All Forum Posts by: Jeff Hamann

@Dolev Shemesh, it could be a good opportunity, could be a bad one. 🤷‍♂️

To answer Question #1, you'll pay a lump sum after 10 years unless you refinance out of it. Hard to say what rates will be doing then or before (without making wildly inaccurate predictions that will come back to haunt me), so I'd just say to ensure you know what kind of (or if a) prepayment penalty is baked into the loan. If you can refi out after a few years at little to no cost should rates fall enough to find a better loan, it's good to keep in mind.

#2: Residential is (broadly) safer, and retail's sure had its ups and downs over the years. Right now retail is largely looking pretty solid in a lot of markets, but make sure you do some serious homework about the property's area and the wider market. If only slightly more than half of the units are occupied (or leased?), that's concerning. Make sure the property aligns with what retailers are actually looking for, or you'll sit with empty spaces for a while, and those vacancy costs will eat into your margins faster than just about anything. And do some research on previous tenants, too. If there was a dry cleaner operating there in the past, for example, you could be on the hook for environmental stuff, to give one quick example.

#3: Definitely expect insurance to keep climbing, especially for Tampa. It's going to be a factor almost anywhere you'd invest, but just make sure to add a bit of cushion into your costs to account for increasing premiums.

More general advice, sorry for not getting too specific, but careful with how you frame your direct mail outreach. 

If nothing else, be memorable/stand out. 

Likely 99%+ of the recipients won't be interested in selling at the moment (and with a list that large, some of the data is invariably wrong or has changed since collection), but if you can stay in their mind for when they are ready to move forward with something, it's potentially worthwhile.

If you've collected their data, likely someone else already has (or will soon), so differentiate and show your value. 

If your prospect doesn't know why you've mailed them in less than 2 seconds, that card is probably getting tossed.

Regarding your third question, you'll likely want to look at financing options that are more asset-based than borrower-based. For sub-5-unit properties that may not be too viable, but if you're looking at slightly larger assets a few options may open up there, but even Fannie/Freddie will be a very tough go unless you have a net worth equal to the loan amount. 

Your best bet may be to keep focused on your current investment and move into something else once your finances are a bit more stable.

Sounds like you've got a good start. Indianapolis in particular is one place I'm seeing a lot of good movement, but most of the others on your list look good.

I'd probably be a bit hesitant about higher-end multifamily in Vegas specifically right now, thanks to recently delivered upscale developments and a big drop in rents (was seeing -3.1% YoY around October/November). Not saying there aren't great deals and great opportunities, but they'd probably be a bit harder to find.

If you're looking at Indy, I'd recommend checking out the north/northeast side, around Carmel, Fishers, or Castleton, that whole (pretty wide) area. All of those are rather strong areas with a lot of pent-up demand for rentals and a strong average household income to make higher-end properties pencil.

@Robert Rixer Absolutely. The "next hot place" is by definition a blip on the radar, an outlier that won't last, and multifamily investment is usually (for most, anyway) a long-term game.

That said, I do think even the previously hot markets that are now getting "slammed" (looking at some of the former Sunbelt darlings like Austin, Nashville, and Phoenix) are still great places to invest provided you find a decent property at a decent price. These oversupply issues, projected vacancy spikes, etc., we see in the news and market reports are all temporary. At its core, we're years (decades probably, if not longer) away from any solve to America's housing crisis, so it's all just a matter of timing your exit, as long as you stay cash flow positive, find good financing, and so on.

A lot of folks posting about the Midwest. Can't really argue, places like Indianapolis, Columbus, Dayton, even Chicago (despite the higher Illinois taxes and…all the fun that comes along with Chicago) can pencil if you find the right property.

On a different front, though, I ran a survey a week ago asking where people are looking to invest this year. I was a little bit surprised, markets in Florida topped the list by a bit — I'd thought that, lower taxes aside, the huge insurance premiums would drive off would-be investors.

Regardless, what makes sense for you is going to be specific to the type of investment strategy you're taking, but you could do much worse than looking at the cities mentioned above.