All Forum Posts by: Cory Carlson

Give me a call and say you're looking for investment properties all over the country and you immediately will go to the bottom of my buyers list. Likelihood of you buying a deal in Oregon seems awfully low. Pick a market or two and go with it. If you want to sign an a buyers acquisition agreement for my state you will get treated like a client and get my pocket and coming soon listings and access to both MLS's (through a portal) and if you get more serious i'll reach out to my sphere to FIND what you're looking for. My time is valuable as is yours, so i'm afraid in this scenario of what I call "pretenders" that bend you over backwards while you run around town, make low ball offers (if at least making any), not listen to any advise/consulting and analyze all the deals to death. Just my .02, we get lots of false starts in this business and i would tailor your calls on deals to not seem like one. Good luck

Any PSA used by a broker is licensed for use by only that broker or brokerage. Try a lawyer if you're going the FSBO route.

The inputs are wrong if your initial post is the circumstance using $18,000 down. The analysis is assuming the $2,000 down as your "invested equity" and skewing your IRR. Being as $2000 is the denominator in the equation the analysis spits out a crazy IRR of 174.25% The visual at the bottom showing the Year 1 - 30 returns shows a year 1 equity of ~$2500. Here is an analysis with my software. I did it quick, used most of your numbers and made some minor expense suggestions, if anything it adds perspective. I am not offering you any real estate advise by using my analysis tool, I am not so familiar with the market.

These are the major inputs assumptions: 

• $90,000 purchase price and $18,000 down for 80% Loan-to-Value.
• 3.9% rate, 30 year amortization 
• Scheduled monthly rent of $1000.
• Conservative annual expense load of ~4950 (43% of Effective gross income).
• Investor effective tax rate of 15% and annual depreciation expense of $2500.

Projected Year 1 returns are as follows: 

(1) Pre-tax cashflow ~$2568 (14.27%), After-tax cashflow $2365 (13.14), After-tax return + principle pay down $3655 (20.30%) and Total Return (After-tax + pay down + appreciation-1.5%) $5005 (27.80%). 

My principle broker also brokers commercial loans for our clients and the banks we work closely with shut down multifamily loans for the time being. Came to a halt on all our refinances, dispositions, and acquisitions until this blows over. I think it has to do with waiting for the government stimulus package - but am a little confused myself and agree with you, there hasn't even been enough time to default or SEE late rent payments. So to preemptively shut down lending has me personally wracking my brain.  

Joe when looking at a the expenses for a house hack you need to draw the line somewhere in expenses to calculate monthly out of pocket. Some of my clients take the more simplistic approach and consider repair/maintenance secondary in calculating the monthly out of pocket. When looking at the investment analysis tools/templates, after you've made your calculations, the annual pre-tax cashflow divided by 12 would be your AVERAGE monthly payment. Here is a quick look at how you analyze a multifamily property. 

Scheduled monthly rent + other income (parking, laundry, utility bill back, etc) - vacancy = Effective Gross income

Effective Gross income - expenses (see below) - debt service = Net Operating Income

The expense load can be generally grouped into these categories for small plex's between 2-4 units: Taxes, Insurance, Property management (if applicable), private mortgage insurance (if applicable) owner paid utilities, repair/maintenance/turnover, and reserves. 

Here is an analysis that was just for ILLUSTRATION that shows the flow of calculations for a client that was interested in a house hack. 

Notice the pre-tax cash flow $1693 (2.66%). That is after all expenses (see expense column) and debt service the annual "savings" assuming the neighboring unit paid $1350 and the owner accounted for $1350. $1693 / 12 =  ~$141. Accounting for $1350 a month minus the $141 = an monthly out of pocket if looking at an annualized average including ALL expenses is $1209. 

My recommendation is to find a broker that is familiar with the analysis of small multifamily properties and help them identify what you're looking for and set some "mile stones". When a good deal comes around you won't hesitate to write an offer. We call it "analysis by paralysis" and the biggest piece of inertia is education. When you want to know the basics behind the analysis and the math and are comfortable with the analysis and how its calculated or more importantly, what it means, then you can start pursuing opportunities. 

Reach out to boutique commercial investment firms and dig through their website to see if they sponsor syndications and/or joint ventures. They will have the systems in place to find deals, put clients and capital that work well together and develop the legal structure or operating agreement. Find essentially what my site says but in your area. Someone that is consultative in style and has a hand in the market. 

For your numbers just make an assumption on the expense load. Guess 35-45% of EGI depending on its age and condition? If its in the ballpark of a decent deal, write up an offer and fish out the rest of the financials. The beauty of off market sellers self representing ahhh! 

@Mike Nuss looking forward to hearing your speech tomorrow! See you there!

Here is the link to the Oregon regional section of BiggerPockets. I actually recently asked the same questions as yours on there. https://www.biggerpockets.com/... 

There are "public" MLS sites, but as other mentioned its derived from the MLS. I know Mid Willamette Valley MLS has a website you can actually search from: https://www.wvmls.com/advsearc... (I have no affiliation here)

Others mentioned zillow, redfin,etc and I personally like HomeSnap. Lots of great tools and its pulled directly from the MLS. You can even link up with your representation (if you have a broker) and favorite, comment, and message between the app. Its very user friendly.