All Forum Posts by: Joseph Gozlan

@Jeff Chapz you can go to https://www.biggerpockets.com/EVENTS

and see if there is already an event in your area or add your own and by doing that expose your event to others that might be interested to join.

only places in Texas you can get 8-9% cap rate are the secondary and tertiary markets.

@Sanjeev Advani I'm surprised to learn there are still multifamily properties in CA at 8-9% cap rates (unless you mean 8-9% IRR)...

I guess it really depends on the construction type. Wood frame with Sheetrock over concrete slab will have a different shelf life than brick over basement construction. 

Other than the outer walls, there are other components that has a shelf life: roofs, boilers, chillers, ACs, plumbing, etc.

All of these will have to be replaced over the years but once you do you it will serve you to years to come. 

When you buy it's important that you know the age of these components and calculate the remaining life and have enough reserves to replace them when the time comes. 

With a a 2 units you should be able to qualify to a conventional loan. Any mortgage broker can help you with that.

@David Toupin how close is your relationship with the brokers?

With the current market, all good deals are "off market" deals. Off market doesn't mean unlisted. The brokers get the listings but they don't waist time and money marketing the properties if the have a list of investors ready to invest and they give preference to those investors that PROVE they can close. 

I wrote a blog post about it a little while ago. Hope it helps.

How are you getting the assignment fee? If it's distributed at closing you can have the title company add it to the distribution amount. 

I'd factor in property management. Even if you plan on doing it yourself, the next person to buy it will factor it as well or maybe you'll get to the point (hopefully) where you have too many units and need to hire a PM to handle some of the load.

Also, try shopping around the neighborhood. if the entire street is small MF, call available units pretending to be an interested renter and ask for the rents, terms, concessions, how long it's been on the market, etc.  This should give you a better feel of rents & capex in the area.

Overall seems like a good deal, just make sure you cover your bases and can sustain the property even if it takes longer to rent a vacant unit.

First I'll address your question: Yes, there are always deals. Even at hotter markets. It just takes a lot more work and efforts to find them. The question is do you want to do the work?

Strategies such as direct mailing, probate, driving for dollars, networking, etc. will eventually yield off market deals and these are the only deals you could find that will cash-flow in a super hot market.

Second, I'd like to share a thought that is true to any type of investing, real estate, stocks etc. and that is: "the masses are assess" if EVERYONE go to the west side why would you want to go there too?  2-3% cap rate means the prices are over inflated and WHEN the market turns it will be the first place to get hit hard.

at 2-3% this this probably running a negative cash-flow. Will you be able to dump money into the money pit in time when the economy is not as strong as today?

For the above reason, I personally look at secondary and tertiary markets in Texas. they are way more stable and granted I will probably never see 40%-60% appreciation I will just as much likely not to see 40%-60% drop in value. What I WILL see is steady cash-flow in both good and bad times..

smarter people than me will probably have more insights but I think it'll be really challenging to get a conventional loan.

Try hitting some local/regional banks and credit unions. They will have more room to maneuver around these requirements. 

I would look at it this way:

On one hand, I can try to find a local bank that will like me enough (yes, it's a person-to-person relationship in these small banks) to give me the loan to refinance but they will do LTV or LTC whichever is LOWER and will usually use the current NOI as the bases of valuation.

On the other hand, you can use other sources of funding such as HELOC, private loan from friend/family, bring in a private investors, etc. get the renovation done, stabilize the property at the higher NOI and THEN refinance. If your at least 2 years into your ownership and the property value is high enough you could possibly get into an Freddy loan.

Now, note that the second option is only viable if your estimated NOI for post-renovations is true which makes option B a higher risk option.

Good luck