All Forum Posts by: Bea Leichliter

It is very common,  at least in CO for all cash offers to complete due diligence in 2 weeks.  One of the major benefits for a seller with an all cash offer is less contingencies.  Because there is no loan, it is typical, at least here, to waive the appraisal.   Personally, I would not call this a red flag.

The red flags that I see, is the location.   Being a small town, I would definitely be concerned about the town dyeing.  What is the major economic driver in the town now?

I am going to assume that you are offering cash then plan to do a cash out loan.   If I am correct,  have you done research on a commercial loan and have a good idea of the interest rate/amortization schedule and know how it will play with your numbers?

I would also ensure to walk thru every unit.  It's not unusual to be shown a couple of the best units to be blow away later by the rest of the units.  

It seems odd to me that only 1 unit needs re-wiring.  why is that?  I would expect if one needs it then most or the entire building needs it.

Get on regional and see what permits have been pulled for the property.   When was the roof redone, water heaters, furnaces replaced.  You should also be able to see any electrical work that has been done.

Finally, request at least 2 years of rent histories and copies of the leases. Sometimes a seller will get rents up to raise the CAP rate to sell. That's not a problem, but sometimes it's not sustainable for that area/building without massive turnovers. As you know turnovers are very expensive. It sounds like you have researched that areas rents, but neighborhood to neighborhood sustainability changes.

If you are very clear about the work needed and the local economy,  I would say the number are fantastic! I hope it works out.  If all is good, I'm jelly.  😉

@Account Closed, thanks for posing that question.  I did some research yesterday and actually found the data on our local market broken down by subarea.  Rents were relatively the same and vacancies dropped.  It appears that the bubble really hurt the rental market here, then the crash corrected it back to what was normal based on the data.

@Michael Ealy, thank you SO much for your post.  It was super helpful and very meaningful coming from someone who has acquired as many units as you have!

Yes, after all expenses including PITI, property management, misc expenses and repairs, I put $1200 in my pocket for This 4plex. It is on a conventional 30 year fixed. Current debt ratio is 70%, with current cash reserves of $500K. But I would like to invest in another which looks like I can get to cash flow similarly. So cash reserves would reduce some.

It’s also very helpful to know you are purchasing now.  Its basically dollar cost averaging, which people understand in the stock market.  Anyhow those same engineers told me not to buy When the market was down...too risky.  So, don’t buy when it’s down, don’t buy when it’s high.  I guess, just buy when it’s just right.  🤣😂

Thank you for your post!

@HT Tony, Colorado Springs, CO

@Account Closed, thank you very much! Your post was super helpful. We have 1 4plex cash flowing at $800-$1000/mo and the break even SFH. I would like to 1031 exchange the SFH, but it seems difficult to pull off. There are not many decent options to purchase and I don't want to be put in the place of making a desperate purchase. We plan to hold it till April 2020. We currently have a bit over $500K in cash. I found another good looking 4plex (I watched every duplex & 4plex that has come up on the market since last Aug, so proprtyies worth purchasing are rare here, most are way overpriced) I loved the stress test, that definitely helps me decide how to move!

@Account Closed, the 4plex we purchased last year was owned by the original owners family, they died and passed it to their children, the children died and their children sold it.  They were living out of state and rents had become extremely low.  Based on years, it would be a class C but it is in the heart of downtown Colorado Springs which is a very desireable neighborhood.  

Anyhow, please elaborate why you think my friends have a point?

Jay, Wow!  That is scary, thanks for sharing.  I wonder if that same scenario would hurt us here?  We do have the cushion of 4 large military bases  as well.  I had to sell a property in 2009 and it hurt, I paid someone $10K to buy it!!  But ultimately, it could have been worse, I suppose.

Hi all,

I am a real estate agent and a new multifamily investor. I have 1 4plex purchased last August cash flowing at about $1000/mo and a SFH rental which funded the multifamily and breaks even. We are working on our second multifamily deal, which will cash flow $1000-$1400/mo.

Prior to being an agent, I spent 20 years as an engineer.  My husband is an engineer and all of my friends are engineers.  

My engineer friends are calling us stupid for investing in a peaking market.  I have run the scenarios, done the spreadsheets and have a successful 4plex under my belt, but I have not lived through a recession with a 4plex in my portfolio.  Does anyone have experience with the last recession and a 4plex?  Can you share your experience?

BTW, I am in a Colorado Springs which is currently experiencing huge economic and population growth.

TIA

BEA

I agree with James.  It depends.   Rent rates are great, vacancies are low.  With that said, it is not “easy” to find a cash flowing property.  But not easy doesn’t mean impossible.  You have to find value, so it will take a bit of work.  I love properties with out of state owners (typical CA) who have their rents way below market.  So they tend to sell low as well.  If I can do a little Reno/repair, paint, carpet, a few new appliances, and yard clean up and double rents ( which I did in Aug with a 4 plex ), then I am making good cash flow and doing well.  With that said, I believe I put in about 8 (over 6wks or so) offers last seasn and was beat out by other offers.  The market is competitive.  Lots of cash buyers from other states, even other countries (in the multifamily sector).

As for SFH. I would say be careful in these arena. It is very difficult to find a good investment property. If you decide to go the route of short term rental, I would recommend that your numbers should have a plan B. Meaning if you buy for short term rental, your numbers should still cash flow for a long term rental. I feel like our short term rental arena is nearing saturation and if we have an economic correction, people will do less vacation travel. So you want to CYA and ensure that you can convert your short term into a long term and ride it out.

I hope that helps.