All Forum Posts by: Joshua Ferrari

Absolutely it's your right to see the lease that you'll be taking over. They could not be allowing you to see it because they have something to hide. 

I wouldn't close on the deal until you've seen the current lease, as well as, security/pet deposit amount paid, whether or not that amount is transferred to you at closing, tenant screening report, rent roll, etc. The fact that they are refusing you access to the lease is a huge red flag. 

I would honestly walk away from the deal if they refuse.  

You could try a private money loan or hard money loan. Once you get into the property and fix it up or do whatever to it that you were going to, then you can refinance out of the original loan and pay off the private or hard money lender. Now you have a conventional loan. 

Co-signer is also an opportunity, but then you would either have to pay the co-signer a fee, or give them a portion of the equity. But 50% of something is better than 100% of nothing. 

You could also try owner financing. That will completely bypass all the banks and allow you and the seller to create your own terms for the deal. The seller would become the bank essentially, and you would get to decide on terms like interest rate, amortization period, fixed-rate or adjustable-rate, down payment, etc. 

You could also take over the existing sellers mortgage with a subject-to contract. Then you don't have to find a mortgage, they already have one, and you can pay the seller a down payment at closing if they wish. 

Try to figure out the root reason that they are wanting to sell, and then solve both of your problems by getting creative. Bring on a partner if you have to in order to help with the creative thinking. 

I'm sure there's a ton of other creative ways I didn't mention, but hopefully this is a good stepping stone for discussion with sellers. 

Depends on your end goals. 

LLC's are only for asset protection against any lawsuit that could be filed against you if your property wasn't in a separate entity.

Some people say they want a different LLC for every property that they have. Some say they want one LLC for all their rental properties and a separate LLC for their flips. Some say they get an LLC for every 5-10 properties that they own. Some even say they don't bother with LLC's at all.

Establishing an LLC is only a few hundred dollars, so it's not a financial hurdle by any means, and it protects you and your asset.

Some people have also said that it's harder to get a conventional refi under an LLC that only owns one property, because there isn't any credit history, and there's not much of any proof of income to substantiate a refinance. But they'll just look at your personal credit and proof of income if the LLC doesn't have any.

You also have to completely separate your LLC funds from your personal funds. That means creating a bank account for every LLC that you own.

All in all, it's something to dig deeper into yourself, and figure out what your end goals are in your real estate investing journey. 

How: I made the transition by giving it all I had. My ever focus of real estate was related to learning multifamily properties. More specifically, Class B & C apartment assets. I honed my niche to value-add in those class assets and in just two markets, Mobile & Baldwin County, & Escambia County. 

It was difficult at first to learn all this new stuff and I thought I'd never get a deal done because I simply just didn't have the capital or network to do bigger deals. My thought process was that I needed to dive in head first and learn as I go. I knew if I never took the leap of faith into the niche, that I would've analyzed it to death and would've been stuck wholesaling throughout my real estate career. (I'm definitely the spreadsheet guy.)

When: I took the leap of faith after a little over a year of wholesaling. I got tons of properties under contract, but was only able to actually flip one property. It let me know that I was capable and that I was going for small potatoes, while these other investors are cashing huge checks and they're just like me. They started out with nothing, but created success for themselves through hardwork and tons and tons of networking. So, I decided to do the same.

I found a local mentor who's been really successful in the space and he took me under his wing, so to say. He answered a ton of my questions and guided me to where I am today. Granted, it's been two years and I've just got a four unit, but the experience from that has catapulted me further than I thought it would, with brokers, lenders, investors, property managers, etc. I'm now at a point where I'm looking at 30-150 unit complexes that I'm being sent off-market from reputable brokers that I've built rapport with.  

Why: I did it because my end goal is financial freedom for my family & our future generations. I want to help others do the same. Knowing that it's possible to have this level of freedom is absolutely mind boggling to me, and I can't fathom why more people don't do it. Sure it's hard work, but the pay off is astronomical. 

My advice would be to "Just do it" -Nike. Dive in and learn everything that you possibly can. Don't procrastinate like I did in that first year. If this is what you want to do, then start today! Once you feel like you have a basic understanding of the jargon and the niche, start reaching out to other investors who are in that niche. Your network is your net worth and I learned that very quickly in this niche. 

If you want to know a good place to start being educated on the topic, you're more than welcome to check out our website over on my personal page. Here are some great books too, to get you on the right path. 

Best Ever Apartment Syndication - Joe Fairless

Traction - Gino Wickman

Extreme Ownership- Jocko Willink

Advanced Tax Strategies - Amanda Han and Matthew MacFarland

So Good They Can’t Ignore You - Cal Newport

10X Rule - Grant Cardone

Raising Private Capital - Matt Faircloth

Vivid Vision - Cameron Herold

The 4 Hour Work Week- Tim Ferris

The Miracle Morning/The Miracle Equation - Hal Elrod

The Hands-Off Investor - Brian Burke

Rich Dad Poor Dad/Cashflow Quadrant - Robert Kiyosaki

Never Split The Difference - Chris Voss

Crushing it in Apartments and Commercial Real Estate - Brian Murray

Multi-Family Millions - David Lindahl

Wealth Can’t Wait - David Osborne

Miracle Morning Millionaires - David Osborne

Retire Early with Real Estate - Chad Carson

My first phone call was frightening. I was once a wholesaler for a little over a year before I moved into multifamily syndications over two years ago. 

I had a script wrote down on what to say to the seller, but it was just that. A script. It wasn't personal at all and they didn't want to sell to me. I had to be more personal in my future calls and remember their names, talk about their situation, figure out why they wanted to sell, and solve their problem. Only then was I able to get deals under contract. 

HELOC is a great way, but you need to be sure that whatever investment you make with the HELOC will be able to be paid back on a monthly basis.

For example, if you take out $100K and your monthly note is $1,000, then you want to be sure that the multi family property produces more than $1,000/month. 

There's also cash out refi's. I haven't seen many lenders do this right now, due to the state of the economy, but essentially you refinance your home to a larger amount and pull out up to 80% of the equity that you have in the home. Then your new mortgage would be larger as well. 

You could also consider getting a second mortgage, but again, due to the state of the economy, not sure how easy those are to acquire because of the increased risk to the lender. Maybe you find a private money lender and have them take a second mortgage on the house for up to 80% of the equity.

Depends on what the partnership consists of, and what your niche is of going about doing business. 

For instance, I'm a multifamily syndicator and I would never do a syndication and form a general partnership without the help of a licensed attorney.

Anytime there is an exchange of money within the partnership, I would consult an attorney in the field of expertise that you need. It would help safeguard everyone in the partnership. 

If it's you, and a friend that you've known for years, entering into a partnership to say, wholesale some properties, then maybe you could do without one. But I would exercise extreme caution if you decide against hiring one.  

@Christian Williams @Greg Dickerson @Jay Helms

Thanks guys! 

My niche is multifamily syndications, and the data we look for in a market/deal is:

- Market Performance: Rent Growth, Market Vacancy, Long-Term Vacancy Average, Adverse Cycle Occupancy Bottom, Median Income, Employment Pool, Rent to Cost of Ownership, Income to Housing Cost Ratio, Market Rankings, Construction/Absorption Ratio, Pricing, Cap Rates, Trends in Capital Market, Etc.

- Forecasted Market Performance of the Same

- Property Specific Performance: Asking Rents, Actual Rents, Vacancy, New Lease Trade-Outs, Average Vacant Days, Lease Terms, Retention Rates, Renewal Trade-Outs, Sales Record, Renovations Completed, Market Comparable Amenities based on Class of Asset, Revenue, Rent Roll, Trailing 12 Months of Operating Expenses, Property Taxes, Property Insurance, Market Trends of Specific Floor Plans, Etc.

This is but a few of the major things we look at to be sure we are providing our investors with a solid investment that brings healthy returns.

I'm not heavy in the single-family space, but I would think there's definitely some rollover in the analytics. 

Congrats on getting your realtors license!

I've got a potential multifamily deal in Mobile, AL, but with everything going on with lending, it has become extremely difficult to acquire capital. Does anyone have any recommendations on how to be creative in acquiring commercial financing during this economic downturn?