All Forum Posts by: Henry Perez

Hi @Tyson Thomas to piggyback on @Mike Day's comment, definitely reach out to all of the banks in your surrounding area (large, medium, small, credit unions, etc.). You will definitely come across a bank that offers HELOCs on investment properties. Two local banks I use offer HELOCs on investment properties so I have those ready to go if I come across a great opportunity and can use the HLEC as a down payment. 

Thanks @Jason Magee. I will definitely use ListSource to reach out to multi-unit owners here in CA

@Ivan Barratt congrats Ivan! Awesome deal indeed. My goal is to be doing exactly what you are doing (deal size, multi-unit size, raising capital, etc.). 

You're definitely motivating me to find my next 40-50 unit property here in CA.

@Derek G. Hi Derek. Much like what @Jessie Niu and @Ronald Rohde have commented, having a strong and competent PM lined up to managed the property will go a long way to helping you get the commercial loan. 

As @Jessie Niu commented, having a well-prepared presentation makes a HUGE difference when applying for a loan. Those couple of hours you put in to create a package which lays out all of the details (local market trends, thorough and well planned out P&L, CapEx schedules - if repairs/improvements are needed, etc.) makes you look professional and makes you stand out not only to the banker you're working with but also to the underwriter(s) who will be reviewing your loan application.

in the near future I intend to share my presentation package openly with the BP world after I have purchased my next multi-unit complex. There are some things I would like to tweak in it and once I do, I would like to share it with everyone else so that they too can leverage it and use it for their own investment opportunities. 

Completed. Thank you for an awesome site!! 

I completely agree with @Andrew Herrig 100%. There are opportunities in every market and at any time. Some periods they scream out at you because they're everywhere. Other times, you have to dig deep and hustle and/or analyze tens or over a hundred deals to find one that matches your criteria.

Here is my logic for times such as now:

1. Don't invest for the short-term. Focus on long-term buy and hold 

2. Have clearly defined investment criteria that suits your goals (e.g. target cash flow return, value-add opportunities, equity appreciation resulting from value-add, etc.)

3. Spend time analyzing deals until one fit your criteria (sorry, there's no easy bullet. In times such as these you have to be extremely diligent and picky about what to invest in).

4. Once you find a property that fits your criteria, get your hands on it!!

5. For value-add opportunities, go ahead and do them, and get the increased cash flow from it

6. Have the property appraised and hopefully the value has increased significantly.

7. Use the equity to purchase another similar property with the same criteria or wait until the market corrects and then go on a buying spree buying deals!! 

For example, I recently sold my apartment building in San Francisco because the market is hot (lots of money seeking investments and low inventory). I wanted to take advantage of selling my property at a ~3% cap rate before thousands of new units hit the market, driving down rents, and the amount of money in the market place drying up.

I am now searching to invest in several properties that add up to ~100 units in the Sacramento/Central Valley area of CA. The Sacramento market is extremely hot and everyone is trying to purchase something there, driving Cap Rates down to 5%. I've analyzed 50+ properties and most of these do not make any sense at current prices. The cash on cash return I am seeking is not even close. Plus, investors are making offers on properties site unseen which defies logic.

I've expanded my search to less competitive markets in the Central Valley where my criteria for cash-on-cash return and equity appreciation through value-add are attainable. 

Once I am able to purchase these properties based on my criteria, I will purchase more like them. If I can't find any, I will continues to search and search. If the market corrects, then it's buying time!!!

Ping me if you have any questions.

Thanks @Todd Dexheimer @Andrew Campbell I too agree that if both the market and the quality tenants you are trying to keep/bring in require a pool on the property, then it's the cost of business.

This is a topic that will require time and experience for my wife to be convinced of . We're a team so I will have to educate her on this and have her meet with other multi-unit owners who have pools on their properties.

@Andrew Cushman

Thank you very much for your time and for your thorough explanation. I greatly appreciate it.

This is a topic my wife and I are constantly discussing as there are many great properties in the 30-40 unit range which have pools. For the same reasons you mentioned, I do not have an issue with pools as each property we own will be in an LLC and each LLC will have its own umbrella policy. I view pools as a risk, much like everything else that comes with real estate, but one that could be mitigated. In addition, I don't want this to be a hindrance in the future as we expand our portfolio and look to invest in Arizona and Nevada where pools are pretty much a requirement in any multi-unit property.

Every multi-unit property we invest in will be managed by a management company. We will not be managing the properties directly.

I have saved your podcast #170 on my Apple Podcasts app and I listen to it at least twice a month to both motivate me and to remind myself of my goal of both reaching 1,000 units and being able to raise money. This is a goal that I live and breathe on a daily basis. 

Thank you for your inspiration. 

Henry

Welcome to BP @Matt Roach!

I would definitely like to stay in touch with you as my wife and I are currently looking to purchase a couple of large apartment complexes in the Sacramento/Stockton/Modesto area but eventually will venture out to the Phoenix/Arizona markets.

Regards,

Henry

Thank you very much @Deanna McCormick & @Jeff Greenberg. Your advice is greatly appreciated!