All Forum Posts by: Charles Soper

The small items they are willing to fix seems like an olive branch in hopes that you'll overlook the CapEx you'll need to lay out for the bigger ticket items. Are you buying at a discount with the knowledge that you will need to spend that money in the very near future? If not (heck, even if) will you have the reserves to pay for those items? Have you gotten a quote for the failing items instead of just an inspection report? A lot of times what the inspector finds vs. what a professional tradesman finds can be vastly different.

Hard money is a great tool when used properly.  You have to make sure your numbers make sense and you need to have an exit plan.  You also need to think about worst case scenario with our economy where it is, it won't be all roses and butterflies forever.

What do your numbers look like?
How long do you expect to have the HML?
What's your exit strategy?
Worst case scenario? 

I 2nd Cozy.co - great service, easy customer support, and cheap (free if you don't mind your rent taking 7 days to post).

I forget which podcast I was recently listening to but the guest made a comment about which states to buy in and why.

Buy in California, New York, Seattle, and some other hot metro's for appreciation, buy just about anywhere else for cash flow.  So now the question is, do you want appreciation and zero to no cash flow, or do you want to stretch your comfort zone and start looking out of state.  Maybe for you it's not so much out of state as it is out of market, there are plenty of secondary and tertiary markets within 2 hours outside of San Diego that probably cash flow pretty well, they're just not "tire kicking" local.

You can also start attending networking events and more specifically even multifamily conferences.

Much of your success in large multifamily will be a direct result of your network!

Residential (1-4 units) or commercial (5+ units)?

The underwriting for residential MF is similar to single family.  Commercial MF is a completely different animal.  You can find great info searching here or you can turn to the more popular coaching syndicators like Themichealblank.com, syndicationschool.com, or rodkhleif.com.  There are more but those are the ones I started with and there’s plenty of info to get you started.

To @Thomas S.'s point, I just finished a rehab on a 1955 built duplex in a gentrifying neighborhood.  When I bought it it was separate electric (tenant pay) and owner pay single water meter.  I did an EXTENSIVE rehab and ended up replacing all the plumbing and sewer lines, I knew going in I was going to hold it and it would be worth the cost to replace so I knew what was in the ground/walls and didn't have the water/sewer/garbage bill but it wasn't cheap, to the tune of $17,000 between the plumber and the city.

ROI wise, doing that saved me about $3500 a year in water bills, so my ROI is roughly 20% and it will pay for itself in about 5 years. Oh, and it doesn't hurt that it helps the property stand out if/when I decide to sell.

Hi Shilo, welcome to BP!

You are absolutely welcome to attend!  Our meetup member list has kind of taken off and I'm not sure we'll have room if everybody attends, but that's a good problem to have.  Bring your goals and your questions and let's chat!

It’s all about your network!

You could very easily get the systems in place for rent collection and maintenance requests.  The biggest physical piece would be reliable contractors (maybe a service contract instead of a per event basis?) and some way to manage low frequency events (got a realtor friend?) like showings, move-ins/outs, eviction notices, etc.

Agree with @David Smith though, good tenants would be a must, maybe that last people is a tenant who you could compensate somehow.

How big is the property?  Good neighborhood?

Hey Chitra, welcome to BP!

You might want to be careful with some of these statements, it sounds like you are making some pretty broad assumptions about the building industry.  If you're in it that's one thing but your post doesn't come across that way.

Most builders I know won't touch a single structure project unless it's super high end ($1.5M +) because there is just simply not enough margin in it for them.  They need to consider all their costs to include zoning, permitting, materials, labor, and construction management to name a few.  Of the ones I've talked to, if they do a project like this they usually walk away with about an 8-10% profit, so on a $500,000, they are only making $45 - $50k for 6-12 months worth of work.

Now if you're a GC and you want to do it yourself by all means go for it and save some cash, but again from the tone of your post I'm not thinking you are.

Good luck to you.