has sold. I think when you present the offer to the seller in a very reasonable way you will have a better chance of getting to the number you need. You could show him estimates of what the rehab will cost you and very conservative estimates of what you'll be able to rent each unit at. Put this all together on a spreadsheet and show what type of return you would be looking at (be sure to account for closing costs and a full year of vacancy assuming you'll have to pay the mortgage every month during renovation). For taking on a project this large you are taking a big risk and therefore should be reaping a larger reward (the ROI). He is clearly an investor himself and should understand this logic.

Poor judgement when choosing a property manager would be one of them but probably not the BIGGEST expense

Contact brokers in your area to determine the cap rate. It is not something you will have to calculate yourself. Also, pay attention to what the OM says the cap rate is and use this to analyze the value based on what you expect the NOI to be.

You should read What Every Real Estate Investor Should Know About Cashflow.

It will help you understand how banks underwrite deals and therefore you will be able to analyze your deals in the same way to ensure that you will qualify for financing. There are also creative finance options you can employ if you find the right seller to offer favorable terms for you. 

If you are looking for a property under 4 units you can use an FHA loan and have a significantly reduced down payment.

I think you are in a great position to take advantage of your free time this summer to get yourself in front of as many syndicators in your area as possible. I would imagine they will be happy to show you the ropes when you exude your eagerness to learn. Start by offering to help them with their business. It sounds like you may be tech-savvy which will get you far with the right person in need of tech help. You could help them with improving their website, content marketing, perhaps searching out better softwares for them to use in their business. 

You should be able to get the market cap rate from a broker. Are you using a broker in this transaction? Secondly, there are lenders who will let your payments accrue while the construction is being completed so you can either make reduced payments during the construction phase or make higher payments once the property is operational again. The best way to find these lenders would be to call the local banks in your area and ask if they offer any programs like this. If not, ask if they have any referrals. You can also check the list of lenders here on BP. I would consult a builder or highly recommended contractor in your area to see what the price per square foot would be to get this project done. You could also drive around your area and look for people rehabbing an apartment building similar to yours and talk to the project manager/GC to get a good idea of what to expect the costs to be. Whatever estimate you come up with add in at least 10% for unknowns. 

You should also educate yourself about the metrics banks use to qualify deals and then run your numbers the same way. For you, the investor, you will probably be most interested in the IRR and CoC return but if you are going to take this master lease option you will also want to know what the DSCR is at the time you take it over and when you plan to refinance/purchase it. You will need a DSCR of at least 1.2 but some lenders have different qualifications.