All Forum Posts by: Isaac Rayne

Hey, I’m looking for some advice as I’m sure you guy’s might be in the same situation but instead know what to do! The market I’m trying to invest in is really slow right now and I’m really just playing the waiting game. If I expand my search criteria I’ll probably find more deals but they will be in a lot lower income areas with probably D+/D tenants. I’m not really interested in investing in that kind of class so I’m not sure if I should expand my search parameters at that expense. What do you guy’s recommend me?

The last 2 weeks I've been trying to locate and analyze properties on the market and so far I've been handed 6 and none of them worked out. Only one was fairly close to passing my checklist but it fell through because I'd be inheriting a very bad long term lease with all the tenants.

The area I'm trying to invest in is pretty competitive so I get why any good deal would get picked up pretty fast but the last week I haven't been sent anymore properties to analyze from my agents (I have 2). I was just curious, in your personal experience how often do you see multifamily rentals (2-4) go on the market?

Could it be people aren't listing because of COVID? I'm probably just being impatient, but I'm not sure what to do I feel like it's out of my control. I'm just waiting for properties to go on the market and I feel like I'm being lazy. Should I start cold calling or driving neighborhoods to find potential properties; isn't that kind of the agents job? Thank you for any advice given.

Thanks for the reply! I'm not sure why the current owner is covering all utilities and charging very low rent.. I know the utilities are being metered, I'm just not sure on the specifics. And regarding extending the closing process, yeah I guess that is an option but one way or another I'm going to be inheriting this terribly written lease... It's a double edged sword imo. I want their to be improvement for me to add so I can create value in my deal, but not when the leases are 9 months from ending lol

 Sorry you feel that way champ!

I'm adding onto this thread. I'm going to do a little more number crunching this next couple days and figure out if I want to do the deal. I was thinking of maybe offsetting the money I'd lose for the 9 months by negotiating the price down by the amount I'd lose. IE. $3000 loss for the year so I'd offer $216,000 instead of $219,000. Also even if I broke even on this property is it worth the headache of working for free for 9 months just so I can have a 20% COC investment in the future? I'm not strapped on capital and this would only require around $40,000 to acquire so it wouldn't inhibit my investing on future properties for the year.

Hello everyone! Today I went and saw a Triplex deal I wanted to run through my checklist and let me tell you the location this triplex was in is quite literally the best it gets for this type of C class Multi-family building. It was located in a gated community that is quite large and encompasses multiple different types of real estate from single families, to multi-families, to mansions. The amenities were also very nice including a country club, 2 golf courses and a lake. The listing price of this Triplex was $219,000 so it was quite a cheap deal with a rental income of $2550. So at face value it sounds like a great property (it actually is lol..) I comp'd out the area aswell and the other multi-family properties were charging around $1100-1200/unit while this one was around $900. So my first plan was to send a letter of intent and put an offer on it but unfortunately after doing a little more due diligence with my agent we figured out the landlord was covering all utilities for the tenants. So that alone literally killed any sort of cashflow this property would generate; infact it put it in the negative. So I didn't think it would be that bad, I'd just take it over and wait for the leases to end in a month or so and create a new lease agreement with the tenants or get entirely new ones. But here's the catch.. The current leases don't end till Nov. 30th. I love long leases but this current landlord is not only charging $200-300 less than market rent but he's also paying all the utilities... If I wanted to buy this property I wouldn't have any grounds for eviction and I would be stuck with these leases for another 9 months losing money every month which I could afford but I'm not sure if it's worth it. If I bought this property and up'd the rent and renegotiated that the utilities are paid by the tenants then this property would not only be in a great location but also around 20% COC which is FANTASTIC! Do you guy's have any advice or have you ever ran into something like this?

Do you ever plan on getting a property manager? Also what’s your reasoning for budgeting 3% vacancy rate? Also I know they said it’s been rehabbed so a lot of things are new but why only 3% on repairs and capex? IMO it generally looks good on paper but it seems pretty volatile. You should try negotiating the price down and getting them to cover closing costs. I could be wrong but 6% caprate seems pretty low. What kind of area is it located in? Is the area growing at a good rate? Rents could be low; check up on that

Hello! My name is Isaac I’m a new investor and I’ve been browsing this forums for the last couple months. As I’ve reached the point where I’m really starting to buckle down and buy my first property I decided I want to get more involved in the community! I really value the opportunity to talk to many different investors and know I’m not alone :) 

Anyways I wanted to just give a small little update on what I’m doing at the moment and hopefully get some advice if I should be doing something different or if I’m going down the right path.

So the last 2 weeks I've really been focusing on talking to different loan officers trying to get a solid quote on what kind of rate and loan type I could get on a 2-4 unit multifamily property and I've made some good progress. So far I've been quoted a 3.6% APR on a fixed 30 year amortized conventional loan, which I'm pretty happy about. The reason I was able to get this rate is because the property will be owner occupied by me for at least a year because I do plan on house hacking. Next I've also got into contact with a very good real estate agent who's helping me find properties and this weekend I'm going to go check out 3 that I worked the numbers on and want to run through my checklist. Next is I'm trying to also find a second real estate agent who's more experienced in multi-family and investing to help me find properties as well. I'm also going to start calling some property management companies this week to hopefully get some more information on the rental market in my area and what rents are typically going for etc. Also hopefully my agents can help me with that too. I'm also (excuse all these also's lol) cold calling some rental properties that are being advertised and hopefully I can find an investor/owner who's willing yo entertain me with the possibility of them wanting to sell. I'm doing this to help expedite the process of finding a good deal.

So yeah, my main objective right now is to just find a good deal. I have the capital, I have the knowledge and I have the time. One thing on my mind right now though is I'm actually investing in one of the fastest growing cities in the country so it is competitive, but I'm not too worried about that because I understand patience and not getting attached to deals. I've been trying to find deals that give me a 10-20% COC return that don't need too many repairs and has good location location location. But yeah, that's about all! I would love some advice on what I can do better and what I'm doing right. Thank you guy's so much!

That is a bit of an open ended question since it’s pretty subjective to the properties condition. But for example to add value in a property one could install a gate. That gate might cost you $20,000 to install; so in order to make it worth your investment you would bump rent by around 2% of the initial capital invested. So 2% of 20,000 is $400 extra you would need in cashflow to make it worth it. So take that $400 extra needed / the units so 400/18 = $22.22. So generally you don’t want to raise rents on everyone by $22.22 instantly across the board; you’d want to raise the rent the next time you have a vacant unit. So if you have all 17 rented out at $375 the 18th one that’s vacant you’d advertise as $397.22 ($397/398). Then over the next couples months just start adjusting every single unit to that price till they are all rented out for that. Then if you work the numbers currently rn it’s $480,000/$81,000(gross rent) = 5.92592 then after rent is raised from creating value your gross rent should be $85,799. So take 5.92592 x $85,799 = $508,441. So originally it was worth $480,000. You put $20,000 into it and raised rent accordingly and created $8,441 in equity. Now the gate is just an example but find things in that property specifically that would be a demand and you could use to raise rents :) Also excuse me if my numbers are a hair off. On my phone rn

That’s a 16.8% caprate; if the numbers you said are correct that sounds very good to me, especially if you know how to add value to the complex to raise rent and create equity in the property. My question for you is what class are the tenants? Is this a slum complex? What’s the average vacancy rate? What’s the crimerate in the area like? Is it in a good location?