All Forum Posts by: Enrique Huerta

Bigger is better in my opinion if you're ready to execute on the ownership aspect of the larger property. Go for the 6. 

@Rick J.

Yes, the step-by-step guide is here on BP: https://www.biggerpockets.com/guides

That's up to you. Read the benefits of a pro membership and decide if they are useful. Before spending money, go through the free guides.

Also, decide where you want to invest that capital. The way to invest wisely is to determine your investment criteria and stay disciplined to that criteria. What returns are you looking for? How much risk are you willing to take on? Do you want to be an active investor or a passive investor? What is your time horizon for these investments? Residential, Commercial, or other alternatives?

These questions will help point you in the right direction.

That's a personal decision. There are many investors who purchase property via 100% cash and then put a loan on it after closing. This incentivizes the seller to sell for a lower price, shorter time frame, etc. The investor can then leverage the asset post-closing.

Additionally, some people buy all cash because they don't like using debt.

The main advantage of using a loan is what you mentioned - leverage to buy multiple properties. If you're conservative and want to minimize risk, then you can still get a small loan of 50% LTV. That should allow you to be comfortable and still use some leverage.

It's a personal decision at the end of the day based on risk appetite, return expectations, and equity available to be invested. I know many doctors who buy apartment complexes all cash. They just need to put the capital to work and are often more conservative. When needed, they'll put a loan against an asset if they want to access capital from their investment. 

@Stephen Fahey

Which markets are you looking at?

We're seeing opportunities yielding 6%+ COC in the Mid-western states

Awesome @Rodney Harris

Thanks for the inspiration and keep crushing it.

@Oliver Sparks Given your passion and commitment to this business, it sounds like you're headed down the route of becoming an investment syndicator. If you wanted to own 100% of these assets, then yes you need a job, income, large down payments, etc. If you're okay partnering with a capital partner, you can take down this portfolio of properties and still own a piece of it. Enough to get you some income, experience, and proof that your dreams are coming true.

Many people will tell you to slow down, get a job, etc. but everyone is different. If you want to make it happen, you can. I'm not trying to motivate you or anything, but it's what you already know is true. Some people are conservative and some are aggressive.

@Stephen Fahey

Are you looking for deals in Huntington Beach? If so, it will be tough to find deals that can deliver a 6% Preferred Return, much less anything beyond that. The reason being that yields are extremely compressed in coastal markets.

@Nita Martin

My thoughts below:

We are in the process of closing on an unoccupied 4-plex with an occupied apartment in back. We are considering offering the spaces with all utilities, cable, and internet included. Is this a good idea?

This depends on the market. In California, tenants are generally responsible for all utilities. In some instances, the landlord pays water, sewer, and trash, but the tenants ALWAYS pay gas, electric, and especially cable and internet (due to their personal use and preferences).

If it is not common to provide these services, I wouldn't. Again, it depends on what neighboring owners and managers are doing. Complete a rent survey and find out if it's necessary. If not, then just list the units at the market rents.

What is the best way to get tenants? Are there any websites, etc. that you all feel work better than others.

Hire an experienced leasing agent. If you want to do it yourself, I'm a fan of HotPads, Zumper, PadMapper, Zillow, Trulia, Craigslist, etc. The wider the net, the better. Again, see what is most popular for lease advertisements in your area and use those. Don't forget to put up a for rent sign as well. Drive-by inquiries are still very common.

The property is approximately 2 hours away in our hometown where several close family members still reside. Should we hire a PM? If so, what is a decent percentage for this service? The previous PM/current realtor charges 12%.

If your family doesn't have experience, what do you want them to do for you? Just collect rents? Meet contractors? If so, that's do-able. But it's best if you have tenants pay you direct and just have family meet contractors or do quarterly visits, etc. if you want.

Regarding PM, 12% is pretty high. I'd seek out alternatives between 6%-10%. I'd pay no more than 10%, but ideally around 6%. Again this varies by market. Call other rentals, see who manages them, or ask brokers in your area for references to good property managers. Always get more than one bid and ask for references and the scope of responsibilities. You can google good questions to ask a PM firm to ensure you're getting a high qualify PM firm.

How are taxes filed as the property will be listed under our LLC.

Consult your CPA or Bookkeeper as each state is different.

@Jeff Caravalho

@Seth Ferguson and @Quincy Lockett hit the nail on the head.

1. Ensure the inquiries are qualified. In other words, don't worry about the price until you have qualified applicants in hand.

2. If you have qualified applicants in hand, there is nothing stopping you from getting a lease for 18-24 months and increasing the price to the real market value.

3. I'm not an attorney and IDK if this would be "false advertising" or whatever, but if the tenant agrees to the longer lease term and higher price than advertised, then you're fine.

This has happened a lot in the last 12 months in OC. Every lease we've had has had 5+ qualified applicants and we've increased rents from $50-$150 over the advertised price and for 12+ month lease terms. Some tenants balked, but the one signing the lease at the end was happy to do so. It's competitive out there.

Yes. Based on the current, long real estate cycle and where interest rates, yields, and prices are, we've made the following adjustments:

-Limited Flips above $600,000

-Moved to buying multifamily out of California and Colorado to other states

-Being extra disciplined on rent growth assumptions, vacancy assumptions, capital expenditure assumptions, and LTV/LTC for financing