All Forum Posts by: Annette Barnett

THANK YOU EVERYONE!  ALREADY HELPING ME FEEL MORE AT EASE WITH LOTS OF POSSIBILITIES.  COLUMBUS, HERE I COME!

Quote from @Annette Barnett:

Quote from @Arn Cenedella:

@Annette Barnett

As Mick Jagger sang : You can’t always get what you what. 😀

In my opinion, to buy in a growth market and get good cash flow AND appreciation is going to be difficult. Maybe with 200 units but those will require $5M to $10M cash to buy if not more.

Your plan to move your SFR equity into MF is a solid tried and true approach.

That being said, one needs to have realistic expectations about the market and values.

I have completed dozens of 1031s for my own account and for my clients.
I can tell you that 45 days window to identify the upleg comes quickly.

If an investor isn’t realistic about the market, they will be up against that 45 day timeline pretty quick. 

With $275,000 to invest you are probably looking to buy something for less than $1M.

In major metro growth markets say in a B neighborhood, that probably buys you a 4plex maybe a tad bigger. A 4plex just won’t provide much cash flow.

Most investors end up making a choice between cash flow and equity growth.

Given your stated preference for cash flow, my counsel would be to stop looking in those A plus boom boom Sun Belt markets where everyone is looking and investors who have $1M or more cash to invest are everywhere to be found.

My suggestion might be Midwest - Kansas City, Indianapolis, Omaha, Columbus etc etc.

A little math might also be illustrative.

With $275,000 cash a property with a 10% cash on cash return year one will only generate $27,500 a year in cash flow. At 8% there will be $22,000 a year in cash flow.

If you can find even 8% cash on cash buy it assuming you use market rents and accurate expenses.

The intent of my comments is not to discourage but rather level set your expectations. Without realistic expectations, your search will not be productive.

I live in Greenville SC and own about 400 units here. It’s a growth market but it’s a smaller market. Even in this market, more growth than cash flow, one can’t generate significant cash flow with $275,000 cash. The cash flow will come as rents increase but year one or two - the reality is break even to small positive cash flow with 25% or 30% down.

Hopefully there are some investors from the Midwest that can chime in.

I’m a Sunbelt investor but the Midwest is solid - nothing is inexpensive anywhere and if it is the area is a dead end podunk market - I think you will have greater success looking in the cities I suggest.

I would also encourage to get on a plane and go to a few of these other markets and see what you think. Be very careful about major locational differences within cities.

Good luck!

Arn

OMG!  Thank you SOOOOOOOOOO much Arn!  You're a lifesaver and you're also being backed up by other after you!  This is what I needed to hear.:):):).  If it wasn't clear, I had already pretty much come to the conclusion that it was going to be hard to do everything I want in one fell swoop in one of my sunbelt power cities! I've done quite a bit of research myself and have also come to realize/know that Columbus is an excellent place to invest (seemingly mores than Cinci and Cleveland).  Part of what was holding me back is that I already own a duplex in Indianapolis, so didn't want to be so heavily invested in that part of the country, but if that's where my boxes are checked for now, then so be it!  I do have an excellent possibility in San Antonio, but not sure it will come through, so I'm doing my research, have been for months now actually!  Very aware of the clock ticking!  Now I am ON Columbus!  I'm open to any leads for realtors, commercial brokers . . . 

 And I'm a singer/songwriter, so love the musical reference!  A line from one of my songs is, "There are infinite possibilities."  I'm a strong believer in possibility consciousness, rather than fear, lack and limitation!

Quote from @Arn Cenedella:

@Annette Barnett

As Mick Jagger sang : You can’t always get what you what. 😀

In my opinion, to buy in a growth market and get good cash flow AND appreciation is going to be difficult. Maybe with 200 units but those will require $5M to $10M cash to buy if not more.

Your plan to move your SFR equity into MF is a solid tried and true approach.

That being said, one needs to have realistic expectations about the market and values.

I have completed dozens of 1031s for my own account and for my clients.
I can tell you that 45 days window to identify the upleg comes quickly.

If an investor isn’t realistic about the market, they will be up against that 45 day timeline pretty quick. 

With $275,000 to invest you are probably looking to buy something for less than $1M.

In major metro growth markets say in a B neighborhood, that probably buys you a 4plex maybe a tad bigger. A 4plex just won’t provide much cash flow.

Most investors end up making a choice between cash flow and equity growth.

Given your stated preference for cash flow, my counsel would be to stop looking in those A plus boom boom Sun Belt markets where everyone is looking and investors who have $1M or more cash to invest are everywhere to be found.

My suggestion might be Midwest - Kansas City, Indianapolis, Omaha, Columbus etc etc.

A little math might also be illustrative.

With $275,000 cash a property with a 10% cash on cash return year one will only generate $27,500 a year in cash flow. At 8% there will be $22,000 a year in cash flow.

If you can find even 8% cash on cash buy it assuming you use market rents and accurate expenses.

The intent of my comments is not to discourage but rather level set your expectations. Without realistic expectations, your search will not be productive.

I live in Greenville SC and own about 400 units here. It’s a growth market but it’s a smaller market. Even in this market, more growth than cash flow, one can’t generate significant cash flow with $275,000 cash. The cash flow will come as rents increase but year one or two - the reality is break even to small positive cash flow with 25% or 30% down.

Hopefully there are some investors from the Midwest that can chime in.

I’m a Sunbelt investor but the Midwest is solid - nothing is inexpensive anywhere and if it is the area is a dead end podunk market - I think you will have greater success looking in the cities I suggest.

I would also encourage to get on a plane and go to a few of these other markets and see what you think. Be very careful about major locational differences within cities.

Good luck!

Arn

OMG!  Thank you SOOOOOOOOOO much Arn!  You're a lifesaver and you're also being backed up by other after you!  This is what I needed to hear.:):):).  If it wasn't clear, I had already pretty much come to the conclusion that it was going to be hard to do everything I want in one fell swoop in one of my sunbelt power cities! I've done quite a bit of research myself and have also come to realize/know that Columbus is an excellent place to invest (seemingly mores than Cinci and Cleveland).  Part of what was holding me back is that I already own a duplex in Indianapolis, so didn't want to be so heavily invested in that part of the country, but if that's where my boxes are checked for now, then so be it!  I do have an excellent possibility in San Antonio, but not sure it will come through, so I'm doing my research, have been for months now actually!  Very aware of the clock ticking!  Now I am ON Columbus!  I'm open to any leads for realtors, commercial brokers . . . 

My situation:  Single family home under contract - closes Sept 7th (26 days), doing 1031 exchange, will have $275K-ish, wanting to move into multifamily.

Quandary - I want to buy in a strong market, have great cash flow, appreciation, get a larger building/more units for greater appreciation and mortgage pay down, etc., but the larger the building/more units - the less the cash flow, as it requires a larger mortgage, which means more of the money to pay for the property has an interest rate on top of it, eating into cash flow.  I am at a time in my life, after a career change, that I need more cash flow, but would prefer not to compromise the equity built from larger mortgage pay down and greater appreciation on a larger building/more units.  I've also primarily been looking in Raleigh, Charlotte (not finding much), Atlanta, Dallas, San Antonio (Texas - high property taxes obviously) and a little in Phoenix, but have heard it's overpriced/saturated.

I'm open to other markets!  Have tried to stick with larger cities to be safe, cuz I'm not well educated about smaller markets.  

Any advice on how to find the best combination of more units/larger building, cash flow, appreciation, mortgage pay down, etc? without endless searching? (which I'm willing to do if needed, but I'm a big believer in magnetizing/manifesting things over efforting).

Thank you

Hi again,

Under contract to sell SF home - closing on Sept 7th, 1031 clocks start ticking to identify and purchase multi-family property.   

I'm starting to reach out to a number of you (lenders) who have responded to my posts, thank you!  I've got some potential properties that you can run numbers on.  

MY CONFUSION: I have seen/read that if I get a DSCR commercial multifamily loan (5 units or more), I can get rates in the 5s or 6s??  Such as here:

https://trussfinancialgroup.com/debt-service-coverage-ratio-...

Where it shows the starting rate of 5.97%.  Yes, this could be bait and switch.  Called and left a message. 

I've also heard that I can get a lower DSCR rate if I work with a lender who requires my taxes? Everywhere I look online I read that DSCR loans don't require taxes. Seems like this is not always the case?

Little help please . . 

~Annette

Quote from @Mark Bell:

Quote from @Annette Barnett:

Have you checked out AirDNA? Lots of cool data there, it helped me decide to purchase an STR in Nashville, though that market is really saturated at this point. That's one thing you've got to be wary of - supply & demand.

Hey Mark, I bought a new construction NOO STR townhouse at the end of 2018, but as I mentioned, my property management company has let me know that Nashville is really overwatered with STRs at this point.

 Hey @Annette Barnett, did you buy a commercial property? The Nashville STR restrictions on non-owner-occupied have made it difficult for me to find anything. Thanks!

Quote from @Zachary Ware:

Hey Ann, 

You should check out some of the BP-recommended lenders in these areas. They are investor friendly and will likely be trying to source these 3-10 unit properties. As others have previously said, this range of units is too big and too small for many. Reach out to some local investors as well. I would also recommend looking at some of the recommended DSCR Lenders as well. Sounds like you could be approved for more than $900k.

 Lenders source properties??  I thought that's what agents would be doing??

If I were to start all over, I would do a lot of research on different markets to see which ones would be appreciating fastest.  I would also do my best to be at a well-paying job in order to be able to qualify for bigger single family homes.  I've noticed that having a good job, that "cash flows" will support your success in real estate, which could eventually be your total income source.  I would buy a number of them, maybe 3 to 5 as soon as possible, leveraging the ones you have to purchase the next.  I would put as little money down as possible so that tenants are paying the mortgage over time and I'm using my capital for more down payments on more properties.  The three primary ways you make money in real estate is with cash flow, mortgage paydown and appreciation.  There's also sweat equity, which is when you renovate properties and sell for more.  After 3 to 5 years, I would aim to sell some or most of them and use the equity to get into multi-family - where it's easiest to build wealth.  You could also skip the above and go down the avenues that don't require your own money, such as apartment syndication, which takes quite a bit of education, but you don't need any of your own money for it.  

I'm in California and looking in Atlanta, San Antonio, Raleigh & Charlotte.

Do commercial agents share their off-market deals with each other?  So that if I worked with one commercial agent, s/he might have access to info about off market deals from other agents?  

What are other ways to find off market deals?  

I am looking for a triplex, quad or larger.

Can put around $275K down - doing 1031 exchange

Working on DSCR loan approval for up to $900,000 - shouldn't be difficult with a credit score between 750 and 800 and $110K in reserves.

I'm looking - doing a 1031 exchange.