All Forum Posts by: Greg Kasmer

Jonathan - Since this is a 5+ unit this is a true multifamily property purchase from a lending perspective. I would therefore get the seller to provide some actual historic numbers (T12) to right-size the expenses. To me, the CapEx, insurance, and electricity all look high, so I would definitely validate those numbers. You could also call a property management company to get a sense for their potential fees as well as any insights on the expenses in the area. Overall, I agree with others that I would not buy the property unless it cash flows already or there is a short term plan (6-12) to get it to cash flow with some relatively easy adjustments on the expense side. (Revenue increases will be harder as you indicated due to Section 8).

Alfred - I agree with Vessi on the ones she suggested. I think no matter what analyzer you use the most important recommendation is that you likely need to use it for 25-50 or so deals before you truly know the "ins and outs" of each tool. Each deal will have some details that you'll need to input into the tool so you likely won't know the full capabilities of each tool until you have enough repetitions. Joe Fairless also has a free tool as well on his website.  

Emily - I've found it very difficult to get a line of credit and/or loan in a second position for an investment property. I've called many banks and credit unions and all of them I've called do not want to be in second position. I would encourage you to think about whether you can get a personal unsecured line of credit yourself or think about borrowing money in the short term (9-12 months) from investors to help the purchase and renovation costs in a BRRRR strategy. Good Luck!

Johnathan - I've used unsecured lines of credit to purchase and rehab properties in a BRRRR strategy before. You'll have to double check the minimum amount due each month to be sure you can make the payments prior to securing long term financing. For example, interest only vs. interest and principle vs. interest, principle as well as a certain minimum % of the loan are all types of payments I've see on lines/loans of credit. You want to make sure you can have enough cash to make the payments while renovations occur and before securing long-term financing... as well as give yourself a little (2-3 month) cushion just in case. Good Luck!

Stephanie - In addition to HELOC and cash out refinance, I would also suggest consider using OPM (Other People's Money) with some private investors. For example, if you find a great BRRRR deal, but don't have the funds perhaps there would be a freind/investor that would loan you money in the short-term (9-12 months) while you buy, rehab, and rent the house. When you refinance you can pay the investor back. Of course, this would be dependent on finding a few investors that are interested, but the more comfortable you get with taking investors money the quick you'll be able to scale your portfolio and not rely on only bank money or HELOCs. Good Luck!

Robert - I've used propstream for some multifamily searches and sorted by: 5+ units, building size (sq. ft), lot size (sq. ft) to help narrow down the size or number of units of the building. (For me, I'm targeting 10-40 units in size). I found that fairly useful and started a mailing campaign. I've also found data on the loan amount useful to determine those that might have equity in their property. Hopefully this helps! Let me know if you want to talk!

James - The other book recommendation I have for you is "Raising Capital for Real Estate" by Hunter Thompson. Good information provided as well as some actionable steps. Others that I would recommend following are: Amy Mahoory and Keeley Hubbard. Both provide their own perspective on how to develop relationships and raise capital. Good Luck!

Preston - I do not know the area personally as I invest in the eastern part of PA. However, whenever I have hesitancy around vacancy rates and the area I would do a few things to understand and "hedge" my bet: 1) Call property managers, banks, and/or realtors that lease rentals to get a sense of actual vacancy rates in the area, 2) In your underwriting add an additional percentage to the underwriting/pro forma. For example, if the local market is 3-4% vacancy, I would assume a 7-8% vacancy in your underwriting, and 3) I would renovate/update you units to slightly above market to give you better chance to secure a tenant.  After all, tenants will want to rent a "better" unit than just an average one> 

James - I would do as Andrew suggests and call around to some banks to get their opinion. I think you'll have a lot more success once the NOI is stabilized for 90 days, so my bet would be that you would not have to wait a year. I've found regional credit unions to be a good place for flexible terms and reasonable rates. Congrats on the renovation!

Ike - I've done a few cash out refinances with Sun Federal Credit Union and they have reasonable rates and efficient with their work. I would suggest you call Sun East Federal Credit Union as well. Good Luck!