All Forum Posts by: Greg Kasmer

@Nicole Portell - When you say a "multifamily unit" are you referring to a condo? Or, is this a building with multiple units? In particular, 5+ units? Just asking to clarify how the future value (for the cash out refinance) will be valued. If it's 1-4 units, then you'll need to look at comparable properties, but with 5+ units you'll want to determine the future value with NOI and cap rates.

@Daniel M. - I think prior to a walkthrough the seller has little/no relationship with you as a potential buyer, so I wouldn't expect more than a rent roll and a list of expenses. I would be on the lookout for the current condition of the units and building while you're walking through to assess how well it's maintained. If you think you like the opportunity I would then ask for other documents to verify the expenses, including utility bills and Income and Expense statement. After you have an agreed upon price and a contract, I would then ask for the remainder of the documents you reference, but would not be surprised if you don't receive maintenance records of capital improvements.  You absolutely need to get copies of all the leases, AND, before closing I definitely suggest you get estoppel agreements signed by the tenants verify their current rent, security deposits, and any other important terms. (I recently bought a quad and found out that two tenants did not have security deposits on file) Good Luck!

@Sharon Israel - Since you mentioned "community" as one of your key desires, I would recommend you check out Jack and Gino's community for multifamily investors. I don't have direct experience in it, but have heard good things. Good Luck!

@Teahjsia Frazier - If you're targeting a BRRRR for your next deal I would consider using a combination of your money, private money (friends and family), as well as hard money for the purchase and rehab. This would be assuming you find a good deal where you can drive a lot of value through the rehab process. However, if you're looking for a more stable property then I would agree with the others and suggest a househack of maybe a triplex or quad. Good Luck!

@Hadar Cohen - I would agree with Matt. For the first deal I would suggest using your own funds rather than going hard money. I would also consider "private money" from friends and family for your first deal as well - maybe offer 8-10% simple interest and see if anyone would be interested. Once you do 1-2 deals you'll have some experiences and be more "lendable" to hard money lenders and have the potential to get better terms on the loan. Additionally, you'll have business income showing up and might qualify for some business lines of credit to tap into as well. Then you'll have a few tools for capital at your disposal, including: personal funds, hard money, private money, and lines of credit... all there for you to grow/scale! Good Luck!

Wayne - Perhaps you could share some of the analysis (in excel) to understand more about the numbers. With a CoC of 5-5.5%, how are you getting a lower ROI? Doesn't make sense to me given that typically ROI includes the impact of appreciation as well as any other financial benefits. ROE is also a snapshot in time depending upon when you calculate it. For me it's hard to provide input/guidance without seeing a bit more information. However, I would suggest you calculate a 5-10 year pro forma on each property and calculate an overall IRR for each so you can compare and contrast based on your risk tolerance. If you don't have a calculator/tool to do this there are a few out there to recommend. Good Luck!

Xiang - Estimating the ARV before purchase can be difficult. I've typically asked my agent to pull comps in the area and then look VERY closely at their condition and sales price. You'll likely see variation (even within a zip code) based on condition even though all might be 3 bedroom 1 bath homes (as an example). From that information I would think the best you can do is get a range of the ARV (say $150-$170k) and I would make sure you numbers work no matter whether the actual value falls within the range. If you do enough BRRRs over time you'll see a few values come in lower than expected and a few come in higher than expected. Good Luck!

@Brick Biermann - I would personally do some research on properties that you would be interested in locally first. If you have that much equity, perhaps a $1.5-$2M would make sense, but I assume that would be a larger property with more doors. Is that something you would want to manage yourself? I have not done a 1031 exchange, but my understanding is that often times people do that to "trade up" to a larger (or bigger) asset. I would think about what asset you would want to buy and whether a good number of those exist in your local area. Even further, I would underwrite 10-20 deals in your area to get a sense if they would indeed cash flow more than your existing property. Sounds like you have a very solid quad, so you'll want to make sure you can get equivalent (if not better) cash flow at an 8-plex, 12-plex, etc... Good Luck!

@LeeAnn Owens - I think you're on the right track. I would first start with a few lenders to understand your options for taking out the equity in your existing properties - likely either a Home Equity Loan or Refinance. From there I would speak with a lender in/around Knoxville to see what lending options there may be for a new development. I'm not in new development but their down payments, interest rates, and terms are likely different than buying an existing property. That should give you an idea of how much money you can leverage in addition to your down payment. After than is know you'll have an idea of the total amount of capital you'll be able to deploy into a new project. With that total capital in mind you can then speak to an architect and/or construction company to see if that is enough capital to build what you want. I think you have a few steps to figure out, but seems like you can put it together to make a good decision. Good Luck!