All Forum Posts by: Enrique Huerta

@Jonathon Nila

I don't have experience with this product, but the mortgage broker that approved you for the FHA loan should be able to help.

Otherwise, there’s a bunch of options online. Find the one that is local so you can meet them in person if you’d like.

Do it if you can do you can get rehab dollars!

@Peter D'Auteuil

What is overwhelming you?

Is it finding a deal?

Giving up the “safety” of your savings to invest them?

Understanding the market?

Finding a good manager?

Whatever your main source of overwhelment (Word from Esther & Jerry Hicks), it can be solved.

I’m active in PHX. Happy to discuss any questions you may have. DM me if you’d like, otherwise just know there is no substitute for taking action and calculated risks.

Phoenix is a hot market so just look at a lot of deals and spend time there so you get comfortable with the area.

@Joscelyn S Johnson

$700 is too high for that arrangement. Like the previous poster said, you can find whole apartments for less than $600/Mo.

Drop the price

@Justin Goodin, DM me your questions and we can hop on a zoom call to walk through. I love this kind of stuff!

@Account Closed Based on my review of the SDA, I believe it is only structured as a syndication where the manager doesn't put up any capital. I.e. they get profit sharing and their contribution is the sweat equity.

You would have to modify the model to include a GP/LP contribution and split. 

Multifamily: I've seen a range between 2.65%-3.15% depending on leverage and term. 2-5 years of IO. Requires PITI reserves of 12 months in most cases. Fixed or Floater is pretty close on rate.

I meant a 5-6% cap rate with today’s interest rates should throw off a high single digit cash on cash.

@Tara Faulks

My experience is that Southern California is typically a 5% cap market with those markets I mentioned heading toward 6%-7% on a good deal. They are hard to find but they are out there...you’ll have more success in the smaller asset space - 2-20 units. That market is still somewhat inefficient and you can find better deals.

8% is hard to find in this market. I’ve e never seen a real going in cap rate of 8% in California. You may be able to add value and stabilize a project there in certain locations, but going in will be closer to 5-6%.

The highest cap rate I’ve seen on real underwriting is 6.5%. That’s rare as it is.

8% sounds like a Midwest cap rate but even there I haven’t seen many real 8s. I underwrite conservatively though.

With today’s interest rates, a 5-6% cash on cash should throw off a high single digit cash on cash north of 8%.

Did you mean 8% cash on cash or cap rate?

Hi Tara,

If you're in West LA and want to stay in CA, I would recommend California's Far East Inland Empire - San Bernardino, Riverside, Victorville, Beaumont, Hemet, Hesperia, and California's Central Valley - Sacramento, Stockton, Manteca, Modesto, Fresno, Bakersfield. These are all within a 6 hour drive and have seen great rent growth and they are relatively affordable. Be advised that the demographics can be more challenging but the returns are greater. Expect more delinquency, turnover, but also higher cash on cash returns. Bloomberg (using RealPage data) recently published an article stating that Riverside/San Bernardino, CA and Sacramento, CA are both on the Top 10 list of markets experiencing rent growth in the 3rd quarter of 2020. 

You CAN find good deals in CA that cash flow. You'll just have to go a bit farther away. 

A little closer to home, I've seen 5 cap deals in Whittier, Montebello, and parts of Southwest LA (Inglewood, near USC, etc).

The only question I have for you is: What returns are you looking for? That would determine where to starts since a 5 cap may not be what you're looking for.

As for Nevada, I don't know anything about the market that will help you. Arizona (Phoenix) is a strong market but hyper-competitive. A lot of folks want in and it's gotten very hot there (real estate market-wise).