All Forum Posts by: Dan Bitner

Hi all,

I'm currently pursuing my first commercial deal in central Pennsylvania. To limit my downside risk on the property, I'll be making an offer contingent upon a tenant signing our lease (tenant has already been identified but).  I'd like to use a triple net lease, but don't have an example to work off of.  If anyone happens to have a template, or would otherwise suggest going through a law firm or other resource, I'd appreciate the advice. Thanks so much!

Thanks @Darnell Lockett, I wasn't tracking that as a metric so appreciate you pointing that out!

@Matt K., I think it makes it tougher, but not impossible.  If the property's occupied units are already at or near market value you have a chance.  Certainly, if you live it in for a year and then vacate, you can list it at market value.  Example: https://www.redfin.com/CA/San-... the occupied 2 bed is at $3200/month and you can probably get $3500 for the second unit.  Rent control would be a 2-3% up charge per year so an extra $100/unit/month.  Depending on downpayment & purchase price, you could still get some modest cash flow (or at least I hope so)

@Tyler Warrick, thanks for thinking through this with me!

Acquisition - I'm looking for positive cash flow in year 2 after I leave the property and move onto the next one ($50/month is fine). For these properties, I'm most concerned with long-term equity rather than actively trying to replace my earned income. I know I should be working to find deals with a higher cash flow or CoC return, but given SF prices and current interest rates, if I'm able to cover the mortgage now (existing tenants + expected rent on the unit I occupy after I leave), I think that would work. Whenever rates drop, I can refinance and even at 5% instead of 6%, that would increase my annual cash flow by $7K+ on a $1M loan

In terms of exits - I'll be refinancing to a lower rate periodically to increase cash flow per property but do not foresee wanting to take equity out of these properties to fund additional deals.  My thought is that around retirement age, with these properties paid off I'd be receiving about $800-900K in annual rents (back of the envelope with 12, 2-bed units, $3500 now, 2% annual bump). If this strategy works out, maybe $7-9M in equity + $850K cash flow I don't think I'd have much fiscal stress in retirement. Not to say I'll stop investing there, but this initial part of my portfolio is going to be built to protect me in the long term.

Great point about the FHA, I haven't actually gone through a pre-qual for that so if you have a great FHA lender, I'd love to give them a look! Regarding capital- I'll be relying on my W-2 and existing savings to acquire the properties which is why low down payment is so important. I do have a good job (~$275K/yr pre-tax), and have some additional monthly income from AF Reserves, and am going through the VA disability process. Sadly, no other side hustles to mention. What's your take on all of this?

Hi Tyler! I think my advantage is access to low money down financing (VA / FHA / Homerun / etc.), so I'd like to use that to build my portfolio. I know most of these programs require making the property my primary residence for at least a year so I'll be occupying one of the units. An ideal path would be purchasing a 2-4 unit property each year as a primary residence using a different low money down option, then after a year, moving onto the next and renting all units as LTRs. My goal is to accumulate 10-12 units over the next four years with total value at or above $5M.

Great call-outs on the other property considerations.  I'm looking at $1-1.5M purchase price but am trying to stay at or below 5% out of pocket down payment (yes to cash restricted). I've never fixed or flipped before so am trying to stay away from that if possible for deal #1.  Looking forward to your thoughts, and really appreciate you offering a perspective!

Hi BP Team,

I'm looking to make my first small multifamily purchase in San Francisco this year.  I'm lining up my financing but want to ensure I'm aware of the different mortgage programs being offered, and those which could be beneficial for multi-family.  So far, I have three:

1/ VA Loan (CalVet), as low as 0% down, no PMI, can roll closing costs into the loan, 6%, up to 4 units

2/ Citibank Homerun program, as low as 5% down, no PMI, $7500 towards closing costs, 5.75%, SFH & duplex only. Must buy in a low or moderate income census tract

3/ First Republic Eagle Community loan, 20% down, $5K towards closing, 4.75%, up to four units. Street-by-street address qualification (if not a designated area, interest jumps to 5.15%).  There is a cash deposit requirement against the value of the loan (10-15%)

If folks are aware of any other niche products/vehicles, I'd be very interested to learn.  Thanks so much!!

Hey Charlie!  I'm new to SF and have been casually looking for the same info.  Houston Garcia (on BP) does host a monthly meetup, but the next one isn't until January.  I've also found a couple of separate groups that have at least monthly meetups:

http://www.bacomm.club/

https://www.bawb.info/index.html