All Forum Posts by: Kyle Vogeler

BP Community, 

My partners and I have been in real estate for 4 years now - we've worked on single-family, small and mid-sized multi-family deals, and done full renovation projects. Now that we've gotten the experience, we feel comfortable with aggressively growing our portfolio. 

My question to you all is: how have you managed to attain aggressive growth goals without using out-of-pocket money? Did you partner with people outside of real estate looking to diversify their portfolios? Did you partner with more experienced real-estate investors and work with them as a sort of mentor?

We have projects identified and the analytical work done, we just need to figure out the best way to gain interest in our projects. 

Thank you!

Ally, 

Spend time on creating a coherent offering packet. Layout the plan for the property and your experience. Use charts to show a multitude of metrics and projected cash flows/values/returns. 

Then it comes down to networking and getting your packet in front of people. Many will say no, but if the packet is realistic, you'll be sure to find a partner soon enough. 

The Multifamily Millionaire volumes 1 and 2 are great books to start with. They will give you a solid foundation of knowledge so you can confidentially purchase your first apartment building. 

And as everyone else has mentioned - Network, Network, Network!

Option 2 is a good choice. It leaves you with a property in your portfolio that is cash flowing while also allowing yourself to grow at a manageable rate.

The good news is that you are in a position that allows you to have options! I would sit down and ponder what your goals and who your network is... this will help you decide the path you chose.

The 3 options essentially are:

- Sell neither condo, let the property cash flow and pay off the debt associated with it. With minimal work, you can pay off the property and have a decent nest egg for retirement or your kids or a charity, etc. Down side is less money today.

- Sell one condo. Now you have one property that is clear-and-free of debt, giving you more money today. It also gives you the option to refinance and invest in other properties. You should be able to get up to $750K which could buy you another $2.5-3M in properties. The only downside to refinancing is you are now lowering the cash flow on the condo.

- Sell both condos. Sell them individually and get $2.8-$2.9M, pay off the $1.2M debt and $200K of closing costs and you have $1.4-$1.5M to reinvest which could get you a portfolio anywhere from $4.5-6M in size. You could utilize your network, find value-add properties again and repeat your initial process at a larger scale. Upsides: More potential for profit, larger portfolio diversification. Downsides: More work, more potential for problems to arise. 

You have lots of options and any of them can lead to success, but first you have to define what success means to you. 

Best of luck!

I generally lean towards the opinion that any foundational issue is too much of a foundational issue - especially if you are new to real estate and don't have deep cash reserves.

The bill for foundational repair is always expensive and overages on estimates are not uncommon and are never cheap, and this is not an area where you want to cut corners.

That being said, there are scenarios when it makes sense to purchase a property with a foundational issue, but that usually involves getting the property at a steep discount. If you are paying full market value for this property, I would proceed with caution. 

Great post - I utilize much of the same strategies. 

I have recently begun to focus on building my network and it has paid off significantly. 

Once you realize that you don't have to do everything alone, a path to 10X your progress starts to appear. There are a plethora of individuals who want to work with you to achieve both their & your success.

Thanks for the response. Based on what you said, I think it would be best to have the property vacant before selling. The rent is slightly below market rent so investors would likely want to raise rents/find a new tenant.

I currently have a townhome that has a tenant living in it that I am considering selling. My question to you all is: Is it wise to list the property with a tenant living in it? Or will that affect the sale price?

This tenant pays their rent on time and isn't ever an issue, but it is time I utilize the equity I have built over the years. 

Thank you all in advanced for your responses. 

It doesn't necessarily correlate to a $300K deduction in price. The needed cap ex would directly impact Cap Rate and NOI, and those numbers would determine the price you pay.

If there is a ton of deferred maintenance, then you can and should get the property at a higher cap rate. You can then do a market analysis to see what cap rate repaired properties are selling at and determine the value you've added (all else being constant).

I'm assuming with $300K of work that rents are also lower now than they will be upon completion, so that change in NOI should be reflected between purchase and sale as well. Just make sure you don't purchase at the Pro-Forma rates.... if you are doing all the repair work and filling all the units, the seller shouldn't get the benefit of selling at a pro forma price.