All Forum Posts by: Bob Mills

Quote from @Alex Olson:

@Bob Mills are you looking for multifamily? What size? How many units? I can help in KC. 

I'd certainly be interested in smaller multifamily of 2-6 units if they cash flow adequately and I can find a good managed.

I've built & managed a lot of larger multifamily properties in my day job in CRE but never owned any personally. There was a time years ago when I was convinced that for personal investments I'd only do multifamily and skip right over single family homes, but then I got jaded on them. In some of the East coast markets I've lived in the supply of small multi is super low. Then when multi got so popular over the last decade, investors were buying all-cash at break even or perhaps even negative cash flows and the only things you could buy were in really bad areas. So I just moved away from it. But all that said I love the fundamentals of multi and if the properties could cash flow I'd love to look at them.

I'm an out of state investor with in-laws in Overland Park so I visit a couple times a year. I'm interested in buying a couple long-term rentals in Kansas city. Most likely on the MO side, although could be Kansas if the numbers work. Single family or duplexes. Either BTR or turnkey - BTR would be ideal, but tougher to manage OOS and my gut says BTR will be tough in this market with costs and interest rates both so high.

I'm looking for referrals of investment-minded brokers and property managers if anyone can recommend some. Will be in town the week before Christmas, so will probably set up some coffees and tour some submarkets.

Chase, correct me if I'm wrong but isn't New Western a wholesaler?  As such, isn't the biggest motivation to flip contracts for the biggest markup possible?  I could be mistaken but as such I think most investors would look at an agent w/ New Western as not being on their side like a typical RE agent who happens to work with investors might be, but really just more someone trying to squeeze the most money out of them possible with no strings attached.  The motivation of your company making money off the upside really removes most of the trust with an agent. From my limited experience with NW it was a situation where you had 24 hours to look at the property, no inspections, show up with cash ready to buy type of situation.  Basically the opposite of a friendly buying experience for a purchaser.  So long way of saying if you're looking to forge good relationships with investors it might be best to move to a different firm with a more client-friendly approach.

Hey Raj,

The answer on a rate depends on several contributing factors such as how much you're putting down, the amortization, whether you are paying for any "points" up front to reduce the rate, the type of property (SFH vs. multifamily), and whether you're talking about an agency loan (FHA -Fannie/Freddie/HUD) vs. a balance sheet loan with a bank.

There's going to be a higher interest rate for multifamily properties - probably give or take 0.5% higher. Also, if you are putting less than 25% down (for agency at least) on an investment property you will have a higher rate as the pool of willing lenders thins out (primary homes can obviously go much lower). Your rate will be a bit higher if it's a jumbo loan (generally meaning over $550k loan for SFH except i a few high-cost areas). Conversely, on the amortization lowering the amort below 30 yrs will generally give you a better interest rate, but that is harder to swing for most investors given the higher monthly debt service payments. So a 20 or 25 year amortization could lower your rate substantially.

So, if your property was a small apartment building (duplex or quad) or was a jumbo SFH with only 10%-15% down then 4.875 might well be a good rate. However, if this was a more cookie-cutter non-jumbo SFH w/ say 25% down then 4.875 is too high in today's market.

I just got a quote for a 4.25% SHF investment home in Durham a couple days ago (30 yr amort/25% down) and another quote of a 4.75% for a duplex (both 30 yr. amort / 25% down).  Send me a DM and I'm happy to send you the contact info of the broker.

Another good recommendation is to go to bankrate.com and see what they spit out. Sometimes there are cut rate lenders with hidden fees and so their rates are lower than realistic, but in general you can get some good info on there. Just close pay attention to the search parameters (like specifying an investment property, paying for points, etc.)

Thanks @Eric G. The reality at the moment is that in DC, buy-and-hold deals worth doing are few and far between and take a lot of work to curate.  Flips are certainly very viable here due to the great resale market, but there just isn't much juice to get stabilized cash flow most of the time.   It might make sense for me to focus more on Baltimore for that reason.  It changes the game of what role I can play, since daily job site visits or property management house calls for showings, etc. aren't really viable with an hour drive,  but I could certainly be a capital partner.  I'd be curious to meet sometime or get a look at any deals you might have in the works that need investors. - Bob

@Joe Norman I am based in DC, so for MD Prince George's County would be the most logical fit.   I've managed properties in Montgomery County, MD, but yield is tougher to find there.  I'm certainly open to Baltimore, although being an hour away just makes me not as useful as a partner in a lot of ways.

New(ish) investor here looking to link up with potential partners to do BRRRR deals or flips in DC, Maryland, or Northern Virginia area. Also want to network with wholesalers, investor-oriented brokers, contractors, or other service providers. PM or colleague request me to connect.

I have some experience in property management with family-owned properties, and am experienced in finance & feasibility (commercial real estate finance day job). So I can line up financing and run the numbers, I'm just new to owning my own properties and also would like a partner to spread out the up-front capital requirement on a few first deals. I have some capital and solid W-2 creditworthiness and am ready to do a deal or two in DC, MD, VA in 2018.

If you bring some of the nuts and bolts experience of rehab project management, contractor relationships, etc. that might make a complimentary pairing.  Maybe we do a 50/50 equity deal and both contribute our skill sets.  Look forward to connecting!

Cheers,

Bob

Natalia,

I have some family/friends who invest in the LA area, and like many major metros it is more of an appreciation vs cash flow area, because real estate is very expensive and it's a desirable place to live. If you paid full price for a property on the MLS, your annual rent before expenses would likely be 5% or less of your purchase price in desirable areas like Santa Monica. So, it would fail the 1% rule often discussed in these forums by a longshot.

You'd get little cash flow but strong potential for appreciation.  Not uncommon with major metro areas like San Fran, DC, Boston, etc., but worth knowing what you're getting into.  Usually you hear of investors from California investing their money out of state across the country because it's hard to find cashflow in their backyard, rather than people seeking out SoCal properties.  But, where there's a will there's a way and there's always a city somewhere within an hour or so drive of anywhere with favorable economics.

There are some fees and minimum taxes to be aware of with California if you plan to use an LLC or other corporate entity. In addition to a couple hundred dollars worth of fees to get started and some annual filing fees which are standard in most states, California has a minimum annual tax of $800 for LLCs doing business in the state (even if registered in another state). So with a state tax rate of 8.8% I'd normally need $9,100 of taxable net income to owe $800 in taxes, but in California even if the LLC makes less than that I pay $800. This comes into play if you are trying to setup an LLC-held property with lots of depreciation and cost offsets that will produce a low net income. Also if you establish an LLC before you purchase a property and then don't end up doing anything with the LLC and it just sits there, or you have a year where you only had a few months of cash flow, you'd still owe the $800. The link below has more detail. Lastly, look into out of state holding fees for your state. That is, if you file your personal returns in VA but own properties in another state, or get cash flow from an LLC in another state, some states will have special fees for those cases as well.

https://www.incorporate.com/california_llc_taxes_f...

@Terri Parrilla A few key attributes of your projects will make a huge difference in the right lender for you.  

Depending on whether this is a flip v. long-term hold, single-family v. multi-family, duplex vs. 10-units, commercial vs. residential, etc., your ideal lending source might be anything from a mortgage officer selling Fannie/Freddie loans, a local/regional bank "portfolio" lender who lends off their own balance sheet, or a private lender (sometimes known as "hard money" lender or a "mezzanine" lender depending on the circumstance).  All these have advantages/disadvantages and work well for different funding goals.

If you post a little more detail on what kind of deals you're looking to fund, the community here can give you much more tailored recommendations & referrals of specific lenders.  

If the appraisal is not at the value you need, and you can come up with a valid case, have your banker challenge the appraisal. You can look up and provide alternate comps and feed them with a brief explanation to you banker who can challenge the valuation on behalf of the bank, who is the client of the appraiser. I did this in my personal recently when the appraiser dropped the ball and it came in low and I got the value up to where it needed to be.