All Forum Posts by: E. C. "Stony" Stonebraker

@Derek Blankenship, if these are their financials, the first rule of underwriting is never trust the seller's financials.  Those numbers don't look real to me.  I live in Coral Gables and we don't invest down here because multifamily properties rarely breakeven.  Find someone who knows Miami MF properties and the realistic costs.  The property taxes, insurance, reserves look way low to me, but as I said, we don't invest locally and I don't even know how old or what condition the property is in.

@Paige Bostic, you ask a common question and one which a lot of people have opinions about.  Depending on your plans for future investments, I recommend you speak with an attorney and CPA who are experienced in real estate.  Use information which others offer on BP to ask professionals so you can understand the pros and cons of different approaches.

Both David and Kevin have some good thoughts to consider and ask of professionals.  I am not a legal or accounting professional, but let me give you some things to think about and ask of professionals.

Many times people invest in their name personally, thinking of saving paperwork or a few dollars or not thinking about liability issues.  I would never do that, but I don't buy small, single residential properties as David and Kevin are talking about.  The benefits are, IMO, negligible compared to the risks.  With properties held in your name, you are personally liable in case something happens at one of your properties to cause a claim against you.  Not only that, if the litigation attorney is aggressive and looking for more money, all of the properties held in your name are exposed to them.  Conversely, and what people frequently don't think about, is if something you or a child of yours causes an accident or similar situation puts you at liability, then a litigious plaintiff can bring a suit against you and all of your properties held in your name.  It happens every day.

The decision is yours, but you should make the decision recognizing the risks of different actions.  Each person's situation has nuances which a professional will ask about and be sure to consider.

You can quickly learn more by watching the video below.  Anderson Advisors is a legal and accounting firm which has a large number of YouTube videos which explain many different ways to structure and grow investment portfolios.  Look on YT for videos by Toby Mathis, Clint Coons and Michael Bowman who are the three partners of Anderson.  They are nationwide professionals who invest in real estate so they are experts in just the topic you are asking about.  And they complete 1,000s of tax returns every year.  If you want to know more, I'll be glad to give you a contact there.  Let me know.

@Joel Lazar, glad to help.  You can also use Rob's book and spreadsheet on smaller properties to practice and get better for working up to larger properties.  Don't hesitate to attend local meetups and ask for help from other investors.  This is a team sport.  No one does it alone and it's best to work with people you trust.

@Akyl-Lateef Hewitt, you should underwrite the deal correctly and determine a maximum offer price from your underwriting.  Then, you can determine an initial offer price.  To learn how to underwrite, I recommend you check out Rob Beardsley's excellent book and free model here. All offers should have contingencies for findings that have a significant effect on your offer price. I recommend you attend local REI meetups, speak with more experienced investors and consider bringing in an experienced and trusted partner to help with your first acquisition.

@Joel Lazar, if you need a model for small MF, that should be easy enough to put together a simple spreadsheet model.  If you are looking to underwrite a large multifamily, check out Rob Beardsley's book on underwriting and his free model here.

@Dylan Murray, I recommend you attend one of the many conferences that syndicators and coaches put on for investors, syndicators, and others.  You may find them by searching this BP forum where many of them are listed answering the questions of others.  

You can also search for a local Real Estate Investors Association (REIA). The problem with that is I've found here in South Florida, those are attended mostly by fix and flippers or single family home investing which doesn't fit my investing criteria of larger multifamily properties.

Be creative when searching online for events and people.  Be sure to do due diligence on anyone you meet and consider as a partner.  It's most important to find people who make trustworthy partners.  Good luck!

@Michelle Dong, there are lots of brokers, investors, sponsors, operators, syndicators, etc. in this space that already have the contacts and experience to get things done.  If you are not familiar with owning and managing large multifamily properties, I would not recommend buying properties through a broker with your investors as a learning experience.  Look for experienced operators who you can trust to partner with.  Check out their experience, contact people who know them, conduct background checks and be sure they are someone you can work with.  They will know the best markets and already have relationships with the best brokers.  If you want to talk about this more, contact me.  Good luck to you.

@Keith Miller, be sure you are educating yourself on the financial and legal aspects of investing and development.  Those may be as or more important to an investor's future wealth than how to install or fix a toilet.  

In addition to the ones already mentioned, check out books by Garrett Sutton (Loopholes of Real Estate), Tom Wheelwright (Tax-Free Wealth), Clint Coons (Next Level Real Estate Asset Protection), and Toby Mathis (Tax-Wise Business Ownership, Infinity Investing), and Brian Hennessey (The How to Add Value Handbook for Commercial Real Estate).  These authors have all written more than one book.

@Mathew Davis, the cost, as @Bjorn Ahlblad mentions can very quite a bit, depending on location, quality, contractor and availability of materials.  And it depends on whether it is a standard turn or a renovation.  It sounds like you are talking more like a renovation.  Turns can be as low as $2,000 for cleaning, minor repairs and painting.  Typical renovations which include appliances, flooring, sinks, counter tops, repairs, painting can go from $5,000 to $10,000 and up for higher quality materials.

Check with other multifamily investors, brokers, and contractors in your area.  Get a couple of contractors to visit your unit, show you how to estimate the costs yourself and give you quotes for the work.  Good luck!

@Sean Starkey, search for REIA (Real Estate Investors Association) or multifamily meetups in your area. Look for other investors in your local area to learn about how they invest, their stories and their suggestions. Ask real estate agents who they know.

As you learn more, you'll get a better idea of what you want to do and how to make your next move.   We all know what it's like to get bit by the investing bug, but keep patient.  Good luck.