All Forum Posts by: Jill F.

How long is his lease? Why don't you just non-renew him at the end of the term?

Quote from @V.G Jason:

Quote from @Jill F.:

I hope you're right and I hope rates go down some! It's been disappointing when the fed cuts caused increases in the 5yr rate (that our dscr loans are tied to). The last few years we've just been nickel and dime-ing it--  picking up small value add add-ons near existing properties and recently did a "trade-up" 1031 exchange sale/purchase for a newer/better neighborhood property with one less but larger higher rent units.

Here in mid-west flyover country, rents are still creeping up and almost all the development has been luxury rentals (mostly by Redwood). Since 2020 we've seen large asset value increases and large tax increases, and more modest insurance increases but we've been able to improve our profit margins sufficiently to keep up with inflation and even do a little better in many cases. We don't see the level of demand that we had in 2021, but we haven't had much turnover, and we've rented quickly each time we've gone to market.

Next year, we'd really like to cash-out refi or 1031 exchange some high equity properties and buy our first (large for us) 30-50 unit (1978+) multi-family.

Financing is different down here in small investor world. Most of our loans are fully amortized and those that aren't, are 10 year balloons where we'll have more than 50% equity (at the purchase price) upon loan maturity in 2030+. 

In our market, even 6.5% would make cash flowing deals possible for us at purchase (with rent increases to market). I'm researching/looking into Freddie/Fannie financing for large multi-family now. Any thoughts/advice for small investors trying to get into larger properties?

Consolidation. Goes back to that original thesis in a thread long time ago-- quality over quantity. Quit nickel and dime'ing it, put more money in better/bigger deals. Better and bigger are not synonymous, better and quality are. 

 
Everything you said is exactly why-- debt levels, market demand, associated costs(taxes & insurance). Quality over quantity. 

If you can take 8 properties and move them to 3 bigger & better one's great, I would push you further and say take it to 2 even better one's. 

 TY for responding. I see that I wasn't clear in my description of our current situation and our goals.  By nickel and dime-ing it I did not mean we were buying cheap or low quality properties, I meant we were adding properties as they became available in neighborhoods where we were already invested. We started out buying groups of duplexes.

Now that we have significant equity positions in renovated, stable properties, we want to move into even better neighborhoods with better schools and we'd like to scale our business by purchasing newer and larger multi-family properties (rather than groups of duplexes). I recently learned that Fannie and Freddie offer financing that wasn't available to us for smaller purchases and I'd now like to pursue larger deals with this type of non-recourse financing. 

I hope you're right and I hope rates go down some! It's been disappointing when the fed cuts caused increases in the 5yr rate (that our dscr loans are tied to). The last few years we've just been nickel and dime-ing it--  picking up small value add add-ons near existing properties and recently did a "trade-up" 1031 exchange sale/purchase for a newer/better neighborhood property with one less but larger higher rent units.

Here in mid-west flyover country, rents are still creeping up and almost all the development has been luxury rentals (mostly by Redwood). Since 2020 we've seen large asset value increases and large tax increases, and more modest insurance increases but we've been able to improve our profit margins sufficiently to keep up with inflation and even do a little better in many cases. We don't see the level of demand that we had in 2021, but we haven't had much turnover, and we've rented quickly each time we've gone to market.

Next year, we'd really like to cash-out refi or 1031 exchange some high equity properties and buy our first (large for us) 30-50 unit (1978+) multi-family.

Financing is different down here in small investor world. Most of our loans are fully amortized and those that aren't, are 10 year balloons where we'll have more than 50% equity (at the purchase price) upon loan maturity in 2030+. 

In our market, even 6.5% would make cash flowing deals possible for us at purchase (with rent increases to market). I'm researching/looking into Freddie/Fannie financing for large multi-family now. Any thoughts/advice for small investors trying to get into larger properties?

Pass for me. It took me a while to find a great commercial agent to work with but that relationship has really paid off for me.  I am focused on growing and running my rental business while my agent is focused on buying and selling commercial real estate. Perhaps I would have gone that route if I had started younger...

Our son is a partner in our business. He recently married. All of our properties are held in LLC's where the operating agreements allow non-members to inherit a financial interest in the company but non-members are not allowed voting or decision making rights unless they are unanimously admitted as a member. Our son's financial decisions regarding his assets as they relate to his marriage are his alone to make. Should he and his wife ever divorce, they will have to figure out for themselves how to divide their marital assets. I feel good about how our company leadership is protected and our son's ability to provide for his wife should he pass before her.

I'm about to use about that much to buy me a nice little 6 unit.

I have never understood the obsession with finding 'off market' deals. Look for deals where there is value. Get good at finding value that others have may have missed. Be a considerate buyer. Make sure you don't chase deals where you can't perform. To find more deals: Develop a great business relationship with a stellar commercial agent and an mls agent that is a good negotiator. Develop a relationship with different types of commercial lenders so that you can expand the types of deals where you can perform. If you do a deal without an agent that has a fiduciary duty to you, make sure your attorney prepares the purchase contract. I generally avoid wholesalers because my experience has been that they are unwilling to use a standard purchase agreement that is fair to both the buyer and seller and they do 'shady' stuff.

If you are a considerate buyer that demonstrates an ability to perform, off market deals will come to you through those people with whom you have developed good working relationships.

(I am a fellow investor offering advice, I have nothing to sell and no pony in this race).

Bob has been giving bad advice for some time. Additionally, his ugly, nasty, condescending behavior has been called out many times by many members (including me). Fraud is a high bar to finally do something about a member that has been so problematic for so long. James, Thank you for finding something that may finally cause some action to be taken.

I have found that it is difficult enough to get people to call when they should without charging for 'service calls.' The only time I charge a tenant for a service call is if the tenant schedules a service call with one of my 3rd party vendors (that schedules directly with the tenant at my request) and then either no-shows or doesn't allow the vendor to enter as agreed. I may also charge if one of our people can't perform scheduled maintenance because the tenant has not crated an aggressive dog. I have found excess service calls to be very rare and they have been limited to tenants that were already known problem people (usually people with some kind of pretty obvious personality disorder).

Buildium does all of those things and it has integrated accounting. It is a more expensive solution. We started out with it because we started out with Buidlium 8.5 years ago with our fist 8 rentals and we planned to scale as fast as we could. It's actually been worthwhile because it allowed me to avoid reinventing the wheel by providing solutions aimed at the needs of property managers which was especially helpful in providing direction when I didn't really know exactly what process and procedural problems I was going to need to solve. Also, I do think it's worthwhile to get a google voice number for your business-- you can forward it to your cell phone and make and receive calls from either the google voice number or you cell number. It's going to be more flexible than strictly relying on you property management software for all communication.