All Forum Posts by: Joseph Cacciapaglia

There are a few different places in San Antonio where you can find deals in the price range you're talking about. Really, there are a lot of them, but I would only suggest a few, because some areas are much harder to keep rented than others. Most of my investor clients are either focused near Randolph AFB, in suburbs like Converse, Selma, Universal City, etc., or near Lackland AFB, inside the city limits. For under $130K, you're usually looking at 2/1's, but they rent pretty well in those areas. There are also some spots near the Med Center that work well, and also near St. Mary's University.

It's pretty easy to work remotely these days. If you're looking at tenant occupied properties, you usually can't look inside until you're under contract anyway. For vacant homes, it's easy to do a video tour through messenger or a similar app.

You should be able to make deals work here with 20% down. My go to lender has a 15% down product for investors, but sometimes it's difficult to make the cash flow work with that.

That looks like a promising deal. I wouldn't expect most house hacking deals to cash flow, unless you count your rent savings. Of course, in some markets you might find those. My first investment was a duplex that I lived in. I rented one unit, and also rented to a roommate on my side. With that arrangement it was just about break even. I would just suggest looking at this deal as if it were a pure investment first. If you're happy with those numbers, then moving into one of the units shouldn't really change that, except you are getting better financing. By the way, I respect that you're looking at taking the small unit. That type of frugal living will help you grow much faster.

If you are buying non-exclusive leads, then you aren't really accessing "off market" deals. They're just being marketed differently. I think it's important to distinguish off MLS deals with true off market deals. I find that some of these "off market" deals have just as much competition as deals that are listed by agents. Of course, you can still find good deals this way, you just have to learn how to make competitive offers. Hence your question.

If you are getting the opportunity to meet with sellers, I think the best way you can stand out it providing them some value in for form of education. One thing I like to do is share all the different ways that other investors may be trying to take advantage. This only works if you're not doing anything like that, which I'm assuming you aren't. I would also share all of my market data with them. Many sellers can feel the asymmetrical knowledge at play, and appreciate it when you are open with them. People do business with people they know, like, and trust. The more you can be an open book, the more they will trust you. Most sellers understand you're going to make a profit. They just don't want to do the work themselves.

All that being said, when you are competing for deals, it is often a numbers game. My clients that primarily buy MLS properties get great deals simply by making a lot of offers. It sounds like you might need to treat your "off market" leads the same way. I would say to do what you can to stand out, but don't waste too much time worrying about the deals you don't get. Move on and keep making offers.

1. I don't think one is clearly better. You can get great returns from 4-plexes and larger properties, and both have pros and cons.

2. You shouldn't have difficulty with multiple mortgages. At least in my market, lenders are willing to credit the income of the property based on a rent schedule appraisal. They don't require that it be on your past tax returns. Of course, you should run this scenario past a few local lenders and see what they say.

3. The last several 4-plexes I sold were financed at 75% LTV. That money is definitely out there. I don't know specifically for CA though, these were all in San Antonio, TX.

4. It does seem to be the case that 4-plexes naturally appreciate faster. However, if you're doing some value add, it's easier to force appreciation on larger properties.

5. I know you said "aside from the 1031 timing", but I want to talk about that really quickly. I had a client in a similar situation last year. They were selling a single property in CA and were trying to buy several properties here in SA. They eventually decided that it was too difficult to identify several properties, and went with just a single property. I don't know what the 4-plex market is like where you are, but here most don't stay on the market for more than a few days. Getting 4 under contract in your 1031 window can be difficult, and sometimes forces investors to make poor buying decisions. 

One benefit of the 4-plex option is that you gain more flexibility with your future sales, because it's no longer an all or nothing experience.

I've owned a town home with no HOA as a personal investment, and have also assisted clients with the same. The biggest issue is dealing with neighbors if/when they aren't properly maintaining their property. I had one client that had water coming into his unit from a leak in the neighbors roof. The neighbor refused to fix the problem, because it was a vacant property that they didn't care about. My client ended up having to sue to compel the neighbor to fix the roof (We tried to buy that neighboring property, but that didn't work out). This was probably the worst thing I've seen, but there are plenty of other minor problems that can arise.

On the flip side, I've seen neighbors get together to replace their roofs at the same time to negotiate better deals, and to take turns with lawn maintenance, because they all had small front lawns that were attached. It's hard to know whether or not you're going to have cooperative neighbors when you buy, and there is no guarantee that's who will stay there. To me, these types of issues are well worth the money I save by not having an HOA. That may not be the case for everyone.

I'm assuming you are asking from the investor's perspective. I believe both buying your own turn-key properties and making an LP investment in a syndication can both be a great way to earn passive income. Here are my thoughts on the relative benefits of each:

Turn-Key - Some quick assumptions: You are buying a property with a tenant already in place, have a great property management company, and the property doesn't have any deferred maintenance:

1. You can change managers - When you buy into a syndication, you are are completely dependent on the sponsor. If you are not happy with their performance, there is often not much you can do. However, when buying a turn-key property, you have the ability to find a new property manager, if you're isn't performing. Of course, how difficult this is depends on your contract.

2. You have complete control - If you decide to change to STR or spend additional money to upgrade the property, that's your decision. Of course, you have to wait for a vacancy. With a syndication investment, your investment is controlled by the sponsor and their business plan.

3. You have greater liquidity - If you own the Turn-Key property alone, you get to decide when to sell or refinance to get access to your equity. With a syndication, you don't get any control over this timing. You may be able to sell your LP position, but there is often a discount associated with doing this.

Syndication:

1. This is truly passive income - You don't have to make any operating decisions like you will with a Turn-Key property.

2. Not credit dependent - In many cases, you are not providing any guarantee, so you don't have to qualify for a mortgage. 

3. Professional operator - Although you may be stuck with the sponsor, you also gain the benefit of their expertise. When you are doing your due diligence on a syndication investment, you should vet the sponsor rigorously. Great sponsors will have a track record of solid returns over time.

4. More product options - You can invest a small amount of money and still access large multifamily or commercial properties. To make a similar Turn-Key investment would require much more capital.

You can achieve strong risk adjusted returns with either strategy, but from what I've seen your upside as a syndicate investor is limited. This is why many LP's eventually move to the other side of the deal. In my mind, the decision comes down to how much you want to be in control vs. how much you'll benefit from a professional sponsor. 

Full disclosure - I've looked into investing in syndications many times, but have always decided to invest directly in property instead. I have helped sponsors of syndications locate properties, and many of them do a great job for their investors.

I have found that most of the real estate "coaches" out there are not worth the money. I'm sure there are some exceptions, but I haven't run into them yet. I would focus more on building a strong team. If you have a knowledgeable agent, lender, attorney, inspector, contractor, etc., you should be able to learn anything and everything you need to in this business. Focus on working with true subject matter experts, not just the first person you happen to meet in those roles. If you're looking more for motivation, I would suggest finding an accountability partner. Find someone similar to you in another market that you check in with weekly to discuss your goals and progress. Another strategy is to find a more successful investor that will invest in your deals with you. This provides a new capital source, but will also often turn into an informal coaching/mentorship relationship. These people will be truly invested in your success.

I think it depends on the rate you're paying on your current debt, and also how much cash you think you could take out of your home. If you have any debt over 10%, I would definitely pay that off first. That's the benchmark I use, but admittedly, it's arbitrary. However, if most of your debt is low single digits, I would go for saving for the next investment. If you can pull equity out of your current home, I would go for it. Rates are incredibly low right now, and it sounds like you could easily afford a slightly higher payment with a higher loan balance. I would use that to either pay off higher rate debt, or as your down payment if you're moving forward on the second property. You should run this scenario past your lender, to be sure you'll qualify for the investment loan after your refi.

Are you planning to be a real estate agent full time? If not, you will have a difficult time finding legitimate commercial brokers that will take you on. If so, I would recommend you continue to follow up, and to also contact several more. This is a sales business, so don't be afraid to cold email/call brokers that you would like to work for. Many will appreciate it. If you are really motivated, put a suit on and walk into offices with your resume. I have had tremendous success with this strategy. Do you have a sales or finance background? The real estate job market is great right now in Dallas, so I'm guessing I'm missing something about your situation.

If you're plan is to be a part time agent, I would not suggest doing commercial deals. There is a large learning curve on that side of the business, and you want to be somewhere that will actually train you.

Does your brokerage provide an IDX agent website for you? I have pretty good success running my own FB ads that goes to an IDX squeeze page. The key is providing some sort of useful additional information or value. Depending on my target audience, it costs between $2 and $5 per lead. I only working with investors, but I think you could generate them for even less if you are willing to work with with non-investors too. The real key is continuing to follow up, because online leads take longer to cultivate than many other sources. Once you get a few investors, and do a great job for them, you will get a lot of repeat business and referrals. Then this job gets fun, because you're just working with friends.