All Forum Posts by: Leo Gregoire

I'm assuming you werent taking 15% of gross off the top for cap ex, vacancy, and maintenance? 

60k is definitely a hit and unfortunate for sure but it sounds like you have two opportunities to force appreciation up front and collect off the back end. Being able to raise rents after the rehabs will sting at first (up front) but will definitely help moving forward with cashflow.

as mentioned above, staggering leases could help mitigate.

i would sell the property. $50/mon cashflow is essentially breaking even and even with the $125/mon you're not cashflowing enough to justify the risk, i don't think. As Elias mentioned above i think you're insurance costs will continue to rise and while the property may appreciate as well i don't think juice is worth the squeeze. Virtually any cap ex expense will wipe out more than a years returns. 

The interest rate is nice, if there was a way to increase the cash flow to ~15% or greater COC you could pull a HELOC on the property for 9% and collect the delta.

again though, i would suggest selling it and trying to lock up a property or two with the proceeds that required some sweat equity, force appreciation through a reno, rent it out, refinance and repeat (BRRRR)

Dalton,

A multi LTR strategy sounds like a great play for 2025.

i would suggest attending any and all REI meet ups in your area that you can find; my brokerage hosts a bunch of them up in the north east and it's been huge for our growth.

i would also suggest finding an investor focused agent. I think you can through BP or through the aforementioned REI meet ups more than likely.

i am inclined to agree with a previous poster in that i'm not sure driving for dollars will necessarily yield you what you are looking for.

Network with as many other MF investors as possible in your area and find an agent that knows the market and can at the very least set you up on an MLS search for your criteria.

Coupled with BP's deal analysis calculator you can then begin underwriting properties you receive from the MLS with your agent or on your own to better understand your market and tailor your expectations moving forward.

I'm an investor focused agent that focuses on MF and while we are not in the same market if you have any questions about moving forward with MF LTRs i'd love to see how i could help.

I agree with Jonathan.

When i started in real estate i started going to local REI meet ups and meeting new people as often as i could.

i've been learning where i can when i can, from who ever i can.

In looking for a mentor i would definitely suggest bringing something to the table for them. Their time is going to be more valuable than yours and frankly you will be the only one gaining anything from that relationship; it's not exactly all that appealing to the average person.

I think the more you can put yourself in the room with people a step or two ahead of you the better. It's easier to foster casual relationships with multiple people than trying to find one person to be your mentor, i think.

Definitely  go to as many meet ups as possible.

i didn't even know auctions gave opportunities to actually have access to properties beforehand.

Given your line of work, i would say that you are uniquely positioned to work well in the outlined situation. That average person given limited access to a property is not going to have the experience required to know what to look for.

Yes, i would have a couple of your most trustworthy contractors with you when you walk the property and i'd film the walkthrough / take as many photos as you can.

With a full hour you can easily assess most of what would be needed to account for 

investing is certainly not what it was five years ago. We have seen unprecedented growth over the last few year which is not the norm.

There are definitely deals to be had/ made but it does depend on your market.

i work with a lot of investors in the central ma area and deals have gotten tougher to find as units trade for more and more but they're still out there.

I suggest house hacking often times. i think it's the easier way into real estate investing with the lowest cost of entry.

If that's not something you are intersted in, have you looked into syndications at all?

I'm not sure where you are located but it sounds like you might need to start looking in markets for longer term plays and not the str beach front game?

Honestly, if you are out of state you should probably be hiring property management regardless of troublesome tenants in the present.

i don't know how experienced you are as an investor or if this market you're buying in is one due for exceptional appreciation but realistically $160/mon cashflow is not a move i would suggest in the short term considering you're a world away and any number of things could go wrong that would wipe out a years worth of cashflow overnight. 

Even a typical water heat replacement would set you back signficantly.

There's plenty to the puzzle that i am unaware of but with what you've outlined here i would consider passing on the property.

you know you need management

you know you need to remove at least one tenant

you know cashflow is meager after considering management.

i personally wouldn't recommend a client take on the risk for such a paltry pay out out of state.

Even when considering long term appreciation the average amount of headache one assumes with a property will bog you down before the long term play pays off.

when underwriting a property a good rule of thumb would be to set aside ~5% gross income for each Cap Ex, maintenance, and vacancy. (15% total)

I dont know much of the market in TX but in central MA i work with a lot of investors that are interested in acquiring multi family properties so that's mostly what i deal in. 

Sparing the fringe cases, most of these properties are literally over 100 years old and setting aside the 10% i mentioned above for repairs has worked well for clients.

If you are dealing with a property that is 40 years old, that's pretty much a new build in my book haha. You mentioned the roof and AC being new and i'm assuming they're in good condition.

10% should be enough to cover the random water heater that goes or any other lesser headache. Cap Ex expenses will bite you but it sounds like you have two of the big ones already accounted for.

as mentioned above i would find a househack property in need to cosmetic upgrades that has below market rents. 

make the necessary upgrades (ie. appliances, flooring, paint, laundry, fixtures) allowing yourself to bring the property up to market rent standards and increasing the rent.

I'm not too familiar with the market/properties in MI but in central MA we have a lot of triple deckers that are 100+ years old. They often times have a configuration that includes essentially two living rooms. If you can find opportunities like this to turn additional living space into a bedroom you can substantially increase your rent for the unit. 

feel free to reach out if you'd like; i'm an investor focused agent specializing in house hack opportunities. Our brokerage has a tremendous amount of resources that would be helpful.

Quote from @Ed Laders Jr.:

When I got started with real estate 9 years ago, I was living and working in and around Boston. I was trying to get started, had all the information but needed to pull the trigger to get in the game. I got my first FHA 3.5% down 4-unit building in Tilton, NH (An hour and a half north of Boston). I had to go that far away due to the insane cost of real estate in Boston, so I fully understand the predicament. I had to live in the property due to the FHA occupancy rules, so I had about an hour and 15 minute commute to work every day.

I settled on Tilton (small town in central NH) because the property was right and it cash flowed very well, and was quite cheap (at the time... 240k), I could get the loan to get into the building and own 4 units. There was also a loan grant available from the state of NH for first time home buyers for 3% down payment assistance. That left me with a 0.5% down payment. By the time I got to the closing table, instead of me bringing a check, they gave me a check.

Fast forward to today, it has more than doubled from appreciation and cash flows a ton, and I was able to get a great property manager in there to handle EVERYTHING. All of this from an investment of next to nothing.

Take what you will from this post, if anything. What I'm trying to say is that going up to 1.5-2 hours outside of even the biggest cities, there are pockets of affordable towns/cities with at least positive cash flow (although its never been harder to find than right now, I've been waiting for 3 years for the market to make sense before buying again). Also, making some sacrifices can more than make up for lack of capital or experience when getting started. Living in bumfck NH started a chain reaction that enabled me to retire modestly at 28, just 3 years later. Never making a large salary.

Like you said, its incredibly important to make these big sacrifices before having a serious relationship and/or marriage and kids, because most times the significant other won't be on board to live so far away from everything. It wasn't fun living an hour and a half from work and play, but absolutely worth it.

If one is starting with relatively low living expenses, cash flow can be extremely powerful towards reaching financial freedom. If one has high living expenses, cash flow doesn't mean much and I definitely understand going for appreciation first.

i agree with the outside market approach. Commuting isn't ideal but if you can "get on base" with a property/househack a bit outside of the city you can potentially cashflow a bit more, and benefit from an appreciating market that isn't quite as HCOL as a mecca like Boston.

My brokerage specializes in multi family investments and househacks in particular around central MA. Worcester/Lowell are examples a bit outside of Boston but are markets appreciating rapidly and are a bit more accessible than Boston. 

Feel free to shoot me a message if you'd like and i can help you navigate some of these markets. We have a tremendous amount of resources and expertise within the brokerage.