All Forum Posts by: Henry Perez

@Syed Rizvi I would follow @Carl Fischer's advice and transfer the funds over to a self-directed IRA. My wife and I plan on doing this in order to expand our multi-unit portfolio.

-Henry

Hello,

My wife and I are currently in the market to purchase two 40-50 multi-unit complexes or one 100+ multi-unit complex in the Sacramento/Stockton/Modesto area. Most of the properties we have come across have pools in them.

My wife does not want to purchase a property with a pool as she feels it would bring unwarranted liabilities associated with it. I don't see any issue with a pool as 1) anything a tenant does on your property is a potential liability (e.g. falling down the stairs, etc.), 2) An umbrella policy for the property with sufficient liability coverage would cover any liabilities arising from a pool incident (or any incident).

Are there any reasons why we should not purchase a multi-unit complex with a pool in it? Has anyone been deterred from pools due to an incident?

Thanks.

Hi Jaysen,

I incorrectly typed in Year 2 "Refinance both recent properties, get initial $2M out of each property..." What I should have written was "Refinance both recent properties, get initital $1M equity investment out of each property..."

The $2M out of each property is completely incorrect and as you mentioned unrealistic.

Thanks,

Henry  

@Jay Orlauski Hi Jay. I would definitely like to stay in touch or reach out to you in the near future. In the next 2-3 years, my wife and I are looking to invest in Fresno and would look to initially purchase a 30-40 unit property. We're currently looking to purchase two 30-40 unit properties in the Sacramento area. Once we have 150-200 units in Sacramento, we will look to Fresno to expand our portfolio.

Thanks, @Gordon Cuffe. The local bank here in the SF Peninsula, Presidio Bank, which is trying to woo mee in becoming a client, offers a LOC to real estate clients allowing investors to take out their initial equity. The investor would then refinance later.

@Myrna Santos Definitely not in the South Sacramento area (crime). Also, be very cautious and study up on flood zone areas in Sacramento. There a several rivers that cross through Sacramento so flooding is a high concern and this will impact in your expenses in the form of expensive flood insurance.

We're currently looking to invest in two 30-40 unit properties in the Sacramento region over the next year. Our equity would be $1M in each and total purchase price we're looking at for each is in the ~$3M range.

Our cash-on-cash return criteria is 10% after year 1 (after raising below market rents and increasing occupancy). This would get us ~$200K in year 1 cash flow/pre-tax income.

Our goal is to reach $1M in pre-tax income by year 10.

How often do banks let you refinance or season your commercial properties?

In our model, we are assuming refinancing the first two properties after Year 1 by cashing out our initial $1M investment in each, and then reinvesting that $1M into another 30-40 unit complex at a ~$3M price.

Basically:
Year 1: Two properties at $1M each

Year 2: Refinance both properties, get initial $2M out of each property, and reinvest in another 2 like properties (4 properties at end of Year 2)

Year 3: Refinance both recent properties, get initial $2M out of each property, and reinvest in another 2 like properties (6 properties at end of Year 3)

Year 4: Refinance both recent properties, get initial $2M out of each property, and reinvest in another 2 like properties (8 properties at end of Year 4)

Our model is to do this until Year 10.

Based on our model (and assuming we purchase properties with the same 10% cash-on-cash return after Year 1), we would achieve $1M in pre-tax income in Year 7.

Has anyone done anything similar to this? Doesn't have to be at the same scale or $ value. We just want to see if this is realistic and if it has been done.

This does not assume doing any larger deals with investors (which is what I plan to do in 2-3 years time).

I would also greatly appreciate any advice or suggestions on scaling your investment portfolio.

Thanks,

Henry

We're currently looking to invest in two 30-40 unit properties in the Sacramento region over the next year. Our equity would be $1M in each and total purchase price we're looking at for each is in the ~$3M range.

Our cash-on-cash return criteria is 10% after year 1 (after raising below market rents and increasing occupancy). This would get us ~$200K in year 1 cash flow/pre-tax income.

Our goal is to reach $1M in pre-tax income by year 10.

How often do banks let you refinance or season your commercial properties?

In our model, we are assuming refinancing the first two properties after Year 1 by cashing out our initial $1M investment in each, and then reinvesting that $1M into another 30-40 unit complex at a ~$3M price.

Basically:
Year 1: Two properties at $1M each

Year 2: Refinance both properties, get initial $2M out of each property, and reinvest in another 2 like properties (4 properties at end of Year 2)

Year 3: Refinance both recent properties, get initial $2M out of each property, and reinvest in another 2 like properties (6 properties at end of Year 3)

Year 4: Refinance both recent properties, get initial $2M out of each property, and reinvest in another 2 like properties (8 properties at end of Year 4)

Our model is to do this until Year 10. 

Based on our model (and assuming we purchase properties with the same 10% cash-on-cash return after Year 1), we would achieve $1M in pre-tax income in Year 7.

Has anyone done anything similar to this? Doesn't have to be at the same scale or $ value. We just want to see if this is realistic and if it has been done.

This does not assume doing any larger deals with investors (which is what I plan to do in 2-3 years time).

I would also greatly appreciate any advice or suggestions on scaling your investment portfolio.

Thanks,
Henry

@Andrew Jones Unfortunately, I do not know much about mobile units in the area. We're focusing on apartment properties.

Though the mobile home properties I have come across on the market while I'm gathering info area are selling for crazy high cap rate. 

@Andrew Jones Good luck on this journey. Let me know if you need any market info, rent info, etc. for the Sacramento area. My wife and I are currently looking to invest in a couple of 30-40 unit properties in the area. I would be glad to help.

-Henry