All Forum Posts by: Chase Louderback

@Wirley Pierre

As long as you can realistically push rents or establish other income streams from the property, then that's what most people are looking for.  

I also agree with @Todd Dexheimer, it is unlikely that your expenses are lower than 45% unless you are self managing/running things pretty lean.

Regarding putting $0 down for the deal.  Your options here are:

• Find a partner to put the down payment
• Ask the seller if they would consider holding a second. Generally a bank will require the buyer to still put some down payment down (~10% minimum) so that they have some skin in the game, there have been local banks that allow 0% down if the seller if carrying 30% or more.
• Pledge other assets that the bank can use as collateral for the down payment. (Be sure to triple check your numbers and make sure they still work with this new debt)
• Work out a deal such as a Master Lease.

That is all I can think of at this time regarding options for any deal.  It sounds like the 1st or 2nd bullet point would be best for you.  Hope that helps

What sized multifamily properties are you looking for?  For off-market properties that are more likely to be in the "mom&pop" range (below 50 units), cold calling would likely be the best method of marketing.  When you start to get larger than that, it will generally be better to work through brokers.

You can pull lists for off-market properties from Listsource or use a service such as Reonomy.com, Costar.com or ProspectNOW.com. If an LLC holds the property - which it likely does- then you can look it up by Googling "*State* LLC lookup" and clicking on the SCC site link that has the Business Entity Search.

Hope that helps. Good Luck!

@Blake Walker as others have stated, you should check with your local market and could potentially consult the municipality.  

Also, depending on the age, layout, etc., of the property it may be better to establish a RUBS system or implement a flat fee.  Again you will have to check with the localities to see if this is allowed and if there are regulations, etc.

@Jason Xue You should always err on the side of conservatism and keep the Capex "above the line" so that it does effect your NOI. As Greg stated, even properties that require large rehab budgets will generally require a reserve per the lender.

Also, these ARE real expenses.  Because you don't the full reserve one year does not mean you may not have something unforseen and have to use the full 2 years reserve at the end of year 2.  

Finally, I am not sure what size properties you are looking at, but generally it will be around $300/per unit/year for replacement reserves for moderately sized multifamily properties.  If you are doing a 4 plex or less, then it may make sense to do 10% depending on your market.

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@Mitchell Behm

One way of getting around the Debt-income ratio is to have a co-guarantor for the loan.  If you are having issues meeting the requirements consider seeing if your parents, close friend who may meet the requirements, etc., will consider signing to help you out.  Keep in mind that you need to be cautious as you have other people will have financial risk on the line too.

If you can't close on this current deal you are looking for and need to find another then some options in addition to working closely with a stellar real estate agent would be:

• Driving for Dollars
• Pulling a mailing list for owners of the type of house and location that you are looking for
• Posting ads on craigslist, networking at local real estate meetups, getting the word out in general for what you are looking for

If you do end up deal sourcing personally, it is my experience that the more personable the contact method, the better the reception will be.  For example, cold calling will have better results than direct mailing because you can build more rapport and they can actually hear your voice and get a feel for your personality. 

@John Bradley Agreed with Greg.

I honestly have never mailed and only cold call.  I wouldn't mail or cold call more than a month as you may become a nuisance. If you are cold calling, it's always best to end the call with a date when you will touch base again or some confirmation that it is ok if you reach out on a monthly, bimonthly, etc. basis.

Are you still pursuing this deal @Jomont Dotton?  Were you unable to negotiate better seller financing terms?  

If you have to go the bank financing route then I would recommend approaching other local banks and credit unions as they are generally more open to financing these types of properties.  If you have a strong relationship with another bank/mortgage lender, I would also approach them.

Great job! @Ingrid J. and thanks again @Mindy Jensen

Second what @Brian Metz said.  I highly recommend getting a quote from local insurance agents/companies because they are likely to be lower since they understand the market better.  Some of the quotes we get from the big names are almost twice as much for the same coverage (depending on property type).

Good luck!