All Forum Posts by: Kristina Sparrow

You can do this for free. Depending on how you plan on funding your deal. If you are self-funding, you could request a letter from your bank certifying you have a minimum amount of liquidity. OR if you plan on syndicating, have your investors sign "letters of intent to invest".

I second Shelon's suggestion for Michael Blank's SDA. The most important metrics I consider are IRR, equity multiple and cash on cash return. Target metrics would differ depending on the riskiness of the deal you are analyzing. I underwrite heavy value add deals and won't accept anything less than a 18% gross IRR, 1.5x equity multiple, or 7% cash on cash return.

Hi Tamika. In addition to everyone's advice above. It is important to consider what your Return on Cost (ROC) would be. You can calculate this by the following formula:

(Projected Potential Rent - Current Potential Rent) / Cost of Renovation.

Projected potential rent would be the annual gross rental income for the building if you converted it to 8 units. Current potential rent would be the annual gross rent you could achieve for the building if you leased it as-is and did no renovations. You would have to take into account the different unit sizes and market rent in your area for those size units. Generally you want your ROC to be higher than your cost of capital for it to be worth it.

Financial Freedom with Real Estate Investing by Michael Blank. His book is geared more towards multifamily syndication, but I found this the most helpful for step-by-step instructions even if you plan on investing on your own and self managing. Cheers!

@James LePage There are two main publicly traded companies that build to rent. American Homes 4 Rent (ticker: AMH) and Invitation Homes (ticker: INVH). You can learn a lot about the space by going to the "Investors" page on their websites and reading through annual reports and investor presentations. Hope that's helpful.

Hi Barry, does PropStream also provide info on commercial multifamily properties (5+ units)? I was browsing their website but couldn't find an answer. Thanks in advance!

@Carlos Fernandez larger payments take the same amount of time

If you just plan to make the extra principal payments on the 30yr, then yes the only benefit over a 15yr would be flexibility. But that flexibility comes with the cost of a higher interest rate and more total interest paid over the 15 year period. However, instead of making the extra payments on a 30yr, another option is to make regular payments but invest the difference between what you would pay on a 15yr. This would be the most beneficial scenario given you can find investments with an expected return greater than the interest rate on the mortgage.

@Account Closed Thanks so much for your spreadsheet, very helpful

Hoping we can set something up soon!