All Forum Posts by: Florent Breton

Hi BPers 👋

I'm calling creative minds here to bounce ideas around a house hacking opportunity.

The building:  San Francisco based 3 unit building. I'm renting out one unit and the owner does not live on site.

The opportunity: The owner is advanced in his retirement and wants to offload some properties from his portfolio. He wants to give us an exclusive look into the deal. We have a great relationship and would really want us to buy him out!

The numbers: Market value $2M, fully paid out and depreciated since mid 1900s. Gross rental income +/- $10K / month, including our unit.

His goals: He wants to reduce his tax exposure and also wants to donate some of the proceeds to charities via a Charitable Trust. He is also open to owner financing.

Strategy #1 - The Charitable Trust

For the seller: he gets a tax break over the first 5 years and receives an annual income from the trust itself.

For the buyer: well, not sure what's in for us in that context. We'd buy from the trust and would have to secure a conventional loan.

Strategy #2 - Owner financing

For the seller: he does get annual income, a lower tax exposure than via a conventional sale. But there is no charities benefiting from the sale.

For the buyer: we can get better financing terms than what the market offers right now. Possibly, low down payment and a low rate.

What other strategies would come to your mind?

Thank you everyone!! This is super helpful and I hope it will also enlighten other members in the BP community!

@Frank Gallinelli I'm so honored to have you replying back to this thread. I've used your book "What every real estate investor needs to know about cash flow" as my Real Estate Bible and promoted it to friends! As a Columbia GSB Alumni, I also feel proud to have a faculty member jumping into forums to help around.

PS: I will also make sure to turn on notification when a reply is posted since I didn't see the replies before being mentioned.

Thank you all! 

IRR: I would agree with @Nick B. IRR captures cash flows over time and refinance cash is one of them. I understand the "icing on the cake" approach (and this is how it feels) but it might be worth capturing that flow of cash somewhere in financial analysis.

Cash on Cash: Should this be specified as "Cash on Cash after refinancing"?

I was reading F. Gallinelli book on cash flow and could not find any mention of this.

Hey BBPers

I am 9 months into the renovation of a multifamily building. I have invested significantly on capital improvement and hope to recoup some of that investment when I refinance later next year. I have then few questions on the following calculations:

- Cash on Cash: as much as you factor in capital improvements expenses, do you also consider cash out from a refinancing as impacting your cash on cash ratio?

- IRR: same question for the Internal Rate of Return - Do you factor in cash from refinancing in your IRR calculations?

In a more broader way: how does cash out refinancing impact your multifamily financial performance indicators?

Thanks a lot

Florent

Hi BP

I'm looking at terminating a contract with a vendor who is not respecting our terms. Can anyone direct me to an attorney who can assist?

Thanks a lot

Florent

Hi BPers

I'm looking for referrals as I am to acquire a multi-family property in Hamilton, OH. Would anyone recommend professionals who can help me run the following jobs?

a. Unit renovation: It's a 12 unit and I want to turn them around as they get vacant. 

b. Electrician: I would like to install a security camera system based on mainstream solutions. The install would require mounting and connecting the cameras to the internet.

c. Exterior works: I have a large parking lot which is needs some repair and sealing. Ideally, I would also like to mount a garbage shed.

Thanks a lot for your recommendations

Florent