All Forum Posts by: Ricardo R.

@Jason Watts okay, your 'agent' sounds like a peach - First you need to surround yourself with professionals that have a 'can do' mentality instead of a defeatist mentality like your agent... now I'm not saying work with someone that is delusional but you definitely need people that are energetic, knowledge and accomplish 'it' no matter what it is. 

The fact that your agent is telling you that you can't find good deals on the MLS, would already put me on alert. A more accurate statement would maybe be: 'It may be more challenging to find good deals on the MLS'... (1) there are only so many investors and no one can buy them all; (2) other investors may have their $ tied up and not able to purchase; (3) other investors may have different criteria (4) Someone is buying good deals on the MLS, so why not you? ... these are all reasons to debunk the statement by your agent.

Dump this drain on your energy and find yourself an agent Rockstar, work the MLS but also dabble into what @Charles Carillo mentioned and start reaching out to Owners (not mls active listed). And lastly I agree with most here, 100% leverage on a first deal could be dangerous territory but, it may not, no way to tell without knowing the deal. 

@Scott Johnson Looking over your financials for the property I think I need a bit more information or at least clarification. Scott, you're saying you say the purchase price is $1,175,000 and you are financing with a 5yr. balloon on 20 years at an interest of 7.5% at 80%LTV ==== 80% LTV means you are putting 20% as a down payment and the bank (lender) is lending 80% BUT your notes on the financials say that you are only putting down $86,323 which is only roughly a 7.35% down payment - Did you overlook this? OR is the value of the property substantially more than the listed price of $1,175,000 ???

A quick look over the financials: 

- I didn't see any insurance factored into the Actuals by the Seller, I do see that you have annotated it but it is not factored in, also for a 12 unit $2,200/yr. insurance seems relatively low, although it may be your area - you should certainly follow up and ask the seller who they use. 

As a side note looking at the monthly rent roll, the vacancy for the bldg. is @ 29.65% (economic/physical) or at least it is for the rent roll you provided for that month but is currently @ 12-13% vacancy so far YTD but in 2022 it was around 35.2% vacancy (maybe slightly lower but not much if rents have gone up since then) 

If I run the financials you provided the cashflow is negative by @ $4,324/mo. and that's by running it in favor of the property i.e. 20% down payment at 7.5% on 20 years | 12 units rent average of $572/mo. | w/ actual vacancy 

Using the numbers you provided the property makes $1/mo. cashflow at a purchase price of $504K

If I run the financial you provided BUT instead using 8% vacancy on the MARKET RENTS - it would start cash flowing @ $831K and lower.

Also, you are missing laundry room income and/or there is potential for a value add in this area

@Zach Fulton It depends how bad a shape each of those items currently are; typically you want to focus on keeping the elements out first so that your interior doesn't get affected. With this said and based on the info provided and your list; this would likely be a good order: 

Windows

Furnace (possibly, get a someone to check it out be prepared to pay $3,000-$5,000 if new is needed) 

Master Bathroom

Paint (do this before flooring and you wont have to worry about protecting it) 

Flooring (LVP all day; go for 12-22mil if you can, its only a bit more but will take abuse much better)

Deck

How much should you put into it? Well, this also depends what you plan on doing with the property, are you flipping, are you holding for a bit, are you holding forever... these would all affect what you would do and how much you would spend HOWEVER, being and investor I also like to take the approach of increased ROI value based as close to a two (2) year payback as possible (not always possible) .... For Example: If spending $20,000 on a renovation would likely increase the rent amount by $200/mo. ($2,400 yr.) -- then it would take you just over eight (8) years to get it paid back but that is a return of 12% -- so it depends. Other factors which are not easily mathematically calculated is that a nice place will likely have less vacancy, less maintenance calls, is more 'rentable' (faster) and decreases liability... so in the back of your mind you should keep this formula in mind but a 12% is not too bad. I hope this helps.

@Michelle Garcia I'll give you my input and you may find it a bit biased but keep in mind, I started out as an investor, found financial freedom as an investor and still am a current investor which now happens to also run a property management company and hold a license. 

1 - It is more 'beneficial' to use a property manager, period. You will save yourself the headache of piecing together this and that from afar; if you're going out of state you want a one stop shop; one person/one company you can depend on for all of issues in managing a property, i.e. leasing, backgrounds, maintenance, photos, move out, repairs, city issues, sale, etc. etc. 

2 -  I am from NJ but I don't run business there so I wouldn't be able to help out here other than... instead of focusing on price and percentages focus instead on the services offered by the PMC.. the price you'll pay is really inconsequential for the amount of services they'll perform.. so focus on services first!

3 - Yes, we currently hold some properties out of state which we hire out to other PMC's... so just to be clear... we have been investing since 2008, have managed our own properties, now hold a license, and now own a PMC and WE HIRE AN OUT OF STATE PMC to deal with properties that are too far away - again focus on services, perhaps ensure the PMC is remote friendly i.e. they give you access to a portal online, post photos, electronic statements, etc. etc. --- you need to find a PMC that is already doing that, not the other way around. 

4 - The 4 hour work week; Landlording on Autopilot; Landlord Horror Stories; Your State's (NJ) Tenant/Landlord handbook.

Ultimately, you can manage your property from afar... I wouldn't recommend it... when it's good, it's great BUT when its not, that's when you'll realize that managing solo from afar is no good and you will wish you had someone with connections local to your property. Next anyone can manage your property even if you haggle them down to 1%... but... it a services business.... so... no sure what you'll be getting after you haggle down the person/company that will providing those services for you and being your eyes and ears on the ground... can't stress it enough... focus on services and you'll be okay.  

I hope this helps.

@Emily Germain we have one, I can dm you if youd like

@Patrick Nolan are you referring to property management software or something else?

Okay, why not start super simple and just start with the MLS... it'll take a bit of looking EVERY DAY but you can certainly still find some great deals on there. It would expose you to real estate within a 'protective bubble' and let you make a real move instead of being stuck in analysis paralysis. That's excactly how I got started... Using MLS with an agent >>> Submitting offers without agent >>> Getting licenses and buying my own properties >>> starting my own company and buying offmarket >>> buying bigger properties....... it's definitely a progression

@Romney Salanoa one of the things can certainly get you a head start is learning how to value properties as an agent, learning and knowing how to comp properties is as mathematical as it is an art form, sounds like you're already doing some of that but becoming proficient at it should give a leg up and free you up to deal with more important issues later on down the road. Secondly, take that to the next level and become proficient at valuing investment properties i.e. value, cash flow, roi, etc. etc. and that should give a 'niche' --- there are many many agents and I'll even say that 99% of agents don't really even know how to do this.. thus if you are able to become proficient at it would definitely add instant credibility to you because you'll come across as someone that actually know what you are talking about. Hope this helps. 

@Jacquelyn Place it depends what are your goals and what are you trying to accomplish? 

@Katrina Barry we have found most of our apartment buildings by contacting the Owner directly and then submitting an LOI. Usually if the bldg. is 50+ units however, there is some form of property management most likely off-site and so, we may start by contacting the PM and then go from there. Typically some of our best deals take awhile for the Owner to finally sell 6+ months. If you need an LOI template I'd be willing to share, just DM me. I hope this helps