All Forum Posts by: James McCreary

@Jason Bott and @Charley C. Thank you both so much, that information is very helpful. I will ask our lender for some insurance requirements and do some shopping from independent agents. 

I'm curious Charley, what have you prioritized as must-haves in your insurance policy? I read these things word for word, but without a bar to measure against, its difficult to say whether we are being shorted or given a lot of value in our coverage.

Thanks again.

Hello everyone,

After some research, I couldn't find much info on recommendations for commercial insurance providers. I am working on (LOI/PSA stage) for two properties in the Phoenix MSA. Property #1 is 11 units, Property #2 is a 100+ unit repurposement deal.

I have two specific questions:
1. Would you recommend going through an insurance broker? Or just contact agencies directly?
2. Would you have any recommended insurance brokers and insurance agencies that cover the Phoenix area?

I have two agencies on my list, but I'm curious to hear from others. Nothing like your own head to blind you to other options =).

Thank you all!

Hi @Lucia Rushton, investors all have different preferences, as they are people too, just like retail buyers =). Some investors want appreciation, income, country, urban, turnkey, dump. Technically it doesn't really change the game much. For families, Frisco is definitely a spot to consider. To quote one of my teammates from college who moved there, "they have everything here". Keep in mind that there is a ton of construction up there, and not sure how long it will hold out until it turns into a "concrete metropolis", that I fear takes over up and coming areas.

I lived in Dallas from July 2016 - April 2018. I even did some home prospecting myself. My price cap was $300K, so a bit under yours, but anything mid-cities was a good market. CAVEAT: IT DEPENDS ON WHAT YOUR LOOKING FOR. 
Nightlife? Uptown
Schools? Frisco/Plano
Lakes? Lewisville
Long Commutes? Fort Worth (because everyone works in Dallas....just kidding, I love Fort Worth!)

So really the answer to your question is first to define a set of criteria. Having a price range is a good start, but you can find a 500 sqft piece of junk downtown or a mansion way out from downtown. Money is flexible. Once you define your top 5 priorites, you can refine your list from there. Heck, even do a pugh matrix for different neighborhoods and then ultimately determine the neighborhood best for YOU and not for anyone else =). 

Hi Tate, I'd be a bit more conservative on the refinance period. Some lenders require a 6 month seasoning period, but some can require as long as a year. If you can obtain better terms on your first loan (see below), you might want to how a later refinance year affects the most important parameters to you.

Loan: Is this a hard money loan? What type of lender is this? That interest rate is killing you before you refinance, and is almost single-handedly the reason you are negative cash flowing. I'd also @Account Closed comments about raising the vacancy to 10%. This is being very conservative, but you know, prepare for the worst right?

Welcome to Bigger Pockets Megan! Glad for you to join the real estate family. What are you interested in? What would you like to know?

I lived in Dallas for the last 2 years (not exactly close, but hey its Texas). Would love to connect with a Texan.

I interpret this question in the sense of the long-run and not on how to start out. I see it as risk and reward. Is one comfortable with putting years of hard work on the line for something that can be lost, or does one want a predictable path (as much as can be had)? I also am of the opinion of working while investing, this lowers your risk and allows one to have a clearer head (re: Maslow's hierarchy). You could lose everything and delay your financial freedom by that many years.

For example, in another non-real estate business I own, one of my partners quit his job and focused on our startup full-time. However, he is struggling, taking out loans to pay for food and his mortgage, and is in an arguably bad spot. I'm keeping down a full-time job and do not have to worry about my next meal, so I can think about higher-level strategy and positioning.

However, to answer your question, I think it can be through both. But when you minimize your risk, and are strategic about your reward, I believe that will take you to your destination in the most expedited manner.

Interesting question Shiloh, thanks for posting it.

HI Kip, welcome to Bigger Pockets! I feel honored to respond to your first question. Congratulations on a very conscious decision.

As for my position, I've lived in Southern California for 19 years, Houston for 3, Dallas for 2, and now back in Southern California. However, I am now investing primarily in Arizona.

I'd first say that it's a bit difficult to generalize a state in terms of a major decision like this (i.e. Fresno, CA vs. Chino Hills, CA is very different). If you'd like to keep it to the state level, I'd suggest taking a look at the state laws with respect to real estate laws and other state-influenced items (e.g. taxes, insurance, landlord eviction times, etc.). To the more county or even city level, I always like to look at the macroeconomic drivers like population growth/decline, economic growth/decline, what developments are or are not planned, general price ranges, investor activity and sentiment, and the like. 

Phoenix for example, is very much the metropolitan city. A 100% primary market. It is red hot like many other major cities. Whereas my uncle lives 3 hours north from Phoenix somewhere in the mountains where I'm sure the city vibe is all but nonexistent. 

Feel free to DM me if you want to chat more. I'd love to connect with a local Californian.

Hi Brian, I think it'd be helpful to see if you get the same type of response from other lenders. I say this also because some of the lenders I've worked with (in Texas) allow for 75% of the rental income to count towards your qualifying income for the mortgage. If he/she is still unwilling to consider that, I'd recommend moving on. A non-investor friendly lender may cost you down the road (e.g. prepayment penalties if you refinance). 

If time is of the essence however, I'd suggest reaching out to your one or two onboard people if they'd be willing to serve as a, what we call in the commercial world, a "KP" or "Key Principal" similar to a guarantor. You just borrow their resume and/or liquid networth. Of course this would come as a point of negotiation between you and each of those individuals. 

I hope it all works out, it sounds like a great deal! Great job finding other partners. As I always say, you live and die in real estate by the relationships you build. I'd love to hear how it all turns out.

EDIT: I had no idea this would be posted publicly. If that's the case, then shoutout to @Kenny Wolfe for bringing me on for my first real estate investment. Kenny is an excellent syndicator and a amiable person. I vetted him and his PPM to the gills and he was extremely patient and helpful. This property acquired a series of properties that were owned by one company, were nearly brand new, and have cash flowed quite nicely. Further details are fairly limited as a passive, hence my surprise because my post is not all that informative.

Investment Info:

commercial investment investment.

Cash invested: $25,000

I invested in a syndicated commercial property fund that pooled properties for distributed risk. I learned here what a successful syndicator is exemplified as and what it takes to execute effectively and efficiently. This syndicator has taught me many lessons which translate to my own approach to syndication. The properties are all NNN leases that distribute "mailbox" money while I get to learn the communication styles as a passive investor.

What made you interested in investing in this type of deal?

Invest with someone whom I like and trust.

How did you find this deal and how did you negotiate it?

Personal connection. I invested as a passive investor.

How did you finance this deal?

Hard-earned dollars from working.

What was the outcome?

Fund is operating nearly exactly to plan.