All Forum Posts by: Ben Firstenberg

From what I can see, it's not a great deal. 

It today's market it's definitely hard to find house hacks that work the way they used to. It's more common to reduce your housing payment to something like $500-1000 instead of $1500-2000. So your year 1 seems fine to me. 

Years 2-5 is what seems like a problem. In my opinion, what makes a good house hack is that it's cash flow positive when you move out. In this case you're losing money every month even when you move out. That's not what you want. 

It seems like the purchase price is just too high. They say the only two things you can't change about a property are the location and the purchase price. So I'd probably walk away from this one unless the location is AMAZING. 

For your Years 2-5 analysis, I'd consider increasing vacancy to something more like 8-10%. In my experience, it typically takes at least 2 weeks to a month to re lease a unit and have a new tenant move in. 3% vacancy implies about 11 days down time in between leases which doesn't feel realistic. Annoying I know, but vacancy and turnover are by FAR your biggest costs as a landlord. Except mortgage payments of course. 

Hope this helps, feel free to respond or reach out with more questions! 

 Of course! The majority of my business is in Atlanta (including the outer suburbs, which are quite extensive) but I'm licensed for all of Georgia. 

Do you own the property or are looking to buy?

If you own, I definitely think it makes sense as long as the terms are attractive to you. 

If you're looking to buy, I'd be a little bit careful. As you may know Office assets are in a really tough position right now. The Atlanta office market may be stronger than others but I think it's very asset specific right now. So I'd consider how strong the location is and how creditworthy the tenants are. Do they operate a good business? Do they actually USE the space? All of that contributes to if they'll actually pay their rent. 

If they don't pay or if the lease expires and they vacate, will you be able to re lease the space? 

I just would hate to see you put a lot of effort into this office building for 2-3 years, then the tenant leaves and you default on your seller financing and give it right back to them. 

Happy to talk more, feel free to reach out

Robert, we really like some of the outer suburbs like Cartersville, Covington, McDonough and Lawrenceville. Atlanta is so huge and sprawling that there is still great demand in these places, even though they're far from the city. There are some great strategies for SFHs and you can find cash flowing multi family as well. 

Happy to talk more, feel free to reach out!

I definitely agree with the above recommendation to connect with an investor friendly agent. They will be a great source of deals. You can also reach out to wholesalers and other investors who can help as well. If you want to look for yourself, you can check Zillow, Redfin and LoopNet. Not all deals reach those websites, so it won't be perfect, but it's still great to look.

It also helps if you really narrow down what you're looking for. The more specific you can be, the more people (agents, wholesalers, other investors) can help.

Option 2 is definitely possible. Lots of house hackers aim for this, so they can keep using FHAs to build their portfolio.

Given the current market dynamics, your forced appreciation may not work out as well as you're hoping. It's just hard to do when values are declining/stagnating. I think it's still worth a try though. 

Good luck!

The thing you have to be aware of when you bring on investors is you're adding responsibility to your life. When it's your money and your properties, you can do what you want. If you want to take a trip and let your manager deal with the investments for a while... that's your choice. 

But when you take on investors, they're sort of your boss. You owe them a duty to monitor the investments and make sure things are going smoothly. For many, it's not a HUGE difference in lifestyle but it's worth considering. 

That said, it is definitely not unheard of. People do this all the time and it's a fantastic way to buy more properties, make more money and grow your business. 

Good luck!

With single tenant OFFICE, I think understanding your tenant and their lease is critical. Office leases are among the most complicated in all of real estate and with a vulnerable asset class like office, you need to make sure you understand what's going on and how likely they are to remain at the building. Understanding the strength of their credit and their remaining lease term would be important as well.

Re-tenanting an office building is a LOT of work. It's typically a huge expense for so-called "tenant improvements" to build out the space for the new tenants and it typically takes a lot of time. You'll likely be working with a leasing agent as well, so will have to pay leasing commissions. Not to discourage you, it's just a hassle. 

If you're looking for opinions from an Atlanta resident/agent, feel free to reach out

I think it's all about what you're looking for and where you can find good people. 

Decide what mix of cash flow and appreciation potential you're looking for. That will narrow it down significantly. 

Let's say you're looking for appreciation potential. Great markets for that are (just for example) Denver, Salt Lake City and Atlanta. 

Now you start looking for good agents, managers, lenders and contractors in those markets. Eventually you'll find someone you feel good about working with and maybe they help you build out the rest of the team. 

Your true advantage will come with finding the right people to work with, not in selecting the market correctly. 

A lot of people are still doing deals. The market is still competitive for the good deals and investors see opportunities in all of the uncertainty. They're probably doing fewer deals than before, but I would bet many are still looking at new opportunities all the time. 

A lot of places are already seeing price drops and rent decreases. This is the recession, we're in it now. How long will it last? Hard to say. A lot of people think it will start to get better in the second half of this year. Some are saying "survive til 2025".

I think the most important things are to be confident in your rent assumptions when you analyze deals, to make sure you're getting a documented discount compared to comps that sold a year ago and to not rely on an aggressive exit valuation in the next 12-18 months (such as for a BRRRR or Flip). If the cash flow looks good to you, you're probably not overpaying.