All Forum Posts by: Greg Kasmer

@Glenn Cross - I agree with Jonathan.... I would focus on stablizing your property the best you can and getting it to cash flow as best you can. In the meantime, I would suggest you network within your area with other investors, hard money lenders, and wholesalers and see what others are working on... You may find a partner to get into your next deal OR you could find someone that is scaling with little capital. I think focusing on a BRRR (either SFH or MH) would be beneficial for your next deal. Good Luck!

@Ashley Guerra - I live and invest outside of Philadelphia, so I can't comment on your specific markets in central and south Jersey, but can provide my perspective on things to think about to help your decision.

1) I would consider speaking to 3-5 people/investors in each market you are considering (central and south Jersey) to listen to their thoughts on pros/cons of the area and how they invest. You can get a good feel by speaking with others. If you need help, I would attend SJREIA or whatever equivalent there is in central Jersey as well.

2) I would suggest buying a property (SFH or MH) in a location you can get you within 30 minutes, especially for your first deal. You'll likely need to be there a lot meeting contractors, agents, tenants, so you'll want to be close.

3) SFH vs. MH? Either can work in the long-term, but if I had to do it over again at 23, I would suggest a 2-4 unit that demonstrates the ability to cash flow assuming all units are rented. You'll benefit greater from the appreciation and loan paydown in the long term and in the short term it's not much more to manage a duplex/triplex compared to a single family if you're managing yourself.

In the end, I would give yourself a few months to talk and deliberate, but the best way to get going is to start looking in an area and look at 100 deals in that area. You'll soon get a good feel for what cash flows/works and what doesn't. The more properties you underwrite the smarter you'll be in the area.

Happy to talk further via phone if you'd like. Good Luck!

@Sam Booth - I agree that planning out your CapEx can be difficult. In larger mutlifamily properties I typically increase my existing expenses (non-mortgage expenses) by the same growth rate as my revenue.... assuming I have up to date and accurate existing expenses. Not knowing anything else about the future this keeps your pro forma not overly weighted one way or another. In the reverse, if you increase revenues 3% and expenses 2% you're naturally going to inflate over time. Good Luck!

@Rich Bultema - Just from my experience I have not had an appraiser impact the value for an older heater/air conditioner, however, a heater without A/C (as an example) has impacted an appraisal on a single family home. Good Luck!

@Antonio Maria Farinha - I started out with a condo, but I soon realized that scaling is dependent upon how quickly you can come up with funds for down payments and equity. In my condo deal I did not "drive up" the value of the property with forced appreciation and therefore was not able to get my money back out of the deal, even though that deal cash flows well. So, as Logan mentioned most turn to BRRRR method to continue to scale. To me, you can continue to invest in condos (and scale) if you find a way to force the appreciate/equity in each of your condo deals. Good Luck!

@Tanner Sortillo - I think I would echo some other's comments as well. I would suggest they understand various strategies/methods to invest in real estate and then let that drive their next steps as opposed to the dollar amount they have to invest. So, first question is do they want to be active or passive? If he/she wants to be active, they you have short term, mid-term, and long-term rentals in addition to fix and flips, wholesaling, etc... My suggestion would be to read 1-2 books/articles in each space and then set up conversations with 1-2 investors in each space to truly understand what skill sets, etc... would be needed in each avenue. Good Luck!

@Tyler Kesling - I would highly suggest reading Multifamily Millionaire Vol 1 & II by Brandon Turner and Brian Murray. They go through the various levels and options available in Multifamily Investing. I think if you start with them you'll have a broad swath of information to consider. I would couple that will listening to Multifamily Podcasts (I especially enjoy Accelerated Investor with Josh Cantwell and Multifamily Insignths with John Casmon)  and you'll have a great foundation!

Multifamily Millionaire Book Bundle – BiggerPockets Bookstore

@Naveen kumar Vadlamudi - Thanks for sharing the information. I think this is a great "real life" example to share and get other opinions. Some of my comments are: 

1) Do you know the current condition of the units? $75k for 14 units means about $5k per unit to bring it up to market ready rents. That seems very light to me. If it's just painting, fixtures, and some other superficial updates that could work. However, if you're talking about flooring, tile, cabinetry, electrical, plumbing, etc... that will add up quickly. 

2) Did you confirm the market rents in several ways/methods? I would use online platforms (zillow, etc..), rentometer, and calling competitive properties to "price shop". Rents are moving and I would double/triple check so you are super confident in the rates. 

3) Insurance seems low at only $3,000 per year for 14 units. Not sure of your area, but I would definitely get a quote from a broker/agent to verify. I'm seeing about $600-$1,000 per unit in my area. (PA, DE, NJ) But this is totally dependent on your location. 

4) What type of loan product are you using? I would find out their DSCR ratio and make sure you can hit their minimums either upon purchase or when they desire those ratios (maybe after stabilization in a year or so).

5) Unit Turns/ Re-Leasing. Typically I would account for the cost to turn a unit into the expense line items. For example, if you think 25% of the units will turn over in a given year you might have to paint the unit, make minor repairs, and then pay an agent to re-lease it. Re-leasing is likely a month rent, plus whatever painting/repairs you do.

Not sure if this is a "good deal" yet as it would depend on your proforma and projections after you consider the above. I would also suggest looking at the IRR of this deal as you have some moving parts on this deal (renovations, etc...) and also include your exit strategy (refinance or selling) into your modeling as well.

Good Luck!

@Joseph Scorese - What is your opinion on the relationship between cap rates and interest rates? In particular, with a stabilized, cash flowing multifamily what relationship (between the two) makes sense to the buyer and lender?

Kyle - I'm local to the Philadelphia area and would enjoy a conversation on real estate. Send me a message and we'll go from there!