All Forum Posts by: Account Closed

Hey, 

I wanted to just ask a couple questions regarding some aspects that will impact underwriting of multi-family properties.. I've really been putting in a ton of work to learn the ins and outs of the game here but I'm trying to get a more thorough understanding of a couple aspects in regards to underwriting. 

A lot of the numbers we input in underwriting models are pretty concrete to know such as mortgage rates, LTV, amortization, certain expenses etc.. but its the unknowns that can greatly skew an underwriting model such as renovation costs if you mess it up..

So, my question would be.. How can we determine "ACCURATELY" the cost of the renovations we "plan" to do to a property to ensure we aren't making a good deal bad or buying a bad deal. I feel if you underestimate this line item it can greatly screw you over..

I would think, that perhaps when you do a walk through of a property you bring a contractor with you to get an idea.. sound right? 

But then this leads to another question.. How much money are you likely to go out of pocket before even locking up a deal? And IF the deal falls through then the cash you spent on this is "wasted".. 

So, what are your ideas, thoughts, and attitudes on how to accurately figure out reno costs, as well as costs you can incur without even locking up a deal?

Cheers friends! 

Kory Louvelle

Thank you to everyone whose contributed to this post, its excellent to hear so many view points and get talking with other investors! Thank you, again! 

I wanted to add a little bit more into what I'm thinking..

I am trying to avoid everything under 16 units entirely as from my understanding, which Grant Cardone echos, anything less than 16 units doesn't provide the pure cashflow needed to have a property manager as well scale as well as the added risk of few tenants. 

I'm not really looking for a single, duplex, tri etc.. as in my opinion that's very high risk as if you have a 4 flex and lose 1 tenant you're now only 75% occupied and lose 2 tenants you're now 50% etc.. I believe the smaller units are also the most foreclosed upon out of everything.. the higher the units the more tenant mix you get which would also mix up their income sources to diversifying thus limiting risk from few employers etc.. 

so yes, I want in the neighbourhood of 16-32 units and ideally BRRRR the thing and do a cash out refinance and pull my money back out of the deal and then invest into a another place with double the units to employ the Stack method (see Multi Fam Millionaire Vol 1 for this method) and just keep repeating this process..

I want to limit risk as much as possible which makes me uncomfortable putting my whole investment account into a deal so I'd like to take at least $100K and "Potentially" partner with someone to jump the units, but I really dont think there's a chance in hell to get that many units with that little capital... I know the traditional lenders are normally in a range of 1=3 or 4 so I think id probably have to buy a fixer upper, employ BRRRR etc if im only using $100K.. Of course my plan is subject to change as I learn new information, this is just a rough idea of what I'd LIKE to do... now getting there is a lot harder than just saying what I plan to do!

Thanks for your time and feedback friends! Much love! 

Hey Nathan, just wanted to say I appreciate your response! 

Cheers, friend! 

Hello Bigger Pockets Fam! 

I'm excited to be on here with fellow REI's! I'm looking for a little bit of advice right now and wanted to put it out there!

I’m 30 and work in professional sales, I make decent income and have a little over a quarter million invested in the S&P 500 right now. I’ve always been drawn to multi family real estate but never pursued it.. however a few months ago I got really into educating myself on it all. I read “Crushing it in Apartments”, “Multi Family Millionaire 1&2” , “The Real Book Of RE”, and also did a course from Grant Cardone! 

I even re read the “Multi fam millionaire 1&2” and took notes my second round. Needless to say, I have a lot of information and I have the processes sort of outlined - literally hundreds of pages of notes - but I only have book knowledge which is my problem. I don’t have any real experience actually dealing with banks for financing or looking at real OM’s or seller documentation or actually underwriting a multi family … so I’m really not familiar with any of this stuff other than just the text instructions, you can say. 

I’m trying to narrow down a plan and process of what to focus on and learn how to do and I feel the most important thing for me to learn is how to actually underwrite a real deal with real documentation opposed to just reading about it. I want to practice this over and over again but I don’t know how to acquire this info other than actually speaking with brokers etc.. is there a better way to do this for practice ? 

I’m ideally wanting to get a 16 unit C class apartment and value add but again I’m lacking all the experience on this and I’m 100% not comfortable underwriting deals until I’ve done it numerous times so I’m just wondering what you’d think I should do to acquire this knowledge? Are there practice sites for this type of stuff or what? 

Thanks again! Kind wishes!