All Forum Posts by: Chris Grenzig

Hi LIza Romero ! I was like you in a way in wanting to get into multifamily in NY but a family friend convinced me to try out of state. Ended up quitting my job as a financial advisor and he hired me and we do multifamily investments full time. We also run a monthly Meetup in Westbury, NY if you're interested at all. If I can be of any help just let me know and I'll see what I can do. Best of luck!

Thomas Hannan I was in a similar situation about a year ago. Didn't have a ton of cash to invest and I was struggling to flip SFH in NY, but wanted to learn MF. So, I invested in a deal and got the syndicator to agree to answer questions I had within reason. Ended up building a really good rapport with him and now I work for him. [Solicitation Removed by Moderator]

@Ben F. Cash on Cash is what percent you will receive back in distributions every year on cash flow. So on 14% if you invested $100k you would get $14k back every year in distributions.

IRR is a bit difficult for me to explain and I would advise doing some Googling until you fully understand it. Essentially it is all the money you would receive in Cash on Cash, principal pay down (if it has mortgage), and appreciation upon sale. That total amount is than annualized, and than there is a formula that gives you a return based upon the Net Present Value of money. NPV is basically that saying that $100k today is more valuable than tomorrow or in a year or in 5 years.

Let's say for example you invested $100k, you go 14k every year, and for this scenario lets say principal pay down was $4k (I'm pulling this out of hat, any information from a deal would have that number available to you). Let's say in 3 years your $100k is now worth $150k. So you're total money received would be $150k + ($14k times 3 years) + ($4k times 3 years) = $204k which is 104% return over 3 years. That means for the life of the deal, you averaged a return of 34.6667% per year. 

IRR will take that average return a year and discount it slightly because you don't have that return today, you have it 3 years from now. So IRR would probably be a few percentage points lower in this case, maybe 30-32%, I can't be sure I would have to put it into excel to figure it out. But that's the basic overview. IRR allows you to compare deal to deal better because that return takes into consideration the time factor.

Hope that helps. Like others mentioned those are very very good returns and I would do some of your own due diligence to make sure everything they are telling you is accurate.

Doug Martin it all depends what you're goals are above 20k-30k in cash flow are. Taxes are a huge part in which route you want to go and it's even different in you're situation because you're probably already in the highest tax bracket. Right now the best route for you might be to lower your tax burden as much as possible, I'm not sure. Wouldn't know if you've spoken to you're accountant about this but I would think that's best avenue to start. That way you know what you want to invest in, how much you want to leverage you're money, how much to put into one deal or space it out, and you don't have to listen to everyone trying to tell you there way is the best. Best of luck in hitting your numbers.

Brady Hurs I would have to agree with Joshua Fulenwider on multifamily. There are plenty of ways to lower your tax burden through multifamily investing. Most of our investors are high net worth guys who are trying to lower their tax burden and have cash flow come in on a regular basis. I'd recommend digging deeper into that avenue and if you think you can manage it yourself, then go with that, or look for an investment firm or syndication that can keep you as a passive investor; allowing you to focus on your business. Hope that helps and if you have any questions feel free to reach out!

Joseph Salegna welcome to BP! We host a free monthly real estate investing meet-up in Westbury, NY centered around multifamily mostly, but we do have quite a bit of networking as well. Good opportunity to meet people a bunch of like minded individuals and hopefully learn some more about investing. Let me know if you would be interested in coming down or even if you want to schedule a call just to have a chat, let me know. Or really any other way I can be of help let me know.

Phillip Vaughan we have property manager oversee all rehab on properties when it's out of state. On sites that need less lifting like just some interior renovations, than it's less important to go out and see it as frequent. On the flip side we've also bought some more run down stuff that needs a lot of work and we'll go out somewhere along the rehabbing process of it as well once it's done. Also have our property manager do tours of the properties and take videos on the more run down stuff so we can get an idea of how it's going. I would also suggest, once in a while, visiting any property you own with little to no notice so you can see how it actually is on a day to day and not after a PM has cleaned it up knowing you'll be there. There's no right answer of when you should or shouldn't, it'll all depend on what will make you comfortable and what you can afford.

Kenny Oliver biggest thing you have to decide on is what submarket you want to get into. A good deal in a bad area can turn into a bad deal in a few years if people are leaving, job growth is stagnant, or rent growth can't support the median income, etc. On the flip side a great area with an okay deal can improve because rents continue to increase rapidly, occupancy stays low because there are always people looking to rent, etc. Obviously you want to find a great deal in a strong area, but the most important thing about real estate is location because that will never change. Why a lot of people like to pick areas close to them is because they probably know a great deal more about it than any numbers you can search online, or it is very easy for them to become intimately knowledgeable. Nothing wrong with out of state if you take your time and do you're proper due diligence, it's just not always easy for someone who doesn't do real estate full time.

@Joshua Palmer The high level numbers look very good and solid. The things I would start to dig into is the expenses and rent. 

How does the rent compare to the rest of the market? Above or below? Is your projected rent a huge increase or is it the current rents? Can you push rents more with a little bit of renovation? Is it not worth the cost of renovations to push rent?

What do your expenses consist of? Will the purchase of the property affect your taxes at all? Does the property have any deferred maintenance? What were the 2016 expenses? 

Also, make sure any numbers and figures given to you that are projected by a broker/seller are checked by yourself to make sure they are legit. They are trying to make a sale and will not hesitate to give inflated numbers or slightly more aggressive figures to make the returns look better to potential buyers.

I would also check to see what your break even occupancy would be so you know how much of a cushion you have until you start paying the mortgage from your own pocket. What's your return if you go to 90% or 85% in case you struggle to get a unit rented. These are good things to know so you don't get surprised. At what point is it better to give concessions to get someone in vs when is the concession become to costly.

Pending the authenticity of the numbers and the exact market it looks like a strong deal. Let me know if you have any questions and hopefully I helped some.

@Diane G. maybe I was a bit harsh, but people do need to understand no investment is a guarantee/ensured. I'm sure you know that, but it is important to make sure. However, if the proper due diligence and research is done it is actually quite simple to have a good investing experience. I agree with @Jeff Wallenius that transparency is absolutely paramount in any private investment. I guess myself, I am a fairly conservative investor/underwriter and like to do my homework before anything else. Definitely didn't mean to scare anyone lol.