All Forum Posts by: Chingju Hu

Once you go over 4 typically you need a dumpster, also will need sprinklers and fire control panel that calls fire dept with any significant renovations. Some areas have a higher real estate tax for commercial property as well.

There is a LOT more competition for 4 unit properties though

Not entirely true. My 6-plex had no dumpster or sprinklers for 19yrs :)

When I sold it, the inventory for MFU 5+ was ZERO and within ten days, I had a bidding war - - sounds like hot competition to me.

Wow good to know that people are competing for your 6plex! Did you find it more difficult to get a good financing for this 6plex that doesn't eat up profit?

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Originally posted by @Terry Lao:

@Chingju Hu

The exit strategy or when you decide to sell, it will be more difficult to sell 8 units rather than (2) 4plex. Not many people can qualify for 8 multi-unit loan versus a 4 plex, also the cost is half as much.

Its not like Costco when you can get better deal buying bulk. The financing kills any savings that you will get via economies of scale.

Terrence

Terry, Thank you for the detailed reply, when you said "The financing kills any savings that you will get via economies of scale", do you mean the 8unit will have more trouble in the financing and ROI will be lower? How about 12units or more? it looks like 8 unit is on the awkward spot, where it's not as big as 12+ units, and not small enough to be residential...

Also, could you elaborate more on: "I was able to find 4plex that actually had $100 net positive to debt ratios with rental agreements factored in." What is the $100 net positive to debt ratios with rental agreement? Thank you so much!

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I'm thinking about getting two 4plex or one 8unit, and want to discuss the pros and cons for each. Let's assume that the total ROI is the same.

Two 4plex pros is the diverse location, risk is lower (if one location is better than another) (feels like 2 baskets for 8 eggs), and I can buy one after another based on the result of the first one, cons is that there will be 2 roofs to replace in the future, 2x repair, 2 locations to run, 2 loans.

Pros for 8 unit is that it's commercial, can increase NOI to increase value, only one location to run, one property manager, one roof to replace, one loan,...etc, cons is that if something goes wrong in this apt, it's an expensive one (1 basket for 8 eggs), and maybe it's more competitive to buy a good 8-unit.

How do you think, BiggerPocket? Same questions for two duplex vs one 4plex

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My friends are talking about investing in Austin as well (we are from CA), they've been there and think it's a nicer place among TX, young and vibrant place with some companies like Apple or Amazon. But I guess the price has gone up a lot so the ROI is getting smaller now....

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Hi, this is a newbie question and i don't know if it's over-posted. I'm planning to buy more rental properties this year. And I'm thinking having a LLC structure to have more legal protection on my own and on my property. I'm solo and don't know any good lawyer, attorney, accountant or CPA to consult on this type of thing. So my question is: (1) Where can I find good people to help me in setting up the LLC? (2) Do I form an LLC before buying the property or after? (3) what are some good training resources about the ins and outs of LLC? (4) Do you form one LLC for each property? (5) How much does it cost to have LLC and how much is the consulting fee for accountant or lawyer?? ....and many more questions coming up...

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I'll go for cash flow $120/month any day rather than out of pocket $200/month.

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Hi, BP, Not sure if this question is over-posted: for my next rental property I'm looking for 4plex or more units, and I'm wondering if it's the same as getting a loan for single family investment property? I heard that when it's more than 4 units, it's harder to get loan from traditional bank? Thanks

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You can also raise the rent really high so they move out....

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Originally posted by @AL Brown:

HELP! need some professional advise. I have my eyes on a 95 unit building. From the pictures the grounds look amazing and the buildings look great. They provide a few pictures of the inside of some units however there are 76 down units and the property is 8% occupied. Why not sure but will be finding out. Is it due to bad management, economic or area. Well from what I have done on my end as far as research (pending a response on my request from broker etc) seem to be in a very good neighborhood. So what could it be, management, economic growth in area or just owners who do not care. In any case this could be a cash cow for the price point which is just over $1.6 million. Is 76 down unit a major no no? I know that assuming $5-6k per door and $380k-$480 later not only will the value of the property go up but the NOI this could be churning based on my proforma due to vacancy and what the surrounding areas are demanding.

Is this a brand new construction? or is it around for many years?? Does the original owner try to get rid of it?? If it's new then it's reasonable that people are not moving in yet, but if it's around for a while then it's a red flag

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Originally posted by @David Faulkner:

Originally posted by @Jenifer Levini:

@David Faulkner Did you go to law school or something? That is just the sort of negative, risk-focused way of thinking as lawyers are trained. To be an investor or an entrepreneur, one has to be able to manage and mitigate uncertainty. Risk:Reward.

@Fabio Salas, Thanks for sharing your strategy. That sounds like youre using your life circumstances very creatively to build fantastic real estate and retirement nest eggs. Very few people have the type of job where they will stay with the same employer for 30 years, these days.

I love reading these stories, and about people's creativity.

You are absolutely correct ... you have to be able to manage and mitigate uncertainty, and the only way to manage and mitigate it is to first identify it. I'm not a lawyer, I'm an engineer ... I have literally spent well over half my career analyzing, managing and mitigating technical risk and have applied the same lessons very successfully to investing in Real Estate for over 15 years. The same exact kind of thought experiment I proposed is precisely the way that I meticulously and systematically lay out and assess all the risks, then I construct a strategy and plan to manage and mitigate those risks, then I execute that plan and adjust as I go wherever and whenever my initial projections are off. How do you manage and mitigate risk if you don't do this? There are no risks looking at the world through rose colored glasses, which is fantastic until that thing called reality happens. Much better to spot and plan for those risks before you get into the investment rather than after. Of course, everyone always wants somebody to only reassure them rather than apply some difficult critical thinking which could actually be used constructively to make their investments safer.

Hi David: This scenario you describe is certainly a possibility. I'm glad that I hear different point of views here so in my journey I can think through each investment decision I make. I'll keep learning from people here in BP and study REI!

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All Forum Posts by: Chingju Hu

Chingju Hu has started 11 posts and replied 74 times.

Post: Two 4plex or one 8-unit?

Post: Two 4plex or one 8-unit?

Post: Two 4plex or one 8-unit?

Post: Austin Texas or Houston Texas?

Post: Where to find good people to help me set up LLC?

Post: Refi for cash flow or payoff early

Post: What kind of loans for 4plex or 6plex+ ?

Post: Tenant Ignoring Late Fee Notices & Refusing to Pay

Post: Multifamily purchase advice

Post: Is it weird to buy rental properties instead of primary residence