All Forum Posts by: David J Carciere

Hey BP

I'm looking at a duplex and trying to figure out if it's worth moving forward on. It's a quality asset, great location, units generally in good shape, although there is some value add (forced appreciation opportunity), the only downside from the  typical model is I don't think it can get bought at much of a discount, certainly not a 20% discount.  

The potential upside though is If acquired, my ex-wife could move into one of the units. We get along really well, so I'm not concerned about her being a tenant, and I'd be happy for her and our kids to have a safe, secure place going forward. However, I still want to make sure the deal makes sense. 

As part of our agreement much of what I pay her goes to her paying rent on her current place - obviously if she was a tenant of this duplex that money (that I'm paying out anyway) would be going directly to my own mortgage.  

Is there a way to quantify the value in that, is it as simple as over "x" number of years, my mortgage will be reduced by "x" number of dollars that essentially I'm paying to myself as opposed to another landlord? Or is it really no different to have her in there than another tenant? 

It seems like it's better to be paying down my mortgage on an asset I own, rather than it just going to rent somewhere else, but maybe not?  

I guess to bottom line it, I'm trying to quantify assuming this duplex can't get bought at a discount, how does that compare to the value of money I'm already paying out going directly to pay down my mortgage.

Hope that makes sense, kind of personal, but trying to look at it pretty quantitatively. 

Thanks for any thoughts!

David

Hello BP

*Apologies if this is in the wrong forum, feel free to move if needed*

Is there any interest in the forum’s on an entitlement/change of use opportunity within the agricultural Real Estate space? I previously marketed a dairy for sale in Sonoma County which is now primed to be developed to vineyard. I’m no longer involved on the sell-side, but I know the ranch very well and think it provides a unique and potentially fairly lucrative opportunity.

The quick backstory: as currently constituted the ranch is too large for any single winery to acquire and develop to vineyard – however, the ranch can be subdivided into 3 parcels which would make (each piece) the ideal size for a handful of world-class Sonoma and Napa wine-producers. I have one very well-known Napa winery who would like to quarterback the project to assist/advise on the subdivision and (vineyard) permitting of the site and subsequently buy one of the 3 newly created parcels.

In addition to the lead winery, I have an engineer who can process the subdivision and vineyard permits. Additional value add improvements would be to develop enough water for the ranch to support the 3 newly created turn-key vineyard sites.

The ranch is located in the hills of western Sonoma County, premium Pinot Noir land. It includes 212 gross acres, approximately 110 of which is suitable for vineyard development. It also includes 5 modest residences. I think the ranch would need to get bought in the $7.0 - $8.0mm range to optimize the return, on top of the acquisition there’d be $500k - $1.0mm in entitlements (subdivision, vineyard permitting) and infrastructure (water and roads) to make the 3 pieces turn-key and return the highest value. The turn-around period would likely be 2 years, based on the engineer’s expectation, and I believe the return could be 50% or more.

I have all kinds of background docs, financials, comps, but knowing this is probably outside the box in a lot of ways just wanted to see if there was any interest in such a project. If anyone has interest, I’m happy to fill in and send along additional info.

Thanks for reading!

David

Hi all

Would people invest in, or steer clear of, a nice 3 unit property if all the units were 1/1.  All the other fundamental appear solid, but that unit mix seems like a potential constraint?  

I found a post on here from about 5 years ago and consensus seemed to be to steer clear of 1/1's just wondering if that's still the prevailing sentiment - it was my initial though, but thought I'd ask the forum.  

Thanks!

David

@Anthony Wick

Very good point about the size of the mistake on buy-and-hold vs. flipping....

@Anthony Wick

Yeah, we certainly didn't buy at an ideal time, the assets were probably overvalued, and therefore we certainly didn't benefit from appreciation but that can be remedied by buying better in the future.  I'm really trying to wrap my head around the cash-flow and make sure I have that solid going forward. 

In our prior case we had good tenants and had cash set aside for R&M, CapEx, Vacancy all that stuff it still just always seemed tight. And with that as a back drop I look at while 20 units x $150 = $3000/month in revenue, that's also 20 units that have something that can go wrong with them. But maybe when things are firing correctly, the normal reserve accounts covered everything and that $150 really actually works out to be profit?!

It's fun getting back into this, I just want to try and make sure it works out better this time around so... 

@Account Closed thanks for the feedback. 

I should clarify, the $100 - 200 target was profit/mo, after all expenses being paid including cash being set aside for reserves.  That said, the margin still feels skinny, and based on my prior experience it never seem to be enough, but I'm hoping maybe we had management issues previously which is why we didn't make headway. 

Mike, that's an interesting model.  I may circle back with you at some point on it. 

Thanks again.

David

I was in @Brandon Turner's webinar yesterday and thought all the info was super helpful but one question I'm trying to reconcile is $100 - $200/month enough on a rental to cover any potential downside risk.  I partnered on a couple of homes down in Houston from 2007 - 2014 and that's basically how our model looked.  The problem was it never seemed like we could get ahead.  There was always some kind of issue with maintenance, or capex or tenant and in the end, we were never really able to take any cashflow out of the properties.  

It's possible we had a management issue, we had a 3rd party management company, and I don't really know how competent they were, but that margin just seems so skinny.  I realize in the calculation there's also money set aside each month for reserves, but again, I just wanted to see if that margin works for everyone overall? 

Thanks in advance!

David

@Jay Hinrichs

Thanks Jay, good point. Quite a few buildable lots, not as much housing inventory..

Thank you all for the feedback and the additional rescources in particular @Justin Windham.

I'm looking forward to jumping into it. 

Hey all!

I've been in Real Estate for about 15 years first as an appraiser and the last 10 years sourcing deals for large institutional investors and wine-companies building vineyard portfolios.  Now I'm looking to apply those skills to personally build a residential portfolio.  

I've heard alot of the cautionary tales that too many newbies jump into wholesaling because it seems easy and they end up washing out.  It seems like the right place for me to start(?) given the lower capital requirements and the fact that I've sourced $50mm in Ag deals in the past 5 years.  I've got some deal sourcing skills - albeit with a totally different set of parameters, but my thinking is the methodology and diligence required is similar.  Does this seem right? 

Ideally, once I've wholesaled a handful of deals I'd like to move to flipping or buy and hold - I've got one best friend who's a remodel contractor, and another who builds (full kitchen) cabinetry, and they have interest in getting into the game.  It seems like a pretty reasonable path, what could go wrong, right;-)?    

Would love any thoughts or feedback and would certainly love to connect with anyone in the North bay.  

Very happy to be here and very much enjoying the podcasts!

David