All Forum Posts by: Fabiola F.

@Maria Luna Is that $5000k monthly goal gross cash flow or net cash flow? Since I'm in both the Detroit & Jacksonville market, I have a different perspective. Average rents in Detroit are about $600-700, which puts you at about an 8 unit property for $5000k gross. However, keep in mind that a large number of the inventory in Detroit would require rehab especially based on your target purchase price. Even at a low purchase price of $50-75k in Detroit for an 8 unit (which is very possible but not be in a good area where you can charge market rent), a basic rehab budget of $5-$15K per unit puts you at an additional $40k-120k in repairs, which is essentially all of your $150k. 

With $5k monthly gross before expenses (and keep in mind that Detroit has among the highest property taxes), you're probably looking at 50-60% in net income ($2500-$3k/mo). Based on that, it would take you up to 5 years to recover your initial $150k investment (repairs included) before you really become whole in the deal. 

@Ashish Acharya I have a similar scenario I'm considering - selling off individual condo units from a batch of units I own. So can you please elaborate on your response - it didn't read so clearly. 

You mentioned that he would have to allocate the purchase price of $150k to all four. Why especially since he's only selling 3 of the 4 units?

Why would it not be capital gains, and why would he owe self employment?

Thanks @Andrew Postell

Which lenders are doing HELOCS on investment and personal properties and would lend above the typical $200k cap and go as high as $500k? Preferably a lender licensed in NY.

The national lenders don't offer the most favorable terms, and many credit unions/local banks cap the credit line at $200k.

@Tchaka Owen The costs are 2.5x more in Detroit compared to what I'm accustomed to paying for in other markets. As we all know, having the right contractor in this business is key, but it's even more crucial in Detroit due to some of the challenges. 

@Yonah Weiss Instead of going into Detroit like other out of state investors, I've made 3 trips in the past month and continue to go every 2 weeks to gain local market knowledge and take my time doing so. I also have 2 local ground up developers to mentor me on local market dynamics and have been building up my social & political capital. So I'm going in with a very realistic understanding of the risks and approaching with discernment and research. I've vetted 2 multifamily units between 24-60 units and have begun negotiations.

By the way, I see you're sharp and highly respected in cost seg studies. I have a smaller 5 unit that may or may not be worth it - still exploring - but when I'm successful in acquiring these larger Detroit multifamilies, I will be reaching out to discuss a cost seg study.

@John Della Bella Thanks John. Are you lending on 10+ units with complete gut job needed?

@Jay Hinrichs I've borrowed from Lima One & Lending Home...no problems with them. However, they don't lend on multifamily, which is why I've been talking with Patch of Land lately. Do you know if any of the others you mentioned fund multifamily - LendingOne, Peak, Vision, or Anchor?

@John Hovanec @Amanda Fabian Following b/c I've borrowed from Lima & Lending One and no issues with them at all. However, they don't lend on multifamily, which is why I've been talking to POL recently for my next project. 

@Amanda Fabian I have a few questions for you:

1. What types of fees were you hit with that weren't previously disclosed?
2. Are there fees for each draw and requirements to time frames between each draw? Also, how long before the draw payments are made?
3. Considering the communication challenges, I can see an issue with having multiple contact changes as you move thru the various stages. My contacts pretty much remained the same with other lenders. 
4. Lastly, I wasn't aware that they had a refinance option. Did you exercise this option?

I went through a similar scenario and you won't find anything stronger than a 75% LTV. So your hope is to have it appraise at or above $700k. Where in South Florida is the property? Was the property generating cash prior to purchase or do you already have it occupied? If so, that can help appraisal. I'm sure there's probably that many comps with that type of footprint so I suggest getting it occupied so that the appraisal can take into consideration cash flow.