All Forum Posts by: Bryson Cox

I'm currently taking a similar approach of growing my real estate portfolio and my main goal is high yielding cash flow (at least $100/mo per unit if not higher) and a  COCROI of at least 9-10% (because that's what I can generally get in a mutual fund). Once I find investments that match my goals, I make an aggressive offer to hopefully add it to my portfolio. My goal is to accumulate roughly 100 units that match my goal of $100/unit net income per month which would set my NET CASHFLOW at $120K/yr. I am open to any size deal as long as the overall numbers match my goals. 

Personally, I love the idea of putting more cash down on a deal if it is going to drive up my cash yield, but I never put down too much cash that it would push my COC under 8%.

In my calculations, I always run the repairs at 4% and CAPEX at 6% unless the property is in poor condition or in a bad neighborhood (in which case I'm hesitant anyways to buy a rental property because of a possible volatile vacancy rate.) But my goal is to buy rental properties that will cash flow from day one. No rehab necessary.

Most of my properties sit around 1.2 or 1.3 on the 1-2% rule scale but they meet my specific investment goals. I don't worry too much about this system as a way to value my deals. 

Hey guys!

I had some questions I wanted to throw out there in relation to Financing a deal. I'm working on a couple of deals I want to make an offer on but I have been struggling a little bit with getting my financing sorted out. We do know we want to go the traditional route. The reason is my family business cash flows $700K+ net income/year and only has about 300k worth of debt overall (including a 13 unit apartment complex that is about 50% paid off) so I don't see any problem with getting financing for deals in the 100K-300K range. But my questions are what sort of terms should I be shooting for in my conventional loan?

My overall investment focus is to aquire a mixture of 2-4 unit (non owner occupied) properties and smaller apartment complexes before growing into bigger deals. When running my numbers I have been using the parameters of getting a 30 year commercial loan with an interest rate of 5.25%. Does this seem reasonable for what is out there in the market currently? Would the rates changed at all if I were to pay cash for a deal and then do a cash-out refi? Or would the terms be somewhat similar?

I have been researching the difference between commercial and residential loans but have been told that the commercial route is best even for duplexes and triplexes as I will not be occupying the property. What are your thoughts on navigating this? Do commercial and residential loans structure their deals that differently from each other?

Once I run my properties by different lenders in my network, I want to negotiate a fair loan that works for both parties  but I can't tell what I should be asking for. Essentially, I'm trying to get all of your advice now about a fair request before I go out and contact 10+ lenders to get their rates. I'm not trying to be lazy but looking for a shortcut so I can negotiate better once I talk to them. 

Another approach I want to explore is doing a cash out refi on our current apartment complex and use some of that cash to finance the deal. Then it's no cash out of pocket. But what are your thoughts on this approach?

Thanks! Any help is appreciated.

Bryson Cox

For me I am looking for positive cash flow on day one for properties that don't need a lot of work that are in good neighborhoods....my favorite requirements I look for before I make an offer on an investment is to have a minimum $100/mo per unit NET PROFIT for multifamily properties and a 12% Cash on Cash ROI. I got these from @Brandon Turner webinars he does every couple of weeks!! These numbers make so much sense.....the renters build my equity in the property long term while I get to pull 12% return on the cash i put down out of pocket.....If your'e familiar with many high quality mutual funds available in the marketplace, they average a 9-10% rate of growth. But this property deal gives me the double dip of equity appreciation while also drawing 12% on my cash I put down. 

When analyzing similar properties in the same area. My approach is......what does my offer price need to be for it to match my numbers and make sense? Then I send the offer as it makes sense to my deals. Sure it may be a lowball and get denied....but its the law of large numbers. Make more offers that fit your profit model and you will close on more properties that fit your goals. With this approach....My 5 year goal is to aquire 100 units under this model which will hopefully cash flow: 100 units x $100/ unit per month= $10,000/mo NET PROFIT which is a 6figure income and will allow my wife and I to retire from our jobs and both do real estate full time....if I meet my goals then that would be an early retirement from a JOB at only 34. 

Freedom of time and money is the name of the game. 

Hey @Josh Stack,

Thanks for the reply! I've been learning as much as I can the past few months on Bigger Pockets so your response was helpful. I definitely did not want to backtrack on my offer and lower less but after physically inspecting the property and the neighborhood it was located in, I realized that it wasn't ideal for my investment goals. There is huge potential in clearing out the extra land that is currently forest and adding multiple apartment complexes but that isn't a project I feel like I am not ready for. My initial goal is to build cash flow with Du/Tri/Quad plexes and add small apartment complexes to our portfolio that can be profitable. My mistake was sending them a LOI too soon through an online site without first getting on the ground and inspecting the property. I'll continue to learn from my mistakes and keep pushing forward! Thanks!

Hey guys! 

I'm fairly new to BiggerPockets but wanted some advice on a deal I'm looking into right now. The purchase includes 7 separate, single family homes on 4.2 acres of land: (1) 3 bedroom unit collecting $800/mo, (2) 2 bedroom units collecting $600/mo, and (5) 1 bedroom units collecting $450/mo. There is the potential to build out on 2 of the acres, which are mostly forest, that could add another 6-8 units in the future. The property is located 7 minutes from a university so we are hopping to be able to create more units in this desirable area. Straight up as is what do you think of the deal? If the numbers aren't as desirable, at what point would it work? 

At a lower purchase price of $325,000, the net monthly incomes goes up to about $700/mo and the cash on cash ROI goes up to about 12% which are my ideal markers. But the sellers have already accepted my non binding initial offer of $350k and I'm wondering if I should risk lowering my offer? I feel like the obvious answer is to.....only agree to a purchase price with numbers that meet all of my requirements. But how do I factor in the potential of adding units? And this is one of only a few properties for sale in my current niche and market so do I just jump on it while it's still available?? Also, let me know what you think about my estimations in expenses, im curious if they are accurate.

Thanks for any feedback and advice!

Income:

$3,800 Gross Monthly Rent Collected

Expenses:

Management $380 (10%)

CapEx $228 (6%)

Repairs $150 (4%)

Vacancy $304 (8%)

Wind/Hail $200 (5%)

Property Taxes $200 (5%)

P&I: $1,900 (50%)

NET PROFIT = $450-500/Month

Cash on Cash ROI: 8%

LOAN DETAILS:

Purchase Price: $350,000

Downpayment: $70,000 (20%)

Amortized Over: 20 Years

Loan Interest Rate: 5%

Income-Expense Ratio: 1.08%

Gross Rent Multiplier: 7.68