All Forum Posts by: Greg Kasmer

@Jake Andronico - Just curious for you to clarify... Your buyer had a 1031 exchange funds and paid the entirety of the 8 plex purchase in cash? Were they transitioning from a smaller investment?

 Frank - I'm targeting multifamily near you in Pennsylvania. Similar target of 5-20 units. I've been thinking about ways to bring in some partners and investors in the deals and would be interested in talking shop! I'll reach out!

@Jesus Gonzalez - The best way to approach this question is to talk to a mortgage broker or local bank lender. They can talk to you about your situation and provide some guidance. They'll focus on your DTI (Debt to Income) ratios and see how your current income can support the new debt - including any existing debt payments you have currently. My initial reaction is that given today's higher interest rates I don't think $100k income will support an 800k loan because the loan payment on an 800k loan (30 Year Am and 7% interest) is about $5,000 - $5,500 and your income is about $8,300 per month. You'll need more cushion between your income and debt payments to account for everything else - taxes, insurance, food, living expenses, etc... Talk to a lender and see what they say!

 Alan - And Hopefully the kitchen and bath reno will last another 10-15 years and serve you and your tenants well. Congrats!

@Alan Asriants - Impressive rehab. I was able to do a reno like that for that price point about 7-8 years ago. My typical rehab was 4-5 weeks and I was paying about $3,250 per week in labor. Now, that contractor is $4,250 per week with materials higher as well. To mitigate the labor expense I've tried to sub out some work (i.e. Flooring) to help with costs, but that only helps a bit. What type of return metric do you use for your renovations? Was this an update to the unit that enabled you to increase rents?  

@Brenden Sperl - Can you clarify you rental income? Once you convert your basement you'll have the ability to rent it out "both" for $1,500? Are you talking your current house and the basement separately? Your income would be $3,000 and your mortgage is $3,000 so you won't be covering costs. However, if you plan on living in your existing house and when you convert the basement you can rent out for an additional $1,500 then your cash on cash return of your $50,0000 would be 36% (18,000/50,000), which is a great ROI. The former I wouldn't do, but the latter I would. Please check the zoning laws where you are on your property and double check your numbers (i.e. Get a contractor estimate) before proceeding. Good Luck!

@Yinon Estikangi - On my BRRRs I've been asked by most appraiser for the rent amount and sometimes asked by the bank for a copy of the lease. My ideal time to have an appraisal complete is post renovation of the house, but BEFORE the tenant moves in. In that manner, the house looks very updated, but also clean and well kept. I try to put my best foot forward with the appraiser. I also use a 1-2 page document ready for the appraiser to share with them what has been done/completed on the house as well as a few "example properties" (aka comps) that I modeled the rehab after. Good Luck!

@Scott Davis - I agree with comments from others in that building takes longer than most people think. My suggestion would be to consider the properties you're purchasing and focusing more on ways you can drive up the value of each property more quickly. With single family investing it's about finding properties at 50-75% of "retail prices" in a neighborhood and then renovating them to improve them to "force equity" and then refinancing to pull out cash - essentially a BRRRR. In larger multifamily investing it's about finding opportunities to increase revenue and/or decrease expenses to drive value. If you buy properties with little/no ability to drive value then you'll rely on appreciation and mortgage paydown to increase your equity. Having the ability to "force equity" yourself through improvements helps you cycle through capital more quickly. Happy to talk if you'd like. Good Luck!

@Frankie Lotrec - Did you run an analysis on what the ROI would be by adding a 5th unit and what the overall value of the property be? The reason I say this is that with a 5+ unit a lender will evaluate based on NOI and a cap rate, so adding a 5th unit COULD (or could not) substantially increase the value of the building and make it worthwhile to refinance and pay off the existing loan (that is tied to the "old" quad) anyway. In addition to checking the loan docs you should also check the zoning in this property. Is it zoned for residential or multifamily 5+ units. That may be harder to change as well. Good Luck!