All Forum Posts by: Chris Grenzig

Hamza F. Welcome to BP, I’m from LI but live in Brooklyn now. Definitely listen to podcasts all the time. Also set keyword notifications for cities and states you like to get notified when someone’s talking about that area. You’ll quickly find people who are active in your areas of interest. If I can help in anyway let me know, we also host a free monthly meetup in Westbury centered around multifamily if you’re interested. No sales pitch just a discussion on a specific topic and we have our tax advisor coming in this month to speak. Either best of luck!

@Sean Hayes If that's a route you want to go you would do significantly better putting together a powerpoint or PDF file that lays out all the reasons the investment it worth it. It should include, but isn't limited to, the background on you and any partners, your experience/track record, each individual deal, the property information, the addresses, information on the demographics of the immediate area and the larger MSA, bids from contractors for al the work needs to be done, the total cost, if there is going to be any debt, how much you're looking to raise, expected timeline, expected returns and probably more I can't think of off the top of my head. The more professional and well thought out your plan is, the more likely you are to raise money and feel comfortable risking other peoples money on an investment.

@Mike Taddy You should 100% confirm with the local ordinance's about the feasibility, but multifamily properties fairly frequently will dedicate a unit into a leasing office for that specific property. I'm not sure if you could use it as the office for a property management company though. You 100% can use a unit as a model unit to show prospective tenants, but I wouldn't advise doing that unless it's a large property and that one unit is a small percentage of the total units.

@David Housewright I did a few things. Easiest, fastest free way to learn is to subscribe to every real estate podcast and listen to them every chance you get. You will get bombarded with information and it can feel a bit overwhelming, but you will start to pick up on successful trends, phrases, ideas, things to look for, things to avoid etc. I personally don't like reading as much so I did that a lot.

Second was I signed up for a popular flipping coaching course, tried to go out and do it and failed. Learned a lot on what not to do.

Third I got brought an investment in a multifamily deal and my contingency for investing was being able to meet, talk with and question the sponsor often all about multifamily investing and his career. We came from a similar background and got along well and ended up hiring me a few months later. Since than the company has closed on over 1,000 units and I've personally sponsored 3 deals over 100 units with our last deal being 82 units and we have another 86 units under contract in Jacksonville, FL just earlier this week.

I don't know if that helped at all or left you with more questions, but that's how I did it.

Take $200k put it in liquid assets, $500k and buy my own property that cash flows decently well in a market I like and think has a decent chance at appreciation (but not banking on it), $300k spread across 6-10 different deals sourced through crowdfunding/sponsor deals, across different regions, across different assets, across different “plays” (value-add, development, cash flow, appreciation, etc.). I think it is very unwise to throw all your eggs in one basket and ideally I would like to diverse more, but I figure if I had $1 mil tomorrow there’s plenty of time in the future to spread out risk further.

@Fami Fozi Welcome to BP. I don't do much in the try-state and the northeast, more in the southeast and midwest. However, I do live in Brooklyn and if you ever wanted to grab coffee, food, a drink let me know and we can set something up and just have a chat. Let me know!

James Hartley I just moved to the Bushwick area about 2 months ago. Let me know if you wanna grab a coffee sometime.

Johann Jells I live in Brooklyn and I definitely would pay more for roof access. But you have to come out similar buildings with and without roofs to see if the ROI is there on the rent premium annually vs what it would cost to build. Definitely reach out to some other owners, leasing agents, etc in the area and see what they say. You never know who knows someone that’s done it and how much it should cost or know someone who specializes in them and might be cheaper.

@Tony Whitaker I'll try to give some brief oversight. First off if they're posting a general ad, they're going to be looking at the deal through rose-tinted glasses, so I would take everything they say with a grain of salt.

Overview: 50 units, 2 properties, built in 1967-68 (watch out for deferred maintenance), asking for $1.55 mil and $1.5 mil or $3.05 mil together, purchase it at either 9.5% or 9.6% cap rate on in place financials.

I'm assuming you're questions are more geared to what they're talking about in terms of Cap Rate, NOI, pro forma, etc.

Cap Rate is used to determine the price, the formula is: Net Operating Income / Cap Rate = Purchase Price.

So if you have 2 of the 3 you can figure out the third. $3.05 mil x 9.5% = $289,750. Both properties combined should produce that after all expenses are taken from the income. Even though one property is 9.6% I used 9.5 to be slightly conservative. 

Pro forma means projections or predictions of how you think you will operate the property in the future. You base this on you're own operations in the past, knowledge of the market, how the property has done in the past, and what you're property manager thinks will/can be done. 

So when they're talking about Pro forma cap rate, they're saying that "according to their projections" you should be able to increase you're return from 9.5% a year to 10.68%. However, they say a 17% Cash on Cash return because if you have a mortgage in place you will make more than the cap rate. The reason being if you have a 75% mortgage and it's a 4.5% rate, than anything over that 4.5% goes to you, thus adding to you're 9.5% return on the other 25% that you used as a down payment. 

Notice I put a cording to their projections in quotes because most times what a broker projects/underwrites, especially on smaller deals, is often the best case scenario or not attainable or not realistic. So you have to do you're own analysis and come up with a price you are comfortable with offering and if it works than thats how a deal gets done.

Hope that helps some, let me know if you have any other questions!

@Travis Lucy an option you can look to use is a crowdfunding website. We just raised $1.93 mil for our ground up development through them. You would need to be able to show some sort of a track record and I think their average raised is like $1.2 mil so you'd need further capital, but it could be a place to look.