All Forum Posts by: Jordan Becker

Hi folks, what level of rehab work requires that you pull permits, or at least makes it strongly advisable to do so? I am thinking that some work may be too minor to bother with the permit process, especially since in some locations the process can take a long time. So how do you decide whether to pull permits for a rehab job (or insist that your contractor do so)? Thanks.

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That would be great, thanks!

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Can anyone recommend a good entity formation attorney in Ohio (e.g., for forming LLCs and the like), ideally one who has experience with real estate investors? (I've considered non-attorney alternatives that provide entity formation services, but prefer not to use those.)

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Thanks, great feedback!

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Thanks, all, although I think the last couple of responses kind of missed the point of my question. I have already decided that cash flow is my prime goal. Any equity is just a bonus. My question was, given that my strategy is to scale up my number of doors as quickly as possible, whether buying more doors at a lower COC return is better than buying fewer doors at higher COC return. Anyway, I really do appreciate the responses, so thanks again!

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Originally posted by @Randall Alan:

My wife and I have purchased 24 properties in 3 years, totaling 40 units, plus do flips on the side. We worked our corporate jobs until we had about 20 units, then, with enough cash flow we quit our jobs and now do real estate full time. Much of your answer depends on your resources. For us, cash flow is king, so low COC return is a non-starter. I think the only reason I might consider it would be if you thought there was a substantial appreciation play to be made down the line, because we have found that by buying units cheap we have been able to double to triple our money in less than 2 years on some of the properties we have sold recently. Outside of that angle, we look to maximize cash flow by buying cheaper properties that will still rent well. If buying using residential financing, know there are a limited number of loans you can have. If your credit score is under 720 it is 7 loans. Over 720 credit score it is 10 loans… but there are also increasing reserve requirements you must meet as you build your portfolio.

We started out buying multi-family properties, but soon switched to single family. They are far more plentiful, and appreciate faster than multi-family in our experience. You are going to be fighting institutional investors for larger multi-family properties… and it seems like they really don’t care too much about what their return is, as long as it is better than the stock market. We, of course, do care, so we find single family homes to provide a good opportunity for lower entry point, faster appreciation, and still good rents. Typically we net 50% of a property’s monthly income on a financed property, including accounting for taxes, insurance, and a 10% maintenance reserve. It takes buying a property right (read: cheap) to pull that off, but we have been able to do it. No way would I ever consider a 4-7 cap property.

Randy

Thanks for the (lone) reply, Randy @Randall Alan. Very much appreciated!

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I am a relative newbie investor, focusing on small multifamily (at least initially). My goal is to scale up as fast as possible, in order to build cash flow. Is there any advantage in doing a larger (more expensive) deal that produces a relatively low COC return but gets me more doors, as compared to a smaller deal (less expensive) with fewer doors with a higher rate of return? My gut tells me the deal with more doors is just locking more cash into a poor rate of return; however, I have heard on BP podcasts that scaling up is the key to building wealth in multifamily investing. So I'm wondering if there is some reason to sacrifice a better COC return in the beginning in order to scale up faster. Any advice in this regard would be greatly appreciated.

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Thanks, @David Lilley and @Jeffrey Donis !

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Thanks, @David Lilley! So you're saying depreciation is not dependent on the age of the property, correct?

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All Forum Posts by: Jordan Becker

Jordan Becker has started 9 posts and replied 25 times.

Post: What level of rehab work requires permits?

Post: What level of rehab work requires permits?

Post: Looking for entity formation attorney in Ohio

Post: Looking for entity formation attorney in Ohio

Post: Scaling up quickly vs. maximizing COC return?

Post: Scaling up quickly vs. maximizing COC return?

Post: Scaling up quickly vs. maximizing COC return?

Post: Scaling up quickly vs. maximizing COC return?

Post: Multifamily Financing and Depreciation

Post: Multifamily Financing and Depreciation