All Forum Posts by: Alyssa Weber

@Julie Boston I would recommend talking to lots of other lenders. Different lenders have different policies, and if you reach out to them and let them know what you're looking for, you may find someone that is able to work with you. It took us talking to about 6 different lenders to find one that would work within our parameters. A lot of lenders will want to see the numbers you've run on rents and expenses, and if the numbers work for their requirements, they still can lend to you.

Also, if you are willing to look and network to find a reliable team, considering out of state markets could be a good bet for you as well. My market in Denver is also way too expensive, so I am working in mid-west markets for the time being.

Good luck!

@Ethan Teuscher I definitely use the Bigger Pockets calculators for analyzing deals. I also sometimes use a website called DealCheck just to run it again and back-check my numbers on Bigger Pockets.

For a buy and hold deal, I often do a "day 1" analysis and a "future" analysis. This will allow me to see what the cash flow will be on day 1, which would be the existing rents and expenses on the property. The future report then can show my goals of raising rents, lowering my expenses, etc. I do this to make sure that I am ok with the cashflow (or lack thereof) on day 1, and also to give me a picture of my goals for where I could take that particular property.

When starting out, it is good to jump in and analyze a few deals per day, so you can start to have an understanding of what looks like a good deal when they come along. I use rentometer.com to estimate rents, and typically try to look for listings that post the expenses. If expenses are not posted, I will estimate based on prior experience, or the seller's real estate agent can provide you the real expenses if you (or your agent) reach out to them. Things like owner-paid utilities can totally bust a deal, so watch out for those!

Good luck!

@David Olson I agree with what others have stated, that over-analyzing the markets can cause a lot of confusion and paralysis. I was in the same boat earlier this year, and I finally just decided to pull the trigger and focus on the Louisville, KY market this year. My main driver for choosing a market was because I had connections there and was able to get referrals for an agent, property manager and handyman that I trust. Building a team in a particular market is most important!

My plan is to focus on Louisville and building a portfolio there for about a year. After that, I will shift my focus to another market to try to diversify in another part of the country. When I look for my next market, I will be focusing on areas that have a stable rent base, good cap rates when analyzing deals and rents, and ideally where I have some connections that can help with referrals.

Best of luck!

@Jeb Brilliant how are the cap rates and tenant base in Indianapolis? I am currently investing in the Louisville, KY market, but am interested in networking in other markets, especially with the BRRRR strategy.

@Jay Leisten I would be very interested in chatting. I am under contract for a 4plex in La Grange, KY, and am looking at adding more properties in Louisville to my portfolio. I am specifically interested in BRRRR-ing my next property and would love to connect and discuss your experience in rehab in Louisville.

Hello! I am looking for some help in reviewing insurance quotes for a 6-plex property I am under contract for. I have shopped around for a couple of providers, and the difference between the quotes have been quite significant. I have landed on one provider that has worked with me on a couple of iterations of my insurance quote.

Here is the info:

• I am under contract for the property at $340K, pending appraisal this week.
• The original quotes I got back were for replacement value of $550K of the property, with a $1K deductible.
• Equipment breakdown, sewer/pump coverage, business income coverage, and business personal property are all covered.
• The original quote ended up being much more than I had budgeted (~$450/month premium), so I asked the broker if he could get us down closer to ~$300/month.
• In order to get the premium down, he raised the deductible to $5K, and lowered the replacement value to $415K.

My main question is: how important is it to have the higher replacement value covered? $550K seems really high and unnecessary, but also don't want to make a poor decision in case something happens.

I think I am going to ask for a version of the quote keeping the replacement value at $415K, but lowering the deductible to $1K instead of $5K. Any other recommendations to get the premium down without sacrificing too much coverage?

Thank you for your help!

Hello @Chris Winterhalter :)

I am currently in a similar position - shopping around for a 6-plex property in Louisville, KY. This is my first multi-family investment, and I am looking for some specific recommendations on what to include in my policy.

Here is the info:

• I am under contract for the property at $340K, pending appraisal this week.
• The original quotes I got back were for replacement value of $550K of the property, with a $1000 deductible.
• Equipment breakdown, sewer/pump coverage, business income coverage, and business personal property are all covered.
• The original quote ended up being much more than I had budgeted (~$450/month premium), so I asked the broker if he could get us down closer to ~$300/month.
• In order to get the premium down, he raised the deductible to $5K, and lowered the replacement value to $415K.

My main question is: how important is it to have the higher replacement value covered? $550K seems really high and unnecessary, but also don't want to make a poor decision in case something happens.

I think I am going to ask for a version of the quote keeping the replacement value at $415K, but lowering the deductible to $1K instead of $5K. Any other recommendations to get the premium down without sacrificing too much coverage?

Thank you for your help!

Alyssa

@Charles Kao I am just now running into this with the lenders I am working with. I didn’t initially realize that 4-plex is the maximum for standard mortgage financing, and that I’d need to get a commercial loan. This is good advice, thank you.

@Charles Kao I was using 5% maintenance, 5% capex, 10% management. Per previous advice, I increased capex to 8%. I also increased property taxes, and increased my rehab costs.

I was running it assuming tenant-paid utilities, but that may not be realistic on day 1, so I re-ran it with owner-paid utilities and current rent income. I then copied it and did a separate report with the future rent increases and tenant-paid utilities.

@Account Closed

The new "day 1" report show a cash flow of about $300/month and 5.55% cash on cash return.

The "future" report shows a cash flow of about $850/month and a 16.5% cash on cash return.

...so that being said, what do you guys think about this deal? My team in the area thinks its a great deal with big upside. I very much trust my realtor (highly recommended by close friends and other investors), and she is also an investor herself who owns 140 units in the area.

Thank you all so much for your help!

@Jovon Itwaru also yes, I am using last year’s tax data I found on Zillow. The expenses are low, and I think that’s what is feeling a little concerning to me. I am going to add in what the landlord currently pays for utilities and maybe increase my maintenance. What do you usually use for maintenance calculations? I am using 5% but since this is an older property, maybe I should go higher?