All Forum Posts by: Darrin Gross

JR - Great event.  Look forward to the next. 

@Dhirendra Ghidode I think you may have a type o,  but it sounds like you are interested in learning more.  I will try and get a copy of the presentation for you.

@David S. I will see what I can do.

Join us for a case study of a recent multifamily syndication.

I think relationships are the place you have to start.  Before you talk with your close relationships, I think you need to understand the incentive for the investor.  I have talked with multiple syndicators who present very different models for investors.  Preferred Return, Water Falls, Acquisition Fee or not, the list goes on.  Two syndicators who I think keep it simple and I believe would be easier to explain to potential investors are Tim Bratz and Bruce Peterson.  

congrats!

Daniel,

Have you found any lenders? 

I would think a local community bank would be a good fit if you have your budgets and contractors, etc.

Darrin

Samantha, congrats on saving up $100k to start with.  That puts way ahead of where I started. 

A couple of thoughts for what it's worth:

Don't be so anxious to spend your money.  A bad deal takes years to recover from .  A good deal cash flows from day one.  Buy a cash flowing deal!

I totally agree with the "start local" conversation.  Why?  Because you know the local market.  I would put a known market miles ahead of any unknown.  Are there jobs in Melbourne?  What do the jobs pay, and how much can people afford to pay?  What's the cost to buy versus rent?  What's being built and how much supply is there in the market?  Who has a good reputation?  

How many horror stories have  you heard where a good deal in some far away place turned into a disaster?  Think about it.  What are you going to do when your property manager, painter, landscaper, contractor, etc craps out on you far away versus in your town.  If it's local, you can easily check references, meet face to face and monitor the situation.  You can take action easily if needed.  You can create your own team.  You can even create your own marketing, waiting list, etc.

 I would encourage you to look for 5 plus units and talk with a commercial bank.  Like it's been said, I find commercial lending is much easier to deal with.  The lender looks at the property's ability to cover the expenses, not the borrower.  I think you would be surprised by how a commercial lender would be willing to do if you find the right property and present a well thought out proposal with numbers that make it easy for the bank to say yes. They will not lend more than the property can support and typically underwrite to a 1.25 cover ratio. 

Find a willing seller.  What if you found a seller who is tired.  They own a 5 unit that has been for sale for a while, is under rented, and needs some minor fixing.  These are in every town, you just have to find them.  You can put a little down, get a loan and if needed get the seller to carry a 2nd.

Other Peoples Money: Don't put all of your money into the deal.  You will need some for the unexpected, trust me.

Good luck and I look forward to reading more about what you find. 

@Andrew M. as for the reason the carrier would cancel the policy, my assumption is the risk materially changed.  They assumed it was a traditional long term rental.  When they learned that  there is a care business in the home, providing care to unrelated residents, for whom they are paid to care for, the risk no longer fit the profile the carrier intended to cover.  Two entirely different liability exposures.  

Long term vs short term rentals are different as well.  A long term single family rental rented for a residence when owned by an individual can be written on a personal Dwelling Fire policy.  If the same property is operated as a short term rental, many carriers will require that it be written as a commercial property.   

Like @Jay Hinrichs suggested, have an honest conversation with an insurance broker, and you will get the coverage you need.  It will likely cost more than you have been paying, but you will be covered. 

If you need help, let me know.

Eric, your profile suggest you primarily do Multifamily and are located in FL.  There is a site I found that is growing in use Apartment Buildings . com.  It is FREE and operates in FL.  If you are a broker and list a property on their site before you list it on loopnet, etc, they will promote it to users.  Check it out.