All Forum Posts by: Juan Maldonado

@Brent M., Pittsburgh is definitely a market you can hit the 2% rule with. My company focuses on larger multi family so we are not a good fit for your strategy. However I do have a contact that I would feel 100% comfortable referring you to, if you want to do rehab rentals in GOOD areas. He doesn't and I wouldn't advice you go chasing 30k properties in rough Pittsburgh neighborhoods. Stick with the B plus areas and you are good. I will be in Pittsburgh in 2 weeks doing Due Diligence on a 152 unit up there, so if for whatever reason you happen to be around would be more than happy to meet up and chat about the market and what areas we are buying in. 

@Joseph Weisenbloom, not on your list and maybe too far but I think San Marcos is a rocket ship. Fastest city in the country for 3 years running (when not discriminating city populations) Hays county is fastest 3rd fastest growing county in Texas 5th in the country, going from 200k to 800k by 2040. There was an article in Austin Buss. Journal about it, just search "fastest growing counties". 

Our company is closing on 100+ complex over there so I have done lots of driving, some very run down houses next to 1 BDRM apts getting 750+ rent for a 1 bd. Opportunity for sure. We are definitely looking for more units in San Marcos. 

@Jay S.,

@Brian Burke gave you some very good advice. I would start by thinking about two things. 1. What type of investments do you want to do. 2. What markets are you interested in.

If you prefer let's say the Single Family Residential asset class more than Self Storage, that in itself will begin to week out some potential partners. Then lets say that you know the Denver area is booming and you expect it to continue, you may want to try to contact some lenders, brokers, and local RE Investment Club leaders and ask them who are the 20% that is giving them the 80% of their business, or who they would want to partner up with themselves.

For example out group focuses on Multifamily Investments in the Central Texas (Austin - San Antonio Corridor & Pittsburgh - where we started). If you don't like the thought of investing in apartments or those regions in particular, then we may just not be a good fit based on those two simple questions.

Just because you don't want to invest through a crowd funding portal doesn't mean that you can't window shop who the operators are doing the deals. With a quick google of the sponsor you can probably find out their office number and talk to them about a possible direct investment. I wouldn't discredit entirely working through a crowdfunding portal they do a lot of due diligence on the sponsor and deal that you may not want or know to do yourself.

Certainly each group will also have different barriers of entry as far as who they want to invest with them, but I think first if figuring out what is your preferred investment vehicle - Asset Class (Multi, SFR, Retail, etc) and markets that you yourself would like to invest in and go from there.

Any other questions feel free to ask.

@Eric A. sent. Look forward to speaking with you. 

@George P., As Joe mentioned becoming an expert in your particular area and knowing what to look for is an excellent way to find a deal. The reality is that properties that look like they are struggling, typically have an owner that: A). Is in a difficult financial situation and therefore may be willing to sell or B). is an owner that doesn't care about his property and if the right offer came long would consider selling it. In either case these are opportunities.

One reason why you may not be finding great listed deals, is that the market is incredibly hot right now, the other and more likely is that the agents/brokers have buyers ready to buy and therefore don't even need to list the properties on the open market. Remember that agents/brokers only get paid when there is a transaction so if they don't have to list the property and sell it quicker better for them and their client. Also for a group like ours that is new to the market, it is pretty risky for a broker to give us first crack at a deal, when for example one of our close colleagues has closed around 250 Million in the last two years. Again if your paycheck depending on a property closing you would also go with the 250 million track record.

If you want to find deal get ahead of them, brokers have more established relationships in many cases and obviously great reputations and backing of big companies, but deals are all about timing. Try to contact the property owner directly, be persistence and you will be rewarded. It isn't easy, but it does work.

 Also establishing relationship with brokers, letting them know what your looking for and just staying on their radar is great. On Joes Podcast Episode 290 Sean - gives a great example how they were able to show a broker that they were serious buyers and interested without buying a property in that market.  

Feel free to reach out at any time.

 Hey Nelson,

I guess it really depends what you want. If your are talking about a higher return, then obviously YES. Funding the repairs will also help you not have to come up with so much money out of pocket. Here I am assuming that you are financing through a bank, not friend or private investor. If you finance repair through a bank then the repair money is typically held in an escrow account. Where an inspector comes out and checks that the works is done. They may also require the you only work with specific type of GCs (licensed, union) that could also drive up cost.

In the multifamily space lenders are currently incredibly aggressive. We have been offered loans up to 85% Loan to Cost, which greatly reduces how much of your own money you bring to the closing table.

In your typical case I would suggest doing a 203k loan. I am currently under contract on a duplex and that is the loan I am pursuing. There you can roll your repair and renovation costs into the mortgage, and its an FHA loan so you only have to come up with 3.5%.

Here is a calculator I made, just find the limits to your county and play around with it.

https://www.dropbox.com/s/py9u3smr5nfbvel/House%20Hacking%20Sheet%20-%20BP%20Version.xlsx?dl=0

@William Fritsche, I would do all that you mentioned. We talk to brokers, websites, cold call, send letters. Do whatever you can to generate a deal pipeline. If your new to the area an agent could be useful, but don't rely solely on one. Remember not many people care about YOUR interest more than yourself.

My last five deals have totaled 515 apartments (4 closed, one under contract set to close next month). 3 of them have been by me cold calling the owners directly. 2 of them through broker relationships.

@Spencer Keables, if you would like lets set up a call, not sure what your schedule is like. I am also going to send you a PM so we can connect, I want to show you an example of a heavy value add deal we are currently doing in San Antonio, I think you will enjoy it.

@Account Closed, 10 years on a renovation can be a pretty long time for apartments, so make sure you ask exactly what was done 10 years ago what wasn't. Ask for the major cap ex numbers, roof, any plumbing issues, we typically camera the main sewer lines, one break of the line depending the severity and location your talking 20k plus easy. Electrical make sure you don't have aluminum wiring. 

Right now we are looking at a property on a flood plain, this insurance can be pricey, would you be required to carry flood insurance? 

On the financials, make sure that you are getting verified information, rent roll is great, make sure you do a lease audit ( once under contract), request the last two years billing statements. Look at the trailing p & l statements last 36 months - YTD. 

Yesterday we toured a 59 unit deal, broker told us "I don't know age of roof, but with all this rain they didn't have one leak", on a/c "they are all working fine". We luckily found a ladder and climbed the roof mid tour. At some point in the next few 1-3 need roof will need full replacement ( flat roof with alligatoring all over it, patches all over the place and you can start to see the Fiberglass membrane, underneath) Not Good! A/C units about 1/3 were being replaced. We can bet that we will be needing to change the other 2/3 soon also. By looking at financials we were able to see their repairs and maintenance budget was HUGE, why? They are trying to tape and glue the place together and are selling rather than dealing with it, a lot of deferred cap ex stuff. 

If interested send me an email or PM, I'll send you our "due diligence checklist" as well as a one pager of a contract that will show you everything we ask of a seller  

Good luck and we are with you!