All Forum Posts by: Derek Carroll

@Ben Sear

Never pay full retail for a property and add value through improvements and/or increased income.

I always buy where I can force appreciation and then on refi get all of my cash back (if not more) and then do it again. Same strategy if I’m doing single family houses, multifamily, or commercial.

Buying retail for cash flow with large down payments that you can’t get back with a refi can be a good investment strategy for many people and invest profiles, but it’s not a growth strategy and therefore not a fit for my current goals.

Fresh out of school you might want to look into some of the large REITS or property managers. Many of the National banks and CMBS shops will also need help with workouts, modifications and asset management even if new originations slow down. All can be good starting points to learning real estate and inline with your long term goals.

@David Roe

No. I’m still very active with single family flips. Single family rentals and large syndications I’ve somewhat put on pause while monitoring markets and circumstances, but my lender are still very much active. In fact I have more lenders than available deals. I only bring this up to say that I do think it’s worth your while to continue to broaden your search for lenders. If you’re a strong borrower with experience and a verifiably strong deal, id think that you can find interested lenders in most markets.

@Daniel Lozowy

One of the main points to consider is that not all returns are created equal. @Brian Burke mentioned one of the key phrases, “risk adjusted returns”.

A 25% IRR multifamily development deal is not necessarily better than a 6% IRR NNN Walgreens 10/31 deal. The reason one deal pays more than the other is due to the risk/reward trade off as perceived by the market. The 6% Walgreens backed by a corporate guarantee with an investment grade rating (high credit score for businesses) gives a high probably that they will continue to pay their lease even if they close the store. The income is more certain so the returns go down by way of interested parties driving the price up, just like US treasury bonds.

New investors will often just look at stated or projected returns and not the entire return profile. Sophisticated investors looking for an efficient and diversified real estate portion of their portfolio will have a mixture of higher risk - higher return deals and also lower risk-lower return deals.

Without going into much detail, time horizon can also greatly skew IRR one way or another.

Point is, there are lots of ways to earn 10-15%. Does it match your investment goals and objectives, time horizon, and is it a good fit for your portfolio are questions only you can answer (with the help of your trusted advisors).

@Robyn Gersh

I’ve brokered hundreds of millions of dollars in non recourse loans. I’ve never done one for a two family. Typically, non recourse starts at $1m but sometimes even higher.

That said other characteristics of the deal could let you get non recourse on a smaller loan but I’m not aware of lenders who will do them. You’ll need to be at low loan to value or have a great credit/income/cash flow profile to even have a shot with traditional lenders.

@Evan Dyer

You really need to ask specific questions. To understand something is really about breaking it down to its most simple form.

A refinance is simply a new loan that pays off and replaces your old one. There are a number of reasons why you might do this but it’s usually based on achieving better terms (rate, amortization, higher proceeds, or non monetary terms).

I’ve been a commercial mortgage broker and lender on nearly half a billion dollars worth of deals so feel free to ask any specific questions and I’d be happy to go into greater detail.

@Bridget Dunlay

There are always buyers for wholesale opportunities. Commercial wholesaling is different than residential but the concept is the same. If you found a great commercial or multifamily deal and wanted to assign it to me or any other number of investors I’m sure you’d be able to.

The challenge right now is two fold; finding a seller to sell below market is much harder with sophisticated commercial investors, and also once an opportunity is found determining current value is much more difficult given all the uncertainty in the market. I suspect that most transactions taking place are investors taking a much longer view on hold horizon than in recent times. The 1-2 year rehab and flip strategy seems more risky and needs a lot more analysis while a 7-10 year hold in great market could overcome the short term blips.

Either way it’s all about value. If you were able to contract a property at a point where it’s a screaming deal, you’d have no problem lining up buyers.

@Alan Crookham

I always stage them. Makes the high end houses really pop and makes the lower end houses look like they’ve moved up a class. People are visual and walking into a small empty house versus a small house with furniture and decor professionally chosen and placed makes a huge difference in how people feel about a place.

If my son cleans his room and organizes it well then it looks nice when I walk in. If his room is a mess with stuff everywhere then it gives off a negative vibe. Either way it’s the same room.

Staging helps with perception in the same way.

All that said, my staging is relatively affordable. In my area it’s anywhere from $750-2000 depending on it I have monthly furniture rental. If I were to pay $3-5k for a whole house then I’d like the concept of it but might pause a bit more.

@Logan Hassinger

I’ve both borrowed and lent out millions of dollars and never once has a fee been paid prior to closing. I am aware of some legitimate shops that do charge upfront fees but I would be HIGHLY skeptical and spend time on due diligence before paying anything. These days Capital is everywhere. No need to pay upfront unless it’s an extremely difficult deal, and even then most will take the fees at closing.

@Casey Roman

$100k is significantly more than I had when I flipped my first house many years ago with a private lending partner. You have more then enough to start flipping houses and don’t need to even think about traditional bank financing. Flipping houses is a great way to build cash, but it’s active.

If you want to be passive then as others have said you can be a private lender. To be clear, I don’t wish to borrow from you, I have more lenders than deals right now, but I pay 1% origination and 1% per month interest. If that sounds good to you I’m sure there are many qualified flippers that you could work with for returns like that.

The other option is investing Passively in a syndication. We don't have any offerings currently but most of ours are in the 15% IRR range with a 2x equity multiple. There are many syndicators on here who offer similar returns. Al depends on the type of deal.

Point is, there are LOTS of ways for you to invest your capital. Most importantly, choose your goals and then you can make a clear plan from that. Once you have a plan in place it will be much easier to narrow your focus and begin to see deals rolling in that match your expectations and investment thesis.