All Forum Posts by: Kenneth Haynes

We are looking at an 8 unit complex to purchase for a long term buy and hold. It would be our first multi-unit purchase. The seller wants $550K and the agent says the CAP rate is currently 7% and should be closer to 10% once the rents are brought up to the market rates.

Based on the NOI and the stated 7% cap rate, the property is only worth $300K. It IS grossly underperforming and once the rents are brought up to the market it should cash flow nicely but at the asking price, it will be a negative cash flow even if we could get financing.

Since I have to get financing, I don't think the lender is not going to give us $550K or anywhere near that based on the current financials. 

Based on my conversations with the agent, it seems he is either using residential property evaluation to come to a purchase price and doesn't understand how commercial properties are valued or he's basing the sale price off the proforma valuation.

We've gone back and forth and the agent doesn't think the seller is going go lower than $475K. At a $450K purchase price, we would barely break even assuming we could get financing. 

What are your thoughts? Should we offer $450K and break-even on entry? This is our first multi-unit. We have one other property that we purchased cash, so this is the first one we'd need to finance. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $92,000
Cash invested: $92,000

Our first investment! A two-bedroom condo in Nashville. Great tenants!

What made you interested in investing in this type of deal?

The numbers worked. It was in the market we wanted to invest in.

How did you find this deal and how did you negotiate it?

I found it on RedFin. I negotiated through a real estate agent.

How did you finance this deal?

All cash

How did you add value to the deal?

Upgraded the kitchen, bathrooms, and windows.

What was the outcome?

Increased ARV

Lessons learned? Challenges?

Make sure the neighborhood is a good one.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jeff Jolly - Crye-Leike real estate. The best agent for buying.

I'll do my best to answer questions you might have, what's up?

Finder fees are legal and a good way to find properties others miss. I typically pay between $500 and $1000 depending on how good a deal is.

Hey @Cole Pavlina!  Welcome! The Pacific NW is a fantastic market and the Bigger Pockets website is a great place to meet like minded people. I recommend the webinars and podcasts. They have a TON of useful information that will get you up to speed quickly.  I'm available to answer questions and help out whenever I can.  Are you looking to start investing in your area?  Do you know where there may be properties that are in need of renovation that are located in good neighborhoods?  That's a starting point for finding good investment properties. Do you know if you're wanting to flip, or buy and hold for rental income?

Hey Joey,

That's a great request. Having a mentor show you the ropes will be fantastic, but I have a question for you.  What's in it for the mentor? Think about it. Why would someone take that much time to show you the ropes?  You CAN find good mentors, but expect to pay a lot of money for that kind of instruction.

In addition, I think you'll find that most people are so busy doing their own deals AND working a day job on the side, that they don't have the time to be able to do something like that, even if there was something in it for them.

May I suggest you download and READ the great materials that are available on BP? Sign up for the webinars and watch some podcasts.  There's so much information here that will be helpful for you. If you have specific questions, go ahead and post them on the forums.  The people here are great and willing to answer even the most basic, newbie question you might have.

Best of luck to you  in your investigation. I wish I had the wherewithal at your age to get into real estate investing. 

Hi @Joey Mack. I'm also an investor in the Portland market. Welcome! One way to find a good agent is to get on Zillow.com and click on the find an agent tab.  You may have to kiss a few frogs to find someone you really like and 'click' with, but look through the listings to find those agents that work with investors.  As far as hard money lenders are concerned, you can find them all over. Google is your friend.  Stay away from the ones that want a large deposit just to do business with them.  There will be points on each of your loans but call a few of them to find the best deal on points and rates. Don't just stop with one or two. Best of luck to you!

Hello @Dusteen Brielle and welcome to BP! There is a LOT to read and learn and a lot of great folks to help!

Ken Haynes

Hi @Charlotte Fogarty, welcome to BiggerPockets! It's a wonderful place to learn, learn, learn. Best of luck to a fellow Oregonian!

Thanks @Lisa Bryant. I'm overjoyed at finding all the great information and great people here on BP!