All Forum Posts by: Carlos Silva

What does DSCR stand for?

Do these types of loans have higher interest rates than conventional loans? 

@Carlos Silva I’ve been doing small deals to get started, 1-4 units and have just in the past 3 months started doing larger, 5+ multi family properties. Not huge deals, under 12 units but it’s all about economies of scale and having lower overall expenses and higher overall cash flow due to just having more units. My newest 8 unit will have about $30,000 in expenses and $52,000 in cash flow compared to my first 4 unit that has about $15,000 in expenses and $20,000 in cash flow.

There's definitely some benefits to doing NNN type strip malls and free standing commercial buildings but I haven't learned enough about these yet and the latest "good" deals on some of these properties in my area had a higher cost of entry than I am currently able to afford.

I can get into a good 4-12 unit multi family for under $100K As opposed to needing closer to $300K+ to begin looking for a retail NNN type of deal in my area.

How do you define "commercial?" Multifamily 5+ units? Office space?

No one can predict the future. The two big things to consider is (1) SFRs valuation is based on what other SFRs have sold versus commercial is all about the rents and (2) the financing is very different with commercial and need to be comfortable with potential balloon payments every 5 to 7 years. There is a reason why commercial real estate is all over the news right now.

You can consider DSCR loans to overcome the 10 loan limit.

A lot of it depends on your experience and desire. You need to find your niche and whatever that is will be the best income producer for you.

Many of us got started in single-family because there is lower cost of getting started and less risk.

I believe that commercial is the best bang for the buck right now. I'm buying the office sector. I don't think that's for everybody. There is a huge amount of risk right now, but I believe that people will be coming back to the office. These properties are hurting right now and there is a lot of value to be had as long as you can have vacancy for a year or more. Don't do this unless you are experienced and have the finances.