All Forum Posts by: Krystle Moore

Depends on what you're looking for. Small banks can be limited on their lending and may charge higher rates and fees.

IMO, there's no always or never in this scenario. You just have to do your research and decide what is best for your situation/needs.

Thanks! The laws are definitely coming to San Diego. They will likely be presented in Feb or March. The city of Chula Vista just passed a new tenant ordinance and something similar is going to be presented for San Diego city. They’re calling it an effort to curb homelessness. 

Currently we gross $25,100. Proforma is $26,600 once all units are at market, not including the ADU. We should hit that number by Q2 2024. In the meantime, starting on getting the ADU plans.

Has anyone not applied for their Tier 3 license? Just before the holidays, there were still over 2,000 licenses available. I am shocked - based on the number of TOT certificates, I thought for sure that there would be a lottery though not enough people applied and we got all 4 of our licenses. There are still licenses if you are interested - I would hurry before they're gone!

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $3,875,000
Cash invested: $1,317,500

12 unit apartment building with upside in rents. Increasing income by renovating units as they turn and adding laundry to each unit. Will also convert existing laundry room to ADU for additional income.

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

Never lost a dollar investing in apartments. It's a long game but the cashflow is forever.

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

I found it through a broker that I work with. We had actually done financing for the seller in the past so it was easy putting the deal together since they knew who we were and that we perform. We ended up negotiating a $35K seller credit for the roof (it needed to be replaced).

How did you finance this deal?

We got a 2 year bridge loan tied to 6 month SOFR with a 1% cap per adjustment. It's been a little painful but overall, I think the timing will be good to refinance in 2024.

How did you add value to the deal?

We got rid of a few bad tenants and renovate units as they turn. Also adding laundry to the units. We are not aggressively vacating the building like we have done in the past. There is alot of attention on investors who are doing that and the city is trying to pass more strict tenant protection laws. We will do it slowly over time and still reach the same cashflow. As is, we are getting higher rents than forecasted when we bought the building.

What was the outcome?

We are getting $150-$200 more on renovated units than projected.

Lessons learned? Challenges?

We have professional management and I let them do the first 2 units for the first time. It took a long time and it costed more than when I use my guys. I did one unit recently in half the time and less than half the cost. I will be doing all turns in the future. I have always done them in the past but was busy and hoped they could take care of it for me but when it comes to renovations, owners should be directly involved. It can save a ton.

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

Absolutely - Florian Sighe at the Browar Group represented us & the seller. I don't usually like agents double ending deals (difficult if not impossible to properly rep both sides) but he did an amazing job, was diplomatic, guided us & helped us to the end. Excellent communication and making it a win win for both sides. He has become a friend and a great referral partner, I would use him again in the future. We financed the deal ourselves (I am a mortgage broker) & I highly recommend us!! :)

Hi Jack, I do commercial financing in CA, so I wouldn't be able to help you out of state. Depending on the size, I'd be happy to refer you to a good broker. I know a few in other states and who also lend nationally. In general, commercial financing is much easier than residential but there are some terms you haven't seen if you're used to residential. I'd be happy to answer any questions I can and point you in the right direction. I wouldn't be any more worried about scammers than anything else, just make sure you work with someone who has experience financing the type of property you want to purchase.

@David Frandsen oh yes! We are currently in the process of getting a converted office approved as an ADU. A previous owner had already converted it into a studio and it's being rented. There is definitely a ton of opportunity in buying properties with potential to add ADU's.

@Dan H. I used to own a property management company and sold it in 2018. Now, we use professional management for our properties now. For us, we decided the best ROI on our time was to make more money so we could keep investing. At some point we may bring our management in house but I'd like to own at least 200 units for that. That said, it becomes a whole other business which can be time consuming and take away valuable time that could be used finding more deals and/or making more money.

On most of our projects, we put 25-35% down, rehab the property and increase income then refinance, get cash out and go by another property. After the refinance, we usually end up with about 10% or less in the property. This one is different, we'll still end up with about 25% in the property but we have better cash flow. 

I guess it depends on your goals. Ours is to own larger buildings and increase cashflow. The purchase of this building was a big step in that direction.

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We are a Wealthability client and have referred several of our clients to them - they have helped us tremendously. We were paying 6 digits in taxes with our previous CPA. I couldn't understand how it was possible we were paying so much in taxes when many of our clients make far more than we do and pay little to no tax. 

The first year they did our taxes, we paid taxes but significantly less than previous years. This year I am happy to say that we not only didn't pay any tax, we are getting money back. While the consulting fee seems steep, it's actually a steal if they show you how to reduce or eliminate your taxes simply because they know the tax code. It was money well-spent for me and my family and I would recommend it to anyone who owns real estate and is a business owner who is paying taxes. It's worth a call to them to see if it's a fit.