All Forum Posts by: Account Closed

@Zachary Bellin in the future, add in some contingency funds and make a financial plan to ensure that you don't end up in a position where you can't afford to sell your deals. Also, all in 280 and 350 sale sounds a little thin, especially considering 350 is just an estimate on your end.

Get out of one of the properties... preferably the one that will me most profitable and require the least work/time.. ASAP. Get some funds back. You're in damage control mode and it's prob too late to fix it because this problem was created on the front end when the deals were purchased. Just get some money back... maybe even dump 2 of 3 and actually complete the 3rd if its a project that makes sense. Don't try to salvage the remaining deals out of pride/failure. Lick your wounds and do it differently next time.

@JC Wu I don't know if I'd say roofstock does the opposite. It's not really up to them to decide where you like to set your risk profile. I do think it's prudent to be conservative, but their business is not one of relationships and advisory. They provide a defined service, and I would imagine they are consistent in providing the service level they promise. 

What companies like roofstock (and my own to some degree) do is make investing in real estate feel simplified and accessible.. and it can be! This is a good thing. Increasing awareness of investing in an asset class that perpetuates wealth at a higher rate than so many others is truly a contribution to the community. A side effect of the simplicity of their process is that buyers may feel a bit euphoric about rental property investing, and in this euphoria lighten their focus on the inherent risks of buying and holding real estate. They didn't influence you or any other investor to feel this way.. and what are they going to do? Push customers away via excessive biases towards conservatism?

I set expectations because my company is still boutique and has one on one relationships with clients. I'll be upfront- the nature of our interaction with our clients will also become more scale-friendly as we grow. It's already happening a little bit. It's a tricky balance, but the nature of a business that is growing.

I think you would have made mistakes of similar magnitude if you went and purchased through a different acquisition vehicle. I still make mistakes... and I've bought over 100 properties. It's part of the process. I call it "tuition". The lesson here is focus on what you as an investor can do to bear the burden of due diligence. Delegate work & tedium, but do not delegate your judgement to any service provider! 

@Nghi Le I plan to defeat you through exhaustion, not through logic. LOL.

I'm kidding. And i truly do see the other side of the BRRR coin. I guess I need to understand that not all investors want it to feel as businesslike as I do, and that there is more to something working out for something that profit optimization. There is an emotional component of equity and accumulation that may be less stressful than constantly HAVING to redeploy funds over and over.

I'm in Sacramento, maybe the SF option could work out! BC lord knows I'm not taking a vacation for at least 10 more years!

@Dave DeMarinis Thank you for the mention! Team is very important, I agree. You know my thoughts, pick a market where you don't have to have the highest standards for team either... and that's because the team is never perfect unless you build it and manage it yourself lol. Property management & contractors are tough, and always juggling your business with a ton of other people's + they're not making a lot of money to do it. Have backups on backups on backups

@Stephanie Moran my business partner knows a couple guys from the view, 6200 lol!

@Nghi Le

The "who" at US Bank is so important. Some lenders are much better at selling a file to an underwriter than another. I would say if you work with a good CM, they're not paid a commission based on spread and can give you those lower rates. We see sub 4 almost every time now. We're also allowed out of footprint product universally now. Out of footprint property AND out of footprint buyers. It only took  2 years & like... 50 closed loans from us? Maybe closer to 100? 

The way I see it is I'm doing them a favor by offering them my business at the rate I do... so we have high expectations of them and we constantly test their rules + have found that the rules have become more and more flexible over time for us. Debt coverage is the biggest challenge with them. You've basically got to bring an 8 cap to them for it to check out. Maybe a little lower if actuals are very favorable. 

Local appraisers kill me lol. They include 2 comps at value, then a 3rd at 40% of value that's clearly a gutjob. Complete arbiters, and many of the one man appraisal company owners are investors too. 

I see what you're saying with the 5 year balloon. The what if's are always a little scary.. but I know what kind of assets you're investing in. They're nonvolatile, they cash flowed well in the last crash, and they service debt very well. US Bank doesn't want inventory at balloon time, and they want you to keep making payments to them. If they see 5 years of debt service and strong performance they're not turning you down. Plus, if the property really can't perform at the level that qualifies it for another loan... it probably isn't performing well enough for you to be making monthly debt service either. 

That^^^ is all very hypothetical, and you know the financing business better than I. But common sense does prevail in a lot of these situations. Even in the last crash, a very small % of multifamily defaulted nationwide. That very small % probably weren't 10+ caps either lol.

@Stephanie Moran if this guy is playing dirty and harassing you, and he's some unlicensed handyman who doesn't really care about your formal, legal approach.... maybe send a scary buddy of yours over to give him a good shake up? 

@Justin Wotring good work! What are the rents and market val on this bad boy? What are the monthly expenses? looks like a good deal

Sorry, I crunched my numbers above on your property at a 160k purchase, not 165k. Take em all down a tiny bit, the actual ROI is 10.9%

@Ron Buffano got it. So lets say 10% management, 5% vacancy, and 10% maintenance/capex without being overly conservative (assuming property is in good shape) leaves you with a net cash flow of 375/mo, 4500 a year on 40k down. 11.25% cash on cash return. 

What market is this in? Honestly I think this is a little low if you're buying at a peak and can't expect appreciation over the next 5-7 years. In a truly B class property shoot for a min 15% return. I shoot for 18-20 on what I'd call B- (nicer working class) assets. 15% for a pretty darn nice neighborhood with strong home ownership mixed in with rentals. Working class, C+/B- is safer when expecting economic correction, due to lower volatility in both property values and rental demand/economics. Dual benefits- higher cash flow at the time of purchase, and less likely to decline in performance when the economy softens. 

If you're in a C/C+ area returns of 25%+ COC can be acheived using the same expense ratios I plugged in for your property if you pick the market/asset well. Low ROI's get eaten up quickly when stuff hits the fan.