All Forum Posts by: Anton Ivanov

@Igor Avratiner

In my case, these were developments of basically identical 4-plexes with the same layout, square footage, etc. I've toured some of them in-person before and knew what to expect. 

A lot of times you can also tell by the number of mailboxes and addresses at each property or signs by each door.

@Justin Wotring @Whitney Breedlove

Founder of DealCheck here, feel free to send me a message if you have any questions/feedback. But all operating expenses are fully customizable in our software. There are some pre-set categories for you at the beginning, but you can add/remove/modify all of them as you see fit. 

@David Gwilt

Sure, I'll send you a message.

@Rabih El-Khoury

I don't manage any of my own properties. I use professional property management companies for all of them and I just make sure things are running smoothly across the board.

@Alan DeRossett

What I do it travel infrequently and maximize the value of each visit. For example, I may fly out to look at some new properties and then also inspect the old ones, do some driving around, network, etc. I don't visit each property every year, so it's not been a big deal for me so far.

@Joseph T.

The PM I work with in KC primarily manages commercial and multi-family properties, but send me a message and I'll give you the details in case they want to work with you.

@Ryan D.

I posted an example of the cash flow numbers earlier in this thread somewhere. Just to clarify, the numbers in my original post are average for my portfolio. Some properties cash flow/cost more, some less. Here is a recent example:

Property: 4-plex, $190k purchase price, about $12k in rehab.

Loan: Commercial, 30% down, 25 year amortization, 5.15% rate

Rent: $3,000/mo ($750/unit)

Vacancy: -$240/mo (about 8%)

Expenses: -$895/mo ($1,100/year tax, $950/year insurance, 8% management, $200/month maintenance, $100/month cap ex, $150/month water/trash, $50/month landscaping/snow)

NOI: $1,868/mo ($467/unit)

Loan Payments: -$789/mo

Cash Flow: $1,079/mo ($270/unit)

I suspect we can maybe raise the rents a bit over the next 1-2 years and stabilize vacancy around 5% to push cash flow to $300+/unit.

@Mark Wood

If we're just talking about management, it's not much on average, probably about 1-2 hours a week. Most of that time is spent catching up/talking to property managers, reviewing PM statements and accounting, and handling miscellaneous things like taxes and insurance.

@Mark Doty

You can send me a message, but unfortunately my schedule is very busy. I don't go to local meetups either - never found them that useful.

@Jason Small

I'm not sure what you mean by "property management model". I have professional property managers for all of my properties. Most I work with charge 8% of gross rents, one a little less because I have a lot of units with them. That's pretty standard, although some areas may go up to 10%. Make sure you ask them about all other fees like leasing, tenant placement, etc. You can negotiate some of these down, especially if you're brining several units to them.

@Nile Reavis

I touched on this in the original post - I bought a duplex as my first property with a VA loan, lived in one of the units for a few years, rented out the other. It's now full rented. I used the VA loan a second time to buy my current primary residence (single family). VA administration has a great website with a lot of details about the program: https://www.benefits.va.gov/homeloans/

@Alan Reza

Not 100% what checklist you're talking about, but send me a message.

@Ricardo Navarro

Look through this thread - I covered this a bunch of times.

@Josh Stack

Reverse valuation:

Yes, I use the software I developed to calculate offers via reverse valuation, but it's actually quite simple. You just define a set of criteria you want to meet (for example, $250 cash flow/month, 15% COC, etc.). Then you analyze the property using the current price and see if it meets the criteria. If it doesn't, lower the price by a small amount, for example $5k and re-run the analysis. Keep doing this until you get to a purchase price that satisfies all of your criteria. You can probably do this yourself in Excel if you really want to.

Estimating operating expenses:

I have written a post on Reddit that somewhat goes into this in detail. I can't post it here, but pm me and I'll send you a link. This isn't an exact science though - you just need to know what costs you're going to have and then do you best estimating them based either on actual facts (like taxes, insurance, PM costs are easy to know exactly) or good assumptions based on your knowledge of the area and property type (for things like vacancy, maintenance, cap ex, etc.).

I don't think anybody can predict operating expenses for years to come 100% correct. I feel that your job during the due diligence is to estimate them accurately enough to where you feel comfortable buying property. I also tend to over-estimate things, so I'm least likely to be surprised or disappointed down the road.

@Josh Stack

Can you share a bit more about the business case of the investments you have made?

I'm not sure what you mean by this question.

Your purchase price is $195 but what are your rents and what cashflow projections do you have?

There was a rundown of the purchase/cash flow numbers for one of these deals in the other thread on BP that I posted: https://www.biggerpockets.com/forums/223/topics/55...

Do you underwrite your deals conservatively with a 50% expense ratio or greater? I have seen where you discount the 50% rule of thumb as misleading but can you share the actual economics and pro forma projections of the deals you are buying?

I don't use the 50% rule. I make a thorough list of actual operating expenses, vacancy and loan payments I'm going to have on the properties once I'm serious about buying one. Again, see the other thread for the numbers.

Are you valuing them on a commercial basis (NOI & CAP rate) or a Comparative Sale (1% type rule) basis?

Frankly I'm not that sophisticated. I just use reverse-valuation to get me the cash flow per door ($250 min/month), COC (15%+) and IRR (20%+) that I like. If the price needed to meet these numbers isn't too aggressive or lower than what I think it could sell for, I'll send an offer.

What was the process from initial call from a seller to getting to the closing table?

Most calls we just agreed on the sale during the first call, I sent them the official offer contract the next day and we went into escrow within a few days. A couple sellers got back to me in a few days after they talked to their partners, etc. I may have gotten lucky, but there weren't that much negotiation - some price concessions, offer terms, etc. I wrote this in the original post.

How did you manage this remotely without a local agent? 

I wrote the offer contracts myself and send them over via email to the sellers. I had good escrow companies who handled all the actual title/purchase paperwork. My property manager did the inspections and tenant turnovers.

Did you have any older sellers who were not tech savvy? A lot of the folks I'm in contact with 'are not computer people' thus getting documentation to/from them remotely is a bit of a challenge.

Ya I had 1 guy who was pretty difficult to work with. I basically had to call him at every step during the escrow process to get things moving along. I guess something that you just have to deal with.

@Frank Wolter

Curios - why not just retire? 120 doors, no financing, I'm assuming your cash flow is at least $300-500 per door. That's about $500k a year, maybe more. I would be very happy with that.

@Stephen Burnette

I've written about this in several places in this thread.

@Alex Olmo

If you're referring to the direct mail campaign write-up, it's here on BP: https://www.biggerpockets.com/forums/223/topics/56...

@Lee Ripma

Great write-up, spot-on on everything and I agree.

@Husain Khan

Look in my signature.

@Alvaro Soto

Market selection is a complex question - I've written about it in a few places in this thread already. I tend to favor markets that have strong economic/population/job growth projections, have relatively low prices and strong cash flow.

@Kevin Lefeuvre

I financed the 4 turnkey properties I bought in 2014-2015 with conventional loans, 20% down payment, most through Flagstar Bank (no specific reason, they just had good rates at the time). The properties were around $50k in price, so the down payment requirements were not that high and since both me and my wife had good jobs, we didn't have any problems qualifying or saving the down payment money ourselves.

As far as the first commercial loan, not sure what type of answer you're looking for. I started building relationships with commercial lenders way ahead of time, I found a good lender that I liked, found a property that met their requirements, formed an LLC, put down 30% of the money I saved up over the years prior.

@Fernando E.

Sure, send me a pm.

@Derrek H.

To answer your question about weather - I don't buy in markets that have extreme weather conditions, like severe snowfall, heat, hurricanes, flooding, etc. This eliminates a lot of the markets around the US by itself. I don't think regular snow classifies as "an extreme weather" condition. Yes, it will affect things like roof longevity and could add things like snow removal in the winter, so you need to account for that.