All Forum Posts by: Francois Frigon

Ya, this construction was bad in all aspects.  I'm glad its now over, and all units have been rented for over a year now.

This property is located in Converse Texas.  I also have a new built property in New Braunfels (duplex) and a Quad in Selma TX...   all done with a different builder.

Sorry for the late reply.  Yes, this was a great deal which required a lot of patience and perseverance with the builder to finish the built.  Rent is about $1275 per units, so after expenses and debt payment, I clear about $900 per month (which is excellent return for me).

Tommy, new MF constructions are good in the Northeast side of San Antonio.  You should try to secure a deal with one of the builder, then be patient for 18+ months before closing...  long wait, but instant equity gain right after closing.  good luck!

Thanks all for the good words.

Collin, the quad is located in Selma Texas (16921 Showdown Path)

Andrew, I paid $5k down pay back in 2016 to secure this deal with the builder SAMA.  This down pay got factored in at closing.  About the returns, well it happen 1st month.  I rented all the units over 2 nights (it was crazy, I even had to increase one of my rental)...  Not sure if it was luck, but all 4 tenants moved-in a few days after closing.

I don't plan to refi anytime soon (working now to improve my debt ratio).  I positive cash flow over $2k per month with my 3 properties which is good for me at this time.  

Next deal could perhaps be a small commercial office building in the markets I'm currently in (new construction of course).  We'll see.

I'm a full time employee and self manage my 3 properties (9 doors).  To me, this is the best way to learn the business, stay connected with the properties and tenants on a regular basis.  

So far so good.  I'm all fine with keeping the 8% PM fees...     

we'll see what happens in a few year

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $475,000
Cash invested: $100,000

Great investment property. Bought for $475k and the property got appraised at $575k (awesome!)
Avg rent is $1350 in that area
NOI is $47k yr with a cap rate 6.4% bringing the value of this property at over $630k.

This was my best acquisition so far through my LLC

What made you interested in investing in this type of deal?

Investing in new construction multi-family property in the San Antonio area was our strategy since 2016.
We acquired 3 properties so far with good to excellent return. So our strategy was a good one I believe.

How did you find this deal and how did you negotiate it?

We looked at new construction projects in the area and found multiple back in 2016.
We decided to go with Vistancia Custom Homes for the Triplex, JAP for the Duplex, and SAMA for the Quadruplex located in Selma.

Though all 3 were Ok, the best construction experience with the less issues was with SAMA.

How did you finance this deal?

Most of the money came from personal contributions to the LLC from both my wife and I
I'm a full time IT employee at a major oil company. This full time job is allowing me to invest in the LLC on a yearly basis.

How did you add value to the deal?

Signed all 3 contracts back in 2016 at a fix price.
Once the properties were built 3 years later, they already had considerable appreciation (so this was a good strategy for us)

What was the outcome?

avg ROI is over 10% - so to us that is excellent result

Lessons learned? Challenges?

Working full time, and managing 9 doors makes life exciting.

The challenge will be how to growth through more acquisition without the need to hire a property manager, and keeping my job... we shall see.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jimmy Palacio was my broker in San Antonio. All 3 contracts came from him. He is very professional, knows the multi-family business in the area, and guided me well through these purchases.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $350,000
Cash invested: $100,000

This is a new construction triplex started in 2017 and now completed since summer 2019.
Now in full operation with all 3 units rented.
Great value appreciation and excellent monthly cash-flow

What made you interested in investing in this type of deal?

Potential return on new multi-family properties

How did you find this deal and how did you negotiate it?

Found a broker which offers new MF construction deals in the San Antonio area.

How did you finance this deal?

Used personal cash on-hand. We also bought this property through our LLC

How did you add value to the deal?

Contract was fix price at $317k for new construction.
We invested an additional $40k to finish the project.
The property is now evaluated at $440k (so good equity gain)

What was the outcome?

Took over 2 years to built (very hard on us).
However, with perseverance we now operate this new Triplex and monthly return so far are excellent.

Lessons learned? Challenges?

On new construction (if you're the owner), be aware of all the inspection checks done by the city.
Go see progress weekly and don't hesitate to ask updates from the builder regularly
Establish a good partnership with your bank partner... keep them updated
Don't under-estimate the time to pass inspection on the Fire Suppression system, and the final

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My RE broker is Jimmy Palacio - great guy and keeps me updated on new projects in the area

Thanks Austin for all your ideas.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $317,000
Cash invested: $64,000

Through my LLC, we recently bought a new construction duplex in New Braunfels Texas near San Antonio.
Good original numbers, but the reality shows different.

What made you interested in investing in this type of deal?

Apparently good market to be in.
Purchase price was about 20% below market value

How did you find this deal and how did you negotiate it?

I found this deal 2 years ago when looking to invest in new construction properties (duplex / triplex) in the greater San Antonio area. After 2 years of construction, we finally closed in mid-March and both units are now rented.

How did you finance this deal?

My LLC put 20% of the sell price, and the bank financed 80% (20 year term at 6.5% yearly)

Lessons learned? Challenges?

The Proforma advertised by the seller was based on personal loan terms. When you buy through a LLC, not only it is very hard to find a bank willing to do Commercial loans, but the terms are not that great (30yr term VS 20yr, Int Rate higher).

My challenge now is to find a way to increase the rent by around 7% in 2020 to improve my bottom line numbers

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $317,000
Cash invested: $64,000

Through my LLC, we recently bought a new construction duplex in New Braunfels Texas near San Antonio.
The original Proforma looked great, but the reality is somewhat different when you factor all expenses (but we remain positive).
The bottom line numbers on this duplex won't look good this year (2019) due to 2 main factors:
1) The rent I'm charging is too low at $1350 (market just went down significantly in the last 6 months). To make my numbers look better, the rent has to increase to $1450 next year
2) My commercial loan on this property is 6.5% over 20 years (not the best). To help though, the bank offered me 6 months only interest

One somewhat good news is the purchase price of $317k is great when comparing to the appraisal of $378k

What made you interested in investing in this type of deal?

Apparently good market to be in.
Purchase price a good 20% below market value

How did you find this deal and how did you negotiate it?

I found this deal 2 years ago when looking to invest in new construction properties (duplex / triplex) in the greater San Antonio area. After 2 years of construction, we finally closed in mid March and both units are now rented.

How did you finance this deal?

My LLC put 20% of the sell price, and the bank financed 80% (20 year term at 6.5% yearly)

Lessons learned? Challenges?

The Proforma advertised by the seller was based on personal loan terms. When you buy through a LLC, not only it is very hard to find a bank willing to do Commercial loans, but the terms are not that great (30yr term VS 20yr, Int Rate higher).

My challenge now is to find a way to increase the rent by around 7% in 2020 to improve my bottom line numbers

Anybody tried to collect rent online through the Zillow Rental Manager system?