All Forum Posts by: Austin Andrews

Find a partner to bring in the other half for a 50-50 partnership. 

I would get with the city to find out the occupancy restrictions. They will be able to tell you how many occupants the house can hold.

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I would look into an FHA loan if you are planning on house hacking. You can move-out of your unit after a year, or refinance after 6 loan payments.

Work in reverse and calculate what you are worth per hour. Calculate how many hours a month you are dealing with the properties and multiply that by your hourly "worth". Is it over $345/mo? Hire out. If it is less, keep on keeping on until it no longer makes sense, as you are losing money by spending your own time, which has a cost associated to it. 

As stated above, cap rates are basically what you are buying the property for compared to its NOI, and the risk associated with that investment. In St. Louis, Central West End (Highly desirable, high income area) is around a 5-6 cap rate (could be higher or lower, depends on the property). Higher crime and low income areas could be 10-13 cap rate (higher or lower, this is just a range).

What you need to be looking at, is how to increase the cap rate for you. Can you buy a 6 cap rate property, increase it to a 10 cap rate according to YOUR purchase price and the new NOI, then resell at a 6 cap rate, making a hefty profit?

An example: Buy a 5% cap rate deal for a million. It should have an NOI of 50k based on the numbers. Raise that NOI to 75k. You now have a property with a 7.5% cap rate. If you sell it at a 5% cap rate, your property is now worth 1.5 million. You raised the NOI by 25k and made 500k in the process.

Look for similar properties in the area, and do some research to who owns them. It isn't easy, but it isn't tough to find the owners information. If they own commercial property, then its probable they'd buy another. Anytime I have a large commercial property, I call the surrounding owners and it usually sells fairly quick.

Good luck! 

I did an FHA (3.5% down) on a 4-family and my CoC is 138%. You just have to find the right deals and they should cashflow just fine with a lower down payment!

Usually the seller pays the agent fees, which is why some decide to sell off market: to avoid those fees. You could state that you are choosing to use your realtor for the transaction, but that you are paying the commission and no commissions are due by seller. This could help, although you are now paying the 2.7% (or whatever negotiated buyers representation fee) to your realtor, so adjust for this in your offer price.