All Forum Posts by: Kim Allard

Dear BP members

So many times I have received valuable insights and contacts through this forum... it’s pay back time!

Take a few minutes to read this: https://www.ccim.com/cire-magazine/issues/Jan-Feb-19/

Basically, to borrow the words of wisdom of the CEO of one of the major lenders: « we are in the 7-8 innings of the economical cycle but only in the 4-5 innings of the cap rates » as of February 2019.

So if you look at the commercial real estate price index, it has been plateauing around 130 for the last 2 years (big demand for CRE bcz people need to put their money to work somewhere). However, the fed increased its rate, and interest rates went up. So cap rates should also be going up (these 3 move in tandem) but they haven't and the spread between the interest rate and the cap rates is closing, which means that the prices are too high, you will get negative leverage on debt soon unless prices go down.

So that’s why cap rates are so dangerous when you look at them in isolation - they are a snapshot at a precise moment in time but they don’t tell you how your investment will perform for the next 5 years and it doesn’t take into account the economical cycle.

If you really want to do yourself a favor, take a CRE financial seminar , buy books, educate yourself on financial maths and soon enough you will know why the veterans are never negotiating on price but on return (yield cap rate, IRR, etc) and you will do the same! And plan your exit strategy even before you get in... what you should care about is return during the entire ownership period (which includes also sales proceeds) and find that sweet spot of LTV ratio that will bring you back the highest return on your equity.

And what seems appealing to an investor might not be to another one; if you are all about stable NOI, you will prefer a stabilized property. If you want the big pay off of equity at sale but you don't care as much about constant cash flow, then you will look for unstabilized properties. These have very different cap rates and yield rates and IRR. It all depends on what are your objectives and then which property can help you meet your objectives.

We are using a CRE advisor for our deals (not a broker) and we determine what it is that we want to achieve. Once we know, then we determine what Is needed exactly AND THEN we go shopping based on our criteria... that way we don't do impulsive shopping because after all; experience is what you get when you don't get what you want but first, you need to know what you want! (Borrowed from our advisor :-)

Cheers!

Kim

Dear fellow members,

With all your experience, may I pick your brain please?!

My husband and I are at a junction. We want to acquire multi-families within the first half of this year in the Miami-Dade and Broward area.

We have to take a decision about how to use the capital at our disposal as well as how to make the best use of our borrowing capacity.

We want to invest in multi family as we realized that condos and SFR will not get us where we want to be within timeframe.

2 options:

1) use our capital to make down payments on as many multi family as possible through conventional loans (which means a max of 4 mortgages x 4 units each = 16 doors)

Or

2) use our capital to make a down payment on a commercial property of 12 -20 doors and not use our personal borrowing capacity

Objective wouldn’t be to stop there but to continue to acquire some buy and hold multi family properties after these initial acquisitions.

Any thoughts and/or piece of advice on how to move the pieces on the chessboard?

Many thanks in advance!

thank you for your answers -  they were helpful and I actually got in touch with Ana and started the 401K Solo :)

@Chloe Philipp various apps already offer this. They help create website, Seo optimized, portfolio of projects, quotes, invoicing, digital payment, community, etc. Around 15$/month. Half price if you pay full year.

Hi, my husband and I own rental income properties and before adding anymore to our portfolio, we need to structure business entity, establish strategy and tax planning, move assets wisely and perform some estate planning. Would also need our CPA to deal with international properties as planning to add a few to portfolio. We are located in Miami and would like to establish long term business relationship with a local CPA. Any recommendations? 

Thanks in advance for your support!