All Forum Posts by: Coty B Lunn

I highly recommend considering Binghamton, NY for real estate investment! It's a strong cash flow market where you can consistently generate substantial monthly income. While property appreciation may be lower compared to other areas, the cap rates often exceed 10%-15%, even factoring in mortgage expenses. With the ability to leverage your investment with as little as 10% down, Binghamton offers opportunities in both small multi-family and single-family properties.

Moreover, I have a dedicated team ready to assist you every step of the way, including property managers, attorneys, loan officers, and more. Whether you're interested in residential or commercial properties, I have experience and resources to support your investment goals effectively.

Hello everyone,

Today, I'd like to open up a discussion about a topic that often sparks a lot of debate among real estate investors: commercial versus residential properties. Both avenues offer unique opportunities and challenges, so choosing the right path depends on various factors that are specific to your financial goals and risk tolerance.

Investing in Residential Real Estate:

Residential real estate is typically the more familiar option for many investors. Here are some key points to consider:

1. Accessibility: Residential properties are often more accessible to individual investors, especially those starting out with smaller capital.
2. Tenant Stability: While turnover can occur, residential leases tend to have shorter terms, offering more flexibility if you want to adjust rents or change tenants.
3. Market Liquidity: Generally, residential properties are easier to buy and sell due to higher demand from individual homebuyers and investors alike.
4. Emotional Appeal: Homes and apartments can have a strong emotional appeal to buyers and renters, which can influence demand and pricing stability.
5. Purchasing: Residential real estate will require a down payment of at least 10% of the purchase price. In this case, we are considering residential real estate 1-4 units. This is through a conventional, no PMI loan.

Investing in Commercial Real Estate:

Commercial properties include office buildings, retail spaces, warehouses, and more. Here are some considerations for commercial real estate:

1. Higher Income Potential: Commercial properties often generate higher rental income compared to residential properties, especially in prime locations.
2. Longer Leases: Commercial leases tend to be longer (5-10 years or more), providing more stable cash flow and less frequent turnover.
3. Tenant Diversity: Depending on the property type, you can diversify your tenant base, spreading risk across multiple businesses or corporations.
4. Market Dynamics: Commercial real estate can be more sensitive to economic cycles and local market conditions, requiring a deeper understanding of business trends and tenant industries.
5. Purchasing: Generally, commercial real estate will require 20% down.

Choosing Between the Two:

When deciding between commercial and residential real estate, consider these factors:

1. Investment Goals: Are you looking for steady rental income, long-term appreciation, or both?
2. Risk Tolerance: Commercial real estate often involves larger investments and higher risks, but potentially higher rewards.
3. Expertise and Resources: Commercial properties may require more specialized knowledge in leasing, property management, and market analysis.
4. Market Conditions: Local market dynamics, including vacancy rates, rental trends, and economic forecasts, should influence your decision.

Ultimately, both commercial and residential real estate can be profitable investments when approached wisely. It's essential to conduct thorough research, possibly consult with experts, and align your investment strategy with your financial objectives and risk tolerance.

What are your thoughts on this topic? Do you prefer commercial or residential real estate? Why? I look forward to hearing your insights and experiences!

Disclaimer:  This is in the upstate, NY area and information may be local to this area.

Our investments in Binghamton continue to yield strong cash flow, surpassing many other markets across the United States. While recent zoning changes may have initially caused some disruption, they've ultimately streamlined operations for us in the long term. I can provide you with an interactive map that meticulously outlines which streets allow for student rentals, offering clarity and ease in navigating the local regulations.

With house prices and interest rates on the rise, coupled with the university's expansion, rental rates are experiencing a corresponding increase, ensuring a favorable outlook for investors.

Binghamton remains a lucrative market with ample cash flow potential, whether you opt for student housing or traditional residential rentals.

While I personally focus on residential multi-family properties rather than student rentals, my portfolio offers valuable insights into the profitability of investments in this area. Feel free to explore my profile to learn more about my experiences and successes in the Binghamton market!

Hope all this helps and feel free to reach out with any questions you may have!!

Are you an investment property owner looking to streamline your property management processes? Whether you're considering hiring a property manager or managing the property yourself, there are various strategies to ensure your investment remains profitable and well-maintained. Let's explore some effective approaches for managing investment properties:

With a Property Manager:

1. Screening and Selecting Tenants: Entrust your property manager to handle tenant screening, background checks, and selection, ensuring reliable renters for your investment.
2. Rent Collection: Property managers can ensure timely rent collection and handle any late payments or lease violations professionally.
3. Maintenance and Repairs: Delegate routine maintenance tasks and repairs to your property manager, who can coordinate with contractors and vendors to keep your property in top condition.
4. Tenant Relations: Property managers serve as the primary point of contact for tenants, addressing their concerns and ensuring a positive rental experience.
5. Lease Enforcement and Evictions: Trust your property manager to enforce lease terms and handle the eviction process if necessary, following legal procedures.
6. Financial Management: Property managers can handle financial tasks such as budgeting, accounting, and financial reporting, providing you with regular updates on property performance.

Without a Property Manager:

1. Self-Management: Take on the responsibility of managing the property yourself, handling tasks such as advertising vacancies, screening tenants, and collecting rent.
2. Outsourcing Specific Tasks: While not hiring a full-time property manager, consider outsourcing tasks like maintenance and repairs to trusted contractors or service providers.
3. Utilizing Technology: Leverage property management software and online platforms to streamline processes such as rent collection, lease management, and maintenance requests.
4. Establishing Clear Policies: Set clear policies and procedures for tenants regarding rent payments, maintenance requests, and lease terms to minimize conflicts and misunderstandings.
5. Regular Inspections: Conduct regular inspections of the property to identify maintenance issues or lease violations early on and address them promptly.
6. Building Relationships: Maintain open communication and positive relationships with tenants to foster a sense of community and encourage better care of the property.

Whether you choose to hire a property manager or manage the property yourself, effective communication, attention to detail, and a proactive approach to property management are key to maximizing returns and maintaining the value of your investment. Share your experiences, tips, and questions about managing investment properties in the comments below!

In the realm of finance, understanding the intricacies of various loan options is paramount for both borrowers and lenders alike. One such type of loan that plays a crucial role in commercial real estate financing is the Debt Service Coverage Ratio (DSCR) loan. DSCR loans are a fundamental tool for investors and developers looking to secure financing for their projects. In this article, we'll delve into the nuances of DSCR loans, exploring what they are, how they work, and their significance in the financial landscape.

What are DSCR Loans?

Debt Service Coverage Ratio (DSCR) loans are a type of commercial real estate loan where the lender evaluates the borrower's ability to repay the loan based on the property's income generated. In essence, the DSCR measures the property's cash flow available to cover debt obligations, including the loan's principal and interest payments.

How Do DSCR Loans Work?

When applying for a DSCR loan, lenders typically assess the property's income-generating potential and calculate the DSCR to determine the borrower's creditworthiness. The formula for calculating DSCR is straightforward:

DSCR=NetOperatingIncome(NOI)/TotalDebtService

• Net Operating Income (NOI) represents the property's income after operating expenses.
• Total Debt Service includes all debt obligations, such as loan payments, property taxes, and insurance.

A DSCR ratio above 1 indicates that the property's income is sufficient to cover its debt obligations, while a ratio below 1 suggests insufficient cash flow to cover debt payments.

Lenders usually have specific DSCR requirements, with higher ratios indicating lower risk for the lender. For instance, a lender might require a minimum DSCR of 1.25, meaning the property's income must exceed its debt obligations by 25%.

Significance of DSCR Loans

DSCR loans play a vital role in commercial real estate financing for several reasons:

1. Risk Assessment: DSCR provides lenders with a quantitative measure of a property's ability to generate income and repay debt. A higher DSCR indicates lower risk for the lender, potentially resulting in more favorable loan terms for the borrower.
2. Borrower Qualification: For borrowers, meeting the minimum DSCR requirement is crucial for loan approval. Demonstrating strong cash flow from the property increases the likelihood of securing financing at competitive rates.
3. Investment Analysis: Investors and developers use DSCR to evaluate the financial viability of potential real estate investments. A thorough analysis of a property's DSCR helps assess its income-generating potential and overall profitability.
4. Loan Structuring: DSCR loans allow for flexibility in loan structuring based on the property's cash flow. Lenders may adjust loan terms, such as loan-to-value ratio and interest rates, to accommodate varying DSCR ratios.

Challenges and Considerations

While DSCR loans offer numerous benefits, borrowers should be aware of potential challenges and considerations:

1. Market Conditions: DSCR requirements may vary depending on market conditions, property type, and lender preferences. Borrowers should be prepared to navigate changing lending criteria.
2. Risk Management: Borrowers should carefully assess the risks associated with DSCR loans, including potential fluctuations in property income and interest rates. Adequate risk management strategies are essential to mitigate financial risks.
3. Property Performance: Maintaining a healthy DSCR ratio requires diligent management of the property to ensure consistent income generation and control operating expenses.

In conclusion, DSCR loans are a vital component of commercial real estate financing, offering both opportunities and challenges for borrowers and lenders. Understanding how DSCR works, its significance in evaluating loan eligibility, and its role in investment analysis is crucial for navigating the complexities of real estate financing effectively. By leveraging DSCR loans strategically, investors and developers can unlock opportunities for growth and success in the dynamic world of commercial real estate.

Awesome deal!  Very good!

The BRRRR strategy, which stands for Buy, Rehab, Rent, Refinance, and Repeat, is a real estate investment strategy that involves a series of steps to maximize returns on investment. Here are reasons why investors may choose to adopt the BRRRR strategy:

1. Equity Build-Up: Through the process of buying a property at a lower value, making improvements, and increasing its overall value, investors can build equity in the property. This equity can be leveraged for future investments.
2. Cash Flow Generation: By renting out the property, investors can generate rental income, which can be used to cover mortgage payments, property management fees, and other expenses. Positive cash flow enhances the overall financial stability of the investment.
3. Risk Mitigation: The BRRRR strategy allows investors to mitigate risks by adding value to the property. Renovations and improvements not only increase the property's appeal but also its market value, reducing the likelihood of negative equity.
4. Portfolio Growth: The ability to recycle capital is a key feature of the BRRRR strategy. Once the property is rehabbed and rented, investors can refinance to pull out a portion of the equity, which can then be used to fund the purchase of additional properties. This facilitates portfolio growth without the need for significant new capital.
5. Tax Benefits: Real estate investors may benefit from various tax advantages, such as depreciation deductions on the improved value of the property, mortgage interest deductions, and other allowable expenses. These tax benefits can contribute to a more favorable overall financial picture.
6. Forced Appreciation: BRRRR involves actively increasing a property's value through renovations and improvements. This forced appreciation can result in a higher appraised value, providing investors with an opportunity to extract additional equity during the refinancing phase.
7. Long-Term Wealth Building: The BRRRR strategy is a long-term wealth-building approach. As investors repeat the cycle with multiple properties, they can create a portfolio of income-generating assets and accumulate substantial wealth over time.

It's important to note that while the BRRRR strategy offers various advantages, it also involves careful planning, due diligence, and a good understanding of the local real estate market. It is important to work with a real estate agent who can provide insight into the market and not only the value of the home in its current condition but an estimate on what it'll be worth after it's repaired (ARV). Agents will also be able to assist in sourcing, negotiating a deal before and after inspections, may have access to off-market deals, market analysis for renting and guidance in navigating regulations.

Investors should be prepared to manage the various stages of the process effectively to maximize its benefits and utilize the help of professionals to ensure overall success!

Investing in real estate, particularly in large multifamily homes, can be a lucrative endeavor for those seeking to build long-term wealth and generate a steady stream of passive income. While the prospect may seem daunting, careful planning and informed decision-making can pave the way for a successful investment. In this article, we'll explore the key steps and considerations involved in investing in your first large multifamily property.

1. Define Your Investment Goals: Before diving into the real estate market, it's essential to clearly define your investment goals. Are you looking for a consistent stream of rental income, long-term appreciation, or both? Understanding your financial objectives will guide your decision-making process and help you choose the right property.
2. Conduct Thorough Market Research: Research is crucial when it comes to real estate investing. Identify target neighborhoods with potential for growth, consider the local job market, amenities, and school districts. Analyze market trends, vacancy rates, and rental prices to ensure that the area aligns with your investment goals.
3. Build a Strong Financial Foundation: Investing in a large multifamily property requires a solid financial foundation. Evaluate your credit score, secure pre-approval for a mortgage, and determine your budget. Factor in not only the purchase price but also additional costs such as property taxes, insurance, maintenance, and potential renovations.
4. Creating Your Team: Creating a real estate team is essential for success. A well-rounded team brings together diverse expertise, saving time and mitigating risks in complex transactions. From effective negotiation strategies to comprehensive due diligence and scalability, a strong real estate team is the key to maximizing opportunities and navigating the challenges of real estate investing. You'll want to get familiar with a trusted Real Estate Agent, attorney, home inspector, lender (if not purchasing with cash) and contractors.
   
5. Understand Financing Options: Explore various financing options available for multifamily properties. Traditional mortgages, government-backed loans, and private financing are common choices. Be sure to understand the terms, interest rates, and down payment requirements associated with each option.
6. Select the Right Property: When selecting your first large multifamily property, consider factors such as the number of units, property condition, and potential for value appreciation. Evaluate the property's income potential, amenities, and current tenant situation. A thorough property inspection is crucial to uncover any potential issues that may impact your investment.
7. Implement a Sound Management Strategy: Successful real estate investing involves effective property management. Decide whether you'll manage the property yourself or hire a professional property management company. Having a solid management strategy in place ensures that the property is well-maintained, tenants are satisfied, and potential issues are addressed promptly.
8. Diversify Your Investment Portfolio: Consider diversifying your real estate portfolio by investing in different types of properties or in different geographical locations. Diversification can help mitigate risks and enhance the overall stability of your investment portfolio.
9. Stay Informed about Real Estate Laws: Real estate laws and regulations vary by location. Stay informed about landlord-tenant laws, zoning regulations, and other legal considerations that may impact your investment. Consulting with a real estate attorney can provide valuable insights and ensure compliance with local laws.
10. Monitor and Adjust Your Investment Strategy: The real estate market is dynamic, and economic conditions can change. Regularly monitor your investment property's performance, stay informed about market trends, and be prepared to adjust your strategy accordingly. This flexibility will help you adapt to changing circumstances and maximize returns.

Investing in your first large multifamily home can be a rewarding venture when approached with careful planning and strategic decision-making. By defining your goals, conducting thorough research, and building a solid financial foundation, you can unlock the potential for long-term wealth creation and financial success in the world of real estate. Remember, patience and diligence are key as you navigate the complexities of property ownership and management.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Endicott.

Purchase price: $94,000
Cash invested: $5,000

House hacking at its finest! This was my second investment property - a 3 family residence! This one features a single family home - in which I live and two apartments above an oversized, long 2 car garage. The two apartments are one-bedrooms each, but cover the mortgage, taxes and insurance. On top of that, they pay for my utilities each month in full with a small cash flow at the end!

EDIT: Moved into another home I house hacked and rented this one out. It took me from producing $515/month in cash flow to $2,065. Also, raised rents slightly on the others and now profiting another $50/month. Total, profiting $2,115/month now! This is after paying the mortgage, taxes and insurance. That is $25,380. If you take the water bills out of it, that is $24,766/year or $2,063/month. Very little maintenance is needed on the property and I manage it myself.

What made you interested in investing in this type of deal?

I originally wanted to move into it to have a single family home to myself while being able to cover the mortgage, taxes and insurance with the two units in the garage.

How did you find this deal and how did you negotiate it?

I bought this before I became a Real Estate Agent. It was presented to me by my Real Estate Agent and the person who ended up mentoring me!

How did you finance this deal?

FHA loan. 3.5% down with seller concessions added on top to pay closing costs. If I could go back in time, I would go with Community Bank as they do a 3% down, no closing costs deal for investors who move into the property. Also, they offer a 10% down with no PMI if you do not move into the property.

How did you add value to the deal?

I fixed up a few odds and ends and replaced some floors in unit 2 and 3 to make it have more of an appeal. I also changed the light fixtures in the apartments and painted everything.

What was the outcome?

Worked perfectly for me to live in until I decided to house hack another property!

 You're welcome!