All Forum Posts by: Lennon Lee

Congratulations Austin. It's very impressive what you and your wife have been able to accomplish in such a short period of time.

All the best!

Jairmiya,

I believe that "house-hacking" is one of the best strategies to get started, more so when it's taking advantage of a VA or FHA loan on a 4-Unit property and living for free on one of the units.

That being said, I'm a firm believer in going as big as possible as early as possible and start  seeing the benefits from economies of scale. In order to pursue bigger deals though, you really have to educate yourself not only on the different real estate investing strategies but also on deal analysis and underwriting. 

I would suggest you find a mentor in your area that is doing what you want to do at a high level. Once you feel you have gotten to a point where you have all the necessary education from books and podcasts and are ready to take action, reach out to these people and if you are willing to provide value to them, at least one of them will be willing to show you the ropes.

I hope it helps,

All the best!

Lennon

Imran,

I would recommend that you account for property management fees even if you plan to manage the property yourself. Doing so will give you a better picture of the real performance of the property. Remember that when it's time to sell, your buyer might decide to hire a PM company.

Good luck!

@Kyle McGee

Raising money is always easier when done proactively. By that I mean building your investor's database before having a deal and getting their "commitment" in advance. The best way to do it is to have a sample deal package that you can present to them and go over a sample investment opportunity. This will get them excited about the opportunities that you will later offer to them.

That being said, if that is something that hasn't been done in advance, you can definitely still raise the money from your investors, but it just becomes a race against the clock.

In any case, I would definitely advise that you get to work within your network and bring as much money as possible to the deal yourself. If you see yourself in a situation where you believe you will not be able to raise the capital needed, then I would suggest reaching out to other experienced sponsors who already have a solid network of investors and most likely will be able to bring the rest of the money.

An alternative to co-sponsoring would be to partner up with your property management company. Many PM companies are also investors and just like experienced sponsors they too might have a solid network of investors ready to go into a good deal. 

You also might have people within your network that have a bigger and stronger network than yours and that might be able to raise the money themselves for a participation on the general partnership. This would be my last option since I would rather partner with someone that brings experience to the table and in the case of the PM company it's a plus for them to have "skin in the game" since they are the one that will be taking care of the asset on  a daily basis.

I hope that helps.

Best,

Lennon

@Account Closed I am specifically looking at the three Florida cities I mentioned. That being said, the other picks on my list are markets that I strongly believe will perform great this coming year.

Sacramento rents are projected to increase way over 6% this year and vacancy rate is projected to be near the 2% mark (driven by minimal deliveries and sustained demand) according to Freddie Mac. Job growth will also continue to be strong at 2.9%.

Also IRR's (Integra Realty Resources) analysis now puts Sacramento among the markets in the early stages of Expansion which tells us that there might be room for it to grow substantially before hitting the Oversupply phase.

All ingredients for successful real estate investment ;)

I hope it helps.

Best,

Lennon

Joe,

As a rule of thumb you should definitely consider 45 to 50% expenses. 

That brings your NOI down to around $100K if average rents are $650/month.

With that NOI you should pay no more than $1,100,000 if you want to go in at a 9% Cap Rate.

If there's a value add opportunity you might consider going a bit over that number but you should definitely run your numbers first and underwrite the deal with a conservative approach. You don't want to go into your first deal without adjusting risk as much as possible.

Best,

Lennon

Kody,

Some of my picks for 2017:

- Orlando, FL

- Tampa, FL

- Jacksonville, FL

- Provo, UT

- San Antonio, TX

- Sacramento, CA

- Las Vegas, NV

- Waco, TX

Ultimately, just like everything in real estate investing, it will depend on what you are looking for and what your goals are.

Hello Kusum,

For both 1) and 2) I would recommend you get your hands on the following reports (They are free): 

- 2017 Multifamily Investment Forecast from Marcus & Millichap

- US Multifamily Outlook - Winter 2017 from Yardi Matrix

- 2016 Best Performing Cities from Milken Institute

- 2017 Viewpoint from Integra Realty Resources

The answer to the third question is very simple and straight forward: No matter what stage of the market we are, never bet on market appreciation. Invest for cash-flow. Period.

That being said, @Gino Barbaro actually pointed out a very valuable distinction between Market Appreciation and Forced Appreciation. The latter is something you definitely want to pursue if possible.

Best,

Lennon

@Sean Myers Hey Sean just came accross this feed. It's an old post but great advise was shared on direct mail and I thought You'd want to take a look.