All Forum Posts by: Charles Soper

I would highly recommend starting to get the relationships in place with potential HML's and community banks NOW so that when you have a deal you have got the preliminary items they require out of the way and you have a better idea of what you can expect/afford in terms of a loan, down payment, expenses, etc.

Might suggest you look into using the BP calculators to make sure you're catching all your expenses, or at least are aware they are possibilities.

This seems really unclear, when you say 5 MF properties in one complex what does that mean?  5 condo units in the same complex all individually for sale?  5 duplexes all on the same street/subdivision?

Assuming 5 condos in the same complex, you would likely need to purchase them individually unless they are all the same owner and find a local community bank that would be willing to do a portfolio loan on the group after the fact.

A 15% (!!) interest loan is insane!  Even most hard money guys don't charge that (12 is pretty standard), what's the reason for such a high interest rate?  You're rents better be right in line with the area because if you have multiple vacancies at once that could be a real strain on your cash flow and ability to pay the mortgage(s).

You need to provide more information if you need further help.

Gonna agree with @Steven Ko here, go with the one that proves out in the numbers and feels right in your gut, analysis paralysis and fear have killed more "investors" than anything else.

Also watch out of the 1/1's, they tend to attract a more transient tenant so even if you're signing year leases you could potentially have 10 unit turns a year, and that could prove costly.

1. What percentage are you paying your property manager?  On a property this size it should be 8 - 9 percent, every little bit counts when you're squeaking by on your cash flow.

2. It's a risk but just because tenants have been in the building for 10+ years doesn't be they shouldn't expect an increase in rents.  You're expenses likely increase year of year so why shouldn't theirs?  A $100 bump spread out over say 4 years probably wouldn't be too painful but it could also be viewed as an opportunity to rehab a unit and charge market if they decide to move because of a $25 rent bump.

Love all of @Jason Stubblefield's ideas for cost savings as well

Yep, be super careful here.  Does the name of the guy you're talking to match the tax records and appraiser's office records?  Have you done a basic search to see what the disposition of the property is in terms of taxes owed, liens, probate, etc.?  Use the BP calculator to help you figure out the numbers and make sure it cash flows with real, conservative numbers.  Have you checked the crime trend in the area as well as prevailing rental rates?  Most of what you have posted doesn't seem to indicate that.

knew more about the history of construction materials and replacement timelines, would have saved me $20k on my first rehab...had to replace ALL of the plumbing and electrical when I hadn't planned for it.

Beware the 1 bedroom only properties, they tend to be fairly transient and lead to higher turnover costs as you are doing more of them.  @Canesha Edwards nailed the expense part, when you're doing the rough numbers a minimum of 40% in expenses, 50% to be conservative.

On the cap rate I don't think that's all that out of line for Orlando, it's the #1 rental growth market in the US right now and I think I read into 2023, every owner out there is trying to capitalize on any appreciation right now.

Something that has worked for some local investors I know is to have an inspector they have a relationship with walk the property with them. Many will do this for a discounted rate if you bring them regular business, just be aware that initial walk is usually a verbal report, nothing official that you could hold them to. Join your local REIA and you might find these guys or another investor who does.

As others have pointed out, many things to consider that the marketing isn't going to highlight, in a 2 minute gloss over my questions would be:

1. Why is the owner selling?  Retirement is the best answer but not the only.

2. Based on the pics (paint, windows, doors) the exterior seems mostly original, what does the inside look like (notice those pics are completely absent).

3. Check the crime in the area but generally anything that close to the water in Gulfport is going to be okay.

4. Flood zone likely, need to account for insurance

5. What kind of deferred maintenance exists?  Age of property makes me ask about electrical and plumbing condition.

6. Flat roofs are notoriously expensive to replace and it rains alot in Florida

There would be more but that's the 2 minute download, I would likely pass unless I think I could talk them down substantially AND have an inspection contingency in the contract.