All Forum Posts by: Bryan Escudero

 @Alex Breshears Great advise!

I am new to REI and I have had to go back to my why, look at my stated goals and go back to my business plan plenty of times. Zachary, the key is consistency and to push through the dissapointments. They will happen, but stay focused. I am two properties in and continuing to look for my first commercial deal. I have taken my goal of helping tenants, lenders, borrowers and other investors to heart and that has given me the drive to try new things with others in mind.

Remember, this is the long game. "If you aim at nothing, you'll hit it every time." Not sure who said it, but it is one of my favorite quotes. Stay the course, remember your why, or find one if you haven't already. Write down your goals and keep at it. Happy to chat if you need some encouragement. 

Good luck

 I have been recently working with both private lenders and borrowers...the more transparent the process is, the better. You should not have to beg for information from a reputable source. Maybe the lender is great, but your comfort is also important. You level of trust in the partnership should not take priority over a number. There are others who will lend. As others have stated, trust your gut.

 Congrats! I just closed on my 2nd in TN...we continue looking for a mid-size in a good appreciating market for the next one.

I'm sure that adding the 3rd unit made a bug difference in your value add proposition. Thanks for sharing!

 Drew,

Agreed. There is a partnership agreement for this deal. Exit strategies and contingencies are in writing so that there are protections on all sides. We are working with lawyers on this and all future deals. I don't suspect the greed factor with this one, but it is also a great proving ground for the process as a whole. As for the numbers, this deal is more about the education. This is a positive cash flow property,  but the reality is that I hope to only make better deals going forward. The closing we have this week coming up certainly Is!

Thanks for your thoughts!

Thanks for note . I will definitely keep an eye on this one for when to exit. I knew this one would be my learning property. I already have a better cash flow property lined up which I will be closing this week. These are both smaller MF...they have given me the confidence to look into larger deals which is where I am focusing on next. As for Capex, there wer many updates on the property done before I bought it, so I do believe I will have some time to build up reserves.

Thanks!

Hello BP!

We were able to close on our first deal this week! These are my notes from the deal for anyone who is interested:

Searching through the MLS, I came across a property in Milan, TN. I ran the analysis on the BP Rental Calculator and compared it to my baseline Crystal Clear Criteria.

1. ~1% Test
2. ~$100/door
3. ~8% Cash on Cash Return

This property did not hit all of my criteria as the CoC Return was below 8%, but the $/Door was a little higher ($125). I proceeded to speak to the realtor and have him reach out to the listing agent. The listing said that both properties were rented out at $600/Month and $500/Month respectively. I decided to move forward as this was going to be my "learning" property. I lined up the lending with the lender which came via an investor friend and they have been serviceable. The loan officer is a little intense, but he has given me good tips and he wants to see the loan closed.

As we moved forward, we had to send the EMD, do the inspection, get the survey done, get the appraisal done and ultimately get the leases for the tenants who at this point were on the 2/1 (left side) a new lease at $650/Month for a Year and $500/Month (right side) which is month to month. We were able to secure property management which has been key to confirming rents. Going forward, LS will be pushed to $700 with the new leas and RS will be pushed to $550 with a 30 day notice.

The core of what my wife and I are doing is helping people. We want to bring the property up to spec (~$10k) with a rehab. We will have Property Management do the initial push, then will bring in a contractor to take care of the bigger issues. This is taking care of the tenants. As for taking care of others, we decided to bring in my parents as equity partners in the deal. All the cash needed for the property was ~$42K. Parents will bring in $22k and get half of the Cash distribution monthly which is ~250/month ($125/month for them) and they will own 40% of the equity in the property. This will ensure they get a distribution for the rest of their lives. We will be able to put aside that monthly distribution until they need the cash in roughly 3-5 years. I know this is not the "best" deal for me, but the joy of being able to help my parents is worth any other deal we could have made.

I am excited about closing on our first property...I am equally excited about the closing we have scheduled for next week on our second duplex! Thanks to the BP community for all of the knowledge getting to this point. I hope to be an asset to this group as my real estate journey continues.

Regards,

Bryan

Yes. That could help mitigate some of the costs/risks associated with taking money out of your home. 

 Greg,

My thoughts would be to find a multi-family in the area as an investment property...You can do some version of the following (House Hack).

1. Take a HELOC on your home

2. Purchase a small to mid-size multifamily

3. Use the HELOC money to put the down payment plus whatever else makes the deal work for you. BP calculators are great for that analysis. Have your son live in one of the units .You have the other units rented and a live in property manager (son and significant other). If the numbers work, he might not have to pay rent (or a reduced rent). You want to make sure that you consider the HELOC payment against your gross income on the property.

Because you would be able to get the 20%-25% down needed on the loan (from your HELOC), you don't have to live there. Your son can live there for a lower rent than he would normally have to. If you are covering your HELOC with the proceeds of the rental (including your son's rent), you are both able to benefit. Once he is done with grad school, you can keep the property as a rental (you just need to add property management) or sell it and 1031 exchange into something bigger or better.

You have a lot of options with the equity sitting in your house. DM me if you would like to chat a bit more. Happy to jump on a call and be a sounding board for you if you like. 

Good Luck!

Thanks Jose! Will do