All Forum Posts by: Collin Ordonez

Hey All, 

We have been searching for a place in DC proper for a house hack. The goal is to get a property with 2+ units and with current interest rates, it is hard to find something that will end up cash-flowing after we move out in 1-2 years. While living in the property we will be able to Airbnb one unit while living in the other. The Airbnb will give some higher returns, but due to permitting in DC we wouldn't be able to run it as an Airbnb after we move. There are two properties we have looked at this week, see the below descriptions:

Property #1: 

3 bedroom upper unit with a 1 bedroom Basement apartment in a great neighborhood with a metro stop a few blocks away. The current list Price is $875,000. The property needs a complete renovation and we expect the cost to be somewhere between 75k-100k. The ARV should be around 1.1M. Our monthly payment with putting 5% down will be $6,700. Long-term rents for this unit should be approximately $5,500/month. After moving out it would be cash flowing negatively around -$1,200/month before taking into consideration capex, maintenance, etc. but while living there and renovating the unit we will have gained approximately $125,000 in equity.

Property #2: 

3-bedroom unit with a separate basement entrance that could be converted into a 1-bedroom basement apartment, but in a slightly less appreciating neighborhood. The current list price is $695,000. The property needs a complete renovation and we expect the cost to be around 100k. The ARV after should be around 900k. Our monthly payment with putting 5% down will be $5,300. Long-term rents for this unit should be approximately $4,300/month. After moving out it would be cash flowing negatively around -$1,000/month before taking into consideration capex, maintenance, etc. but while living there and renovating the unit we will have gained approximately $105,000 in equity.

Neither property will be cash flow by the time we are moving out (unless rates drop dramatically and we can re-finance). We could do a "Live and Flip" and sell the properties after 2 years and use our equity for the next deal. We feel stuck right now on what the "right" thing to do is in finding the balance between cash flow and equity when house hacking. It doesn't seem that with current rates there is much that works in the DMV area in terms of having cash flow after moving out of the house hack. Any guidance is appreciated! 

Hey All, 

My ultimate investment goal in real estate is to be able to own, or possibly develop, large multifamily properties. I am 26 doing project management for a large commercial general contractor, but am wondering if I should change career paths to work for a multifamily investor or large developer. The thought would be to try to grow knowledge and connections in the industry to hopefully accelerate the ability to buy multifamily properties in the future. I like my current career and think I would be able to use the knowledge I've gained in the construction field to renovate existing multifamily properties or help run new development projects.

Currently I have one property that is currently being used as a mid-term rental. We don't have enough money to personally put down on a commercial multifamily deal, so the goal is to buy a 1-4 unit to live in while we grow knowledge/capital to be able to purchase larger deals. 

Any advice is helpful on the possible career shift or other advice on getting started in multifamily investing would be appreciated!

Thank you everyone for your helpful insight! 

We really like the Tampa market (and the beaches) and would love to make it work! With that being said does the risk of the market still make it worth it over others? Some other areas we have considered are Atlanta and Austin.

Hello Everyone! I just had a lease signed on my first rental property and the goal is to buy another property as soon as possible. We have been thinking about re-locating from Virginia to go to an area that will give a chance to house hack a small multifamily property while also having warmer weather. One location that we have been considering is Tampa/St. Petersburg since we have some connections in the area.

One major concern I have is regarding Tampa is hurricanes and the implications that may have insurance wise and property value wise in the future.
If anyone has an advise on if there are any special considerations to look at when analyzing properties in Florida or Tampa particularly it would really appreciate it!

Quote from @Don-Carlos Moniz:

@Collin Ordonez, welcome to the forums. I'll start with the price and NOI. I recommend getting a copy of the financials (RR, T12, including lease terms for the retail space) and calculating the NOI yourself. You will be surprised how often you have missing expenses, future rental income instead of current, and simple poor math.

On the financing side, this would be a commercial loan. I am going to guess that you will need to bring on a partner with mixed-use experience. With professional management, you may get around that hurdle.

You must also have a net worth equal to or greater than the loan amount and meet the lender's liquidity requirements. So again, probably will need a partner.

When it comes to a downpayment, maybe 25% will be enough. The deals I am underwriting now are at 60% LTV. If the property is worth $1.45M, the loan amount would be $870K. On top of the down payment, there will be all the closing costs, attorney fees, inspections, environmental, and probably a few things I am forgetting.

Reach out to the listing broker and see what information they have. Ask them questions about the deal. Try and run the numbers yourself and when you get stuck, come back and ask more questions.

Depending on your market, someone on the forums would probably partner on the deal if the numbers are good.

Good luck, and feel free to shoot me a DM.

 Don-Carlos thank you so much for your reply! Lots of great information here. I have reached out to the broker and received some information back including their own pro forma (see picture below). The broker did say they currently aren’t able to provide tax returns and formal P&L statement due to previous property management challenges. Is this a major red flag that would be a deal stopper?

A couple other items that stood out to me looking at the sellers NOI calculations was the general maintenance of $5,000/month and no property management being included in this number. With being in a historic district would you have to consider higher maintenance cost for major CapEx expenses? For property management cost would this typically be taken into consideration for the NOI?

Hi everyone! First post here on BiggerPockets. Currently I am house hacking a townhouse and I am looking into buying a multi family property for my next deal. I recently found a listing of a mixed use commercial building in the downtown historic district with 5 apartments (3 - 1bed/1bath and 2- 2bed/1bath) with lower level storefronts that are fully occupied. I would like to get some advice on financing and analyzing small commercial deals. Here is the current information I have on the property :

List price: $1,450,000

NOI : $91,091

Cap Rate: 6.28%

I have the following questions to begin with:

1. Financing: What are the first steps I need to take to be able to get approved for a commercial loan for this property type? It’s my understanding the best route may be to reach out to small local banks. For a downpayment I believe I could make a 25% downpayment between personal savings and investments from a couple family/friends. Would it be possible to get a bank to give me a loan or would I need to partner with someone with commercial real estate experience?

2. Analysis: What are the factors or calculations do I need to consider when underwriting a deal to decide if the property is a fair value and worth pursuing. Should the main focus be on cash flow and ROI? With current market conditions what is a good target for cash flow and ROI.

I know these may be very basic questions for the big picture but I hope it’s a good start to begin a conversation.