All Forum Posts by: Brian C.

@Tanner Bruce. We are looking in SoCal.

@Nick L - good suggestion. How willing are sellers to accept master lease options in today's market?

Given the state of the expensive SoCal Multi-family market, what are the best strategies for buying multi-family properties right now? The low 4-6% CAP rates don't allow for much cash flow, so is value-add the only feasible strategy?

What are some of the most creative ways to finance Multi-family properties including, but not limited to, seller financing, hard money loans and conventional financing?

Derek Carroll I appreciate the feedback. Your comments make sense. Sellers shouldn't pay for the buyer's upside and conversely sellers shouldn't expect buyers to pay based on ProForma numbers or rent upside, but instead on the actuals. Also, my NOI numbers don't include mortgage payments. Here are the facts. I appreciate any feedback. Asking price: $1.26M (off-market) Size: 21 units NOI: $66k (5.2% CAP) Market CAP rate (based on recent sales): 6.5% Upside to NOI (based on my analysis): $10k Offer price: $1M (based on actual NOI of $66k / 6.5%) Rehab: (needed for rent upside): $50k Total investment (25% down payment and $50k improvements): $300k NOI (with upside): $76k Mortgage ($750k at 5% with 30amortization): $48k Cash flow: $28k COCR: 9% ($28k / $300k) Does this analysis make sense and would you consider this a reasonable return based on the hot CA market? Thanks!

Patrick Liska so what you're saying is that if I expect $100k in rehab costs, my offer should be $900k? ($66k / 6.5% = $1M - $100k = $900k). Thanks!

Hi Brent - the $66k is the NOI (after expenses, but before the mortgage). Also, I'm in CA so CAP rates are very low.

I'm hoping someone can confirm my thought process, as I'm new to MF investing: At this point, I've reviewed the owners financial statements and I'm comfortable with the amounts. The 2015 financial statements show a NOI of $66k and the average CAP rate in the area, based on recent sales, is 6.5%. Is it reasonable to make a $1M offer ($66k / 6.5%)? To me this seems like an offer at market and should be fair. Anything higher must be supported by something unique to the property, which I haven't found during my due diligence. Also, based on my own analysis there appears to be an opportunity to add value by rehabbing units, raising rents and running a more efficient operation allowing for a $10k increase to the NOI over a year period. Assuming an all cash offer (to keep things simple) and based on my ProForma $76k NOI, does it make sense that this property would yield a 7.6% return? I appreciate the help!

Hi Jeff - is the REI club still meeting on the 2nd Thursday of each month?