All Forum Posts by: Nancy Tran

Depends on area. If you are talking about southeast fresno (east of 99 and south of 180), you can definitely find numbers like that, but it will take work and time. But the reward is cash flow. 

We've had issues with our C-/D+ property like squatters, evictions, break-ins (we now have a security company come in twice a night), but the cash flow is about $200-300 per door, even after having to pay for all of this. You go to the local REIAs and the owners of these types of properties deal with drugs, gangs and property damage in these areas. It can be stressful, like getting the call from your property manager in the middle of the work day that someone broke into one of the vacancies, created a fake lease and now had to be evicted (this happened three weeks ago). Comparatively, we have B+ properties that have had zero issues, get virtually zero calls from tenants and PMs, but don't cash flow nearly as well. 

So it depends on the location. If you are talking SE Fresno, or west of 99, it can be rough. If you are talking Tower or even just east of 41, which most would call C areas, you might be ok. As long as you know what you're getting yourself into, could be worth it. For us, we chose to narrow our locations away from these areas. As you've noted, it's hard to find deals in the good areas in Fresno unless you're willing to lose money on the front end and hope for appreciation.

Our agent, @Jeff Zimmerman, specializes in the multifamily Fresno real estate, and has helped guide us toward and away from properties since we began our journey, he would be probably good person to ask questions. 

Would be interested as well, we've bought a couple properties as well, currently saving capital. Not sure if it would be me or my husband, we have two kids lol. But we would love to meet other investors if the schedule permits. Jeff is actually our agent and helped us a lot with his knowledge of Fresno real estate investing. 

My husband and I have worked extensively with Jeff Zimmerman of Realty Concepts for last 18 months, he knows the area really well. He also has a lot of good contacts as well. Good luck!

@Jeff Zimmerman

Clovis is indeed nicer with newer units and likely higher appreciation, but it's much harder to cash flow in the Clovis area than Fresno and Visalia. It sounds like you aren't just looking for a place to live, but that you're looking to expand your portfolio via house hacking (buy via 3.5% FHA, stay there for the requisite 1-2 years, then move out and find out another place to buy via 3.5% FHA). Keep in mind there is a limit on the number of loans that you can do this way but hopefully you will have already started your portfolio. If you haven't already, check out the Bigger Pockets and Coach Carson guides to house hacking.

Back to Clovis and cash flow. Unless you plan on staying there long term (which would not allow you to build your portfolio), you want to make sure your property cash flows whenever you leave. Take the 533 W Santa Ana that just went under contract - $305k for a duplex, one 3 bed, 2 bath and the other a 2 bed, 2 bath. Average rents for a 3 bed in that area are $1350, and for a 2 bed is $975, per Rentometer.  A mortgage with 3.5% down at say a 4% interest rate (this is an aggressively good rate, it could very well be higher), is $1405. You can break it down by actual numbers, but for rough estimate, using the 50% expense rule, your expenses would be about $1150. So your incoming rents total $2325, and your expenses + mortgage is $2555, meaning you would actually be losing $230 per month. You can actually break down the numbers to see what 10% repair, 10% property manager, tax, insurance, etc. would be - but this is very typical for the Clovis area. The ideal house hack would be a place where the rents are high enough and the cost of purchase is low enough that whenever you leave to continue expanding your portfolio - it would still cash flow and you would make money. 

Clovis, it also seems to me, has much more duplexes than 4-plexes, in case that's important to you, but I'm not 100% positive.

Let me know if any of that doesn't make sense, but the point is - you need to find a deal to make it work in general, and there are probably more deals to be had in Fresno/Visalia than Clovis. And you will have to balance that deal versus the neighborhoods of Fresno/Visalia vs Clovis to determine whether it's worth it.

If you need help looking at actual properties, @Jeff Zimmerman who is on this website helped us get started on our multifamily journey and is a Fresno based multifamily realtor. 

Best,

Nancy

Thank you both for allaying my fears. Sounds like it's a solid area to invest as long as I have good people on the ground.

Hi, I am an out of state investor looking at the neighborhood just a mile north of Chicago State University. Any thoughts? I think at best C, but is it D neighborhood? Gangs? Drugs? Thank you for your input. 

Thank you both for your responses - they were both very helpful. I think I understand better now. It sounds like at the end of the term, the loan is callable, and based on the performance and what the market looks like, can be refinanced or will have to be sold or paid in full. Thank you both again for taking the time out of your day to help a newbie!

Hi,

I am attempting to secure financing for a five-plex via a commercial loan. This is my first real estate property, but it's older and the loan amount is small (less than $200k), so the banks and credit unions I shopped around at are asking for higher interest rates. Here are the best options I've been given:

25% down:

5/30 - 6.63%

7/25 - 6.97%

10/10 - 6.92%

15/15 - 7.05%

10/30 – 7.11%

35% down:

5/25 - 5.5%

Am I understanding correctly that at the end of the first number, a balloon payment is potentially due? How do people navigate this? Is it very likely I'll just be able to refinance at the end of this period? From a leverage standpoint, it would appear the best thing to do is the 25% down, 10/30, but I just worry about the potential balloon payment after 10 years if I am unable to refinance.

I can afford the 45% down, but would love to be able to use that capital toward another purchase.

Thank you for all responses in advance,

Bruce