All Forum Posts by: Chris Grenzig

 @Account Closed ha be careful the next few years, syndicators ears perk up when they hear doctor for raising money. 

A couple of people recommended the white coat investor which I think is great and obviously tailored towards you. 

My differing advice/thought is if you plan on being a doctor for most of your life, and your goal isn't to replace your income with real estate in the next couple of decades, sacrifice "projected returns" and do your homework on the risk for any deals you evaluate. 

Pay close attention to the capital stack, how much debt there is, how much preferred equity there is, how much the GP is co-investing, how much they project rents to rise organically every year, what exit cap rate they're assuming, how much cash reserves the property/investment will have, how much does the deal returns change when you add 50-200 bps to the cap rate, what is your breakeven occupancy and exit cap rate, and a bunch more. 

If you're going to be able to consistently invest solid chunks of money every single year, then a big part of your focus should be on not losing money versus hitting crazy returns. 

$50k invested per year at a 10% annual compounding return is just over $9m in 30 years on $1.5m invested. Even 5% annual compounding is $3.5m in 30 years.

I don't know what you'll be able to do or plan on doing, but my main point is to focus on how deals can go wrong or how a deal can be plumped up artificially with a few small tweaks in underwriting so you can properly decide if a deal is right for you or not. 

@Charles Webb best thing you can do is work backward. Figure out what your goals are for the future (say 10 years or so), then try and figure out the best way to reach those goals. For example when I left my old company to start my own I made a 10-year plan to get to $500m AUM in 10 years. Now granted that has gone off the rails because I have decided to change our focus because my end goals changed, but doing the exercise helps create the path to walk and figure out what the next steps are. If I know I want to walk 1,000 miles by the end of the year, I can come up with a plan of how many to walk each day, week, month, quarter, etc. 

I also highly recommend finding someone to work with who knows more than you, but also figuring out how you can help that person. A lot of people decide to bring/raise investor money to the table as a foot in the door, but I also think there is options to be more creative and do the same thing. Plenty of people need help in other ways that you might be an expert in. Find someone that needs something specific and offer that to them. 

Could be SEO, admin work, investor relations, social media management, asset management, etc. Or you could get even more creative and find someone who wants to learn to play the piano or speak Spanish and you can be their teacher. 

Most people trying to find a mentor take the approach of I'll work for free just teach me. But that isn't that attractive because they then have to spend time figuring out what to give you, setting it up, teaching you things to be able to do it, and that's a lot of time and energy spent. It's way easier to find 10-15 people who you would want to be mentored by, try and find 1-3 things they currently need help with (check their podcast appearances, social media, etc.), and create a tailored offer that solves a problem for them with little energy and time required on their part. 

@Ayanna Taylor if you haven't already join the yellowbird facebook group for investors in Jacksonville. Tons of active people in there to connect with to find deals. 

If we can ever help on the property management side let me know. We currently own and operate 51 units in Jax and manage for other owners in Jacksonville and Orlando. 

$1500 is $18k per year, on equity that's 6% per year. The question is do you want to spend the time energy and money to find something that you think can do better? Do you think there is even anything better out there right now?

I'm personally choosing to wait on our 16-unit deal in Jacksonville, FL. It was always a longer-term hold (also 60s built) and I feel like we are near or at the bottom of the current cycle, and if I'm not forced to sell then why would I do it during a time that I think is closer to the bottom? The only reason would be to try and find something better, and I don't personally see anything that is, so I choose the property we have. Also, with the property we currently have, I have a much better idea of where the potential or known problems are, versus a new property which you won't know nearly as well. 

Probably not, be happy your water costs are actually lower than they used to be and use this as a win.

If you want to prevent this in the future you can tackle this one of three ways, assuming they are allowed in your area (check before you do anything)

1. Have the resident put the utilities in their name if it's per unit. If it's 1 meter for 2+ units then probably not a great option

2. Bill back for utilities on a flat rate to help recoup some of the costs

3. Bill back for utilities based on usage, need to have a specific caluction for this (is it based on per unit, per number of occupants, per SF, etc.) Here's how it works. Jul1-30 they use the water, you get the bill on Aug 2nd. You can't bill them right away so you have to wait until Sep 1 to prorate that utility bill to the residents. So you're effectively billing 2 months in arrears but on the 3rd month (month 1 July, month 2 Aug, month 3 Sep). So it takes awhile to catch up, but they're paying their actual fair share of usage. Where it gets tricky is when they move out. Since they got the first 2 months without paying anything, their last month before moving out they have to pay for 3 months all at one time. One of those months you'll know what it is, but the other 2 you'll have to take some sort of an average and tack it on. There are companies that do this for you and charge a fee, but usually it's for larger buildings. 

Personally we just do option 1 or 2, it's easy to explain and understand, and even if option 2 only recoups you 80% of the cost, that's better than 0% or the headache of trying to figure out option 3.

Again make sure this is all allowed for your area

 @Thomas T. We've bought over 200+ units in the Jacksonville, FL area and we currently own and manage 51 units. Before that I worked for a company that bought 4000+ units and I oversaw 1000+ units in Jacksonville, FL. We also 3rd party manage in the Orlando area.

"Cap Rates" are 4.5-6.5 % depending on location, asset type, etc at least for long-term rental residential. I can't really speak to commercials as I don't know or have any experience there. 

Find a good insurance person that specializes in what you're looking to do and have them look at deals before you buy them, it's a crap shoot right now. 

40% isn't too crazy for the exp ratio without mortgage or replacement reserves, I definitely wouldn't go below that. Florida reassesses taxes every time a property is purchased, every county should have a property tax calculator you can use to get a rough idea or call the county and ask them how it's done. A lot of times it's 80-85% of the purchase price multiplied by the millage rate which you can find on the tax records for that property. You get a 4% discount for paying in Nov of every year versus March, technically every month you pay early is 1% but caps at 4%. 

If you're going to self-manage Heist Weiss and Wolk is a great landlord-tenant attorney and they've helped write a lot of the leases and laws for FL NAA and other FL stuff. They have a ton of free videos on the laws here too. Their website is evict.com (which is hysterical to me). 

If you're going cash and being conservative I think you'll be fine. We've had an oversupply in housing the past 2 years or so and will probably continue for the next 1-2 years, but everything I'm seeing has shown next construction starts have dropped substantially in the past 1-2 years so good chance we have an undersupply again in about 2-4 years once everything still being completed does finish and gets leased up. However, I'm also seeing some studies suggest our population growth might drop from about 350k to 250k to the state per year due to a lot of the growth being from boomers and they are continuing to age and the boomer population dwindles every day. So still 1% state-wide population growth per year, but possibly less. 

Happy to give more general thoughts on stuff if you want to chat or answer specific questions. I don't know the west coast FL cities beyond generalities so I won't speak to them too much. 

@Michael Penny so we refinanced I think in late 2021, so it was a very different environment. We use a commercial mortgage broker for all of our loans and we ended up getting a bank loan on this that was slightly better than Freddie/Fannie at the time. 

Right now I would imagine you're best bet is a small balance Freddie or fannie loans depending on loan size and location. Most deals are DSCR constrained, not necessarily LTV constrained and as such you're seeing lower LTV's on acquisition and refinance so you're getting a lot of IO years with Freddie/Fannie which is great for cash flow.

Happy to share who I use for this, they work regionally and nationally and most of the financing knowledge I have I've learned from him. He's very knowledgable and based in Jacksonville too. 

However, another option is to call a few local credit unions and banks and see what options they have, they might just require you use them for your operating account and some might even require some deposit minimum too. That might be more regional banks since they're balance sheets have been under fire the past 2 years because many commercial asset values have dropped so getting 25% of the loan they give you back in cash deposits help them balance their books a bit more. I don't know what the ratio is, I'm just pulling that number out of thin air. Still worth exploring if you have the time and want to save the 1% fee paid to a broker. 

@Michael Penny so we refinanced I think in late 2021, so it was a very different environment. We use a commercial mortgage broker for all of our loans and we ended up getting a bank loan on this that was slightly better than Freddie/fannie at the time.

Right now I would imagine you're best bet is a small balance freddie or fannie loans depending on loan size and location. Most deals are DSCR constrained, not necessarily LTV constrained and as such you're seeing lower LTV's on acquisition and refinance so you're getting a lot of IO years with Freddie/Fannie which is great for cash flow.

Happy to share who I use for this, they work regionally and nationally and most of the financing knowledge I have I've learned from him. He's very knowledgable and based in Jacksonville too.

However, another option is to call a few local credit unions and banks and see what options they have, they might just require you use them for your operating account and some might even require some deposit minimum too. That might be more regional banks since they're balance sheets have been under fire the past 2 years because many commercial asset values have dropped so getting 25% of the loan they give you back in cash deposits help them balance their books a bit more. I don't know what the ratio is, I'm just pulling that number out of thin air. Still worth exploring if you have the time and want to save the 1% fee paid to a broker.

 @Britney Lewin I think it's great you have the chance to go in many areas, but finding a property while searching a very wide area can be tough. When we look for properties we set a pretty defined criteria so that it enables us to only spend time on the properties that fit for us. 

10-90 units, C+ or better areas in Jacksonville and Orlando, has a value-add component.

I would suggest trying to work backwards, especially since this is somewhere you want to live. Do you want it to be in a major metro A++ area where it's very nice to live but your other rent may not cover all of your mortgage, or in a small town C area where the other rent might actually make you a little money every month? Do you want to personally live in a small town vs a major metro? Somewhere in between. 

I would recommend finding maybe 2 areas that you look in, then start looking for neighborhoods you would want to live in within those areas. Once you know that, then you can narrow your search and spend time on the properties that definitely make sense versus trying to spend time looking at properties everywhere. 

@Britney Lewin figure out what you want to achieve and where you want to live.

You can probably get more bang for your buck in more tertiary areas in Florida versus primary or secondary areas like Orlando, Jacksonville, Daytona, Tampa, St Pete, etc.

One area to consider might be the space coast. Still near the beach, not to far from west palm, and probably not priced as high as some other areas. 

There are probably even some smaller towns between Space Coast and Orlando that you might be able to do even better on.Or maybe some smaller towns around Okeechobee. I don't actually know anything about the towns south of Orlando and not on the coast, I'm just giving another alternative to the other ones suggested. 

However, they might not give you as much appreciation potential as more major areas like Orlando, West Palm, etc.

@Kenneth Lewis if you're 21 and you want a rental property by 24, I think the best/easiest path is to work on a career related to real estate. I was fortunate enough to find a job that worked in multifamily synidcation and I was there for 4.5 years and I learned a ton. Then I went out on my own and started buying some multifamily properties with my own money and some investors, and now we also started a property management business. 

Giving yourself 3 years I think is definitely doable. Spend the last year of college getting educated (assuming you'll graduate at 22, if not than your first year of work) and networking a ton. Then try to find a job somewhat related to the field, but I would probably lean towards something that is W-2. Ideally you would find something with a base salary plus commissions. A W2 makes getting a loan for an investment property easier, earning commissions allows for increased earnings which gives you more money to invest. 

Live as cheap as you can! I cannot stress this enough. If you can live with family for free our cheap, do it. Future you will thank you. 

Don't get caught up in having your own place, going to fancy places, big trips, etc. The way to have money to invest is to earn more than you spend and put that money aside. Put $1k+ a month (if you can) into a high-yield savings account like Marcus and earn 4-5% while you still can, and then when you have enough buy a property. If you can get free rent with Mom or someone, pay yourself the rent into that savings account. 

I would seriously consider househacking a 2-4 unit property in like a B neighborhood. If you have the stomach to self manage, do that. You'll learn even more doing it yourself but you might not have the time or the desire to, and that's okay. The cash flow from the other units may or may not cover your expenses or mortgage, but that's not the end of the world. 2-4 units in FL are expensive right now, but it allows you to get your own place, pay down the principal and start building your track record and portfolio. 

Keep saving, and after a year you could technically go do that again. 

Also, keep always hunting for new job opportunities. You can only live so cheaply, but good chance you can find a new job that can increase your salary $10-30k especially as you gain more experience in a career. 

DM if you want to talk more about it, I'd be happy to help if I can