All Forum Posts by: Andrew Freed

@Seth Harvell - Are the utilities separated. Is it truly turnkey? At face value, it looks like it cash flows assuming the items I mentioned are true however real estate is a relative game. In that area, the 2% rule may be the norm hence you are not getting a deal. If the 1% rule is the norm, perhaps you are getting a deal.

For example, I live in Worcester MA. If you find things close to the 1% rule, its a pretty decent deal vs. Springfield MA an hour away. The 1% rule in Springfield is not good because it has a more challenging tenant base and cheaper homes hence if I were shopping there, I would be looking for properties in the 2% rule. 

Do you have a local expert / landlord that you can reach out to and bounce this property off of. More or less, market specific information is missing from this equation and should be researched further as well. 

@Jay Kister - That's awesome! What are the biggest challenges and hurdles you faced while flipping those properties? I'm a buy and holder but would like to understand the struggles of someone in the flipping game. 

@Michael Deignan @Ian Hogan - It should be a good time, come on down! 

@Henry Adewale - a 9% CoC return even after the additional $100K is a pretty good return. After taking into account other levers of wealth in real estate, I'm sure the return is at least 3 points higher. Are you able to get more than a 9% CoC return elsewhere?

Also, if you keep it, make sure to complete a cost segregation study on it. That could also boost your returns... it could even qualify under the short term rental looppole for the ADU if that is applicable to your situation.

@Katlynn Teague - At the end of the day, a wholesaler is simply a non-licensed real estate agent. They do everything a real estate agent does including finding listings, bringing buyers to the table, and sheparding the process along. That is why I always recommend to all wholesalers to get their license... why not? It provides way more exit strategies and gives you options when approaching sellers, e.g. selling it quickly to an investor, listing it on the MLS, seller finance. Wholesalers do everything real estate agents do so honestly I really don't see much difference.

@Henry Adewale - What is your return on equity? If it is 5% or below, I would move on and leverage that into assets that can provide a 10%+ return taking into account mortgage paydown, tax benefits, cash flow and appreciation. The key to growing someones network is leverage their capital into assets that provide a high return on equity. If you're networth produces a 10% return on those funds, you could retire with a million dollars ($100K annually in dividends) vs. someone whose network is $2 mil and they have a 2% ($40K annually in dividends) return on networth. 

@Yangyang Jin Personally I prefer to show my units to qualified tenants. Why waste everyones time if the person won't even pass the rental criteria? With that said, I like to use a questionairre approach and ask them information about the rental criteria prior to showing. To have them complete a full application with a background check / credit pull is a big ask if they don't think they have a high liklihood of getting the apartment. 

Additionally, the listing should we visible on all platforms including facebook marketplace, zillow, apartments.com and the MLS. If it isn't, you should have this corrected ASAP.

Lastly, make sure to employ patience in renting the unit. Don't rush the rental to a bad tenant to save yourself 1 month of vacancy..... this has caused way more frustration down the road in my opinion. Especially if it turns into  an eviction that will cost you a lot more money than 1 additional month of vacancy. Best of luck in filling the unit. 

Personally, I find cash flow in tertiary markets that are heavily concentrated in multifamily properties outside major metropolitan areas. For instance, I invest in Worcester MA and the surrounding areas which is a tertiary market to Boston. Around my area, you can still find properties with decent appreciation liklihood while still hitting the 1% rule. If I was moving to another market, I would focus on tertiary markets outside major growing metropolitan areas with a large concentration of multifamily, preferably at least an hour away at most. It's easier to find a cash flow multifamily when there are more supply of that asset class. That is how I seek cash flow in this market.... how do you? 

@Robert Medina - Agree with the feedback. At least in my area, a 4 bed 1 bath rents for the same if not more than a 3 bed 2 bath apartment. I'd keep it as is since you most likely won't get added revenue from making this change. Run a couple local rental comparables on 4 bed 1 bath vs. 3 bed 1 1 1/2 bath. I'm assuming you won't see much of a difference however every area is different. When making upgrades to real estate, always ask yourself, how will this upgrade increase the value or revenue on the property?  If it does not and is not needed to keep the property running then I most likely wouldn't do the fix. 

@Mario Morales I think @Bob Stevens has a great point. Ask the incoming tenants first before making an issue out of something that may be nothing. I have multifamilies with people with dogs and an enclosed yard and I've never had to address this personally. They tend to figure it out.