All Forum Posts by: Matt Aquino

@Andrew Hogan

Great question re: keeping capital reserves. 

I initially modeled that I'd need to put aside 5-10% of revenue per property for unexpected maintenance and repairs. So far, I've needed much more than that.  I hope that after getting through some rounds of repairs that it comes down.  But for now I'm building my real estate portfolio so I'm trying to keep all the cash in those accounts to see it build and not "pay myself" anything out of them. To be quite honest, as of yet there hasn't been much excess cash flow after these large repairs to even pay myself if I wanted to. 

Second question re: advice to tell myself in the beginning...

I was spending a lot of time networking and learning from other landlords and investors. But as I went through this journey and as highlighted in my story, I had a really hard time sourcing investable opportunities.  If I had a time traveling machine I'd go back and probably re-allocate some of those networking hours to time spent building relationships with wholesalers and property management companies.  To someone like me, those two relationships seem like the most reliable sources to find "off-market" deals without sourcing them myself. 

@Nicholas L.

good question. I used a mortgage broker to get traditional 30yr lending on all three properties. Two of them were 25% down and one was under a FHA so 5% down on that one. The properties were all around the $200k price point, so it took about $120k of capital for down payments + closing costs.

Two of the loans received an interest rate of 5% and the other at 3.25%

I wanted to share my personal "getting started" story with the Bigger Pockets universe.  My intention with sharing is to help provide another point of perspective to those who are on the sideline hoping to jump into the game but don't yet know how. Also my intention is to connect and attract advice from others who have traveled the paths which I am hoping to bestow upon next. 

The headlines for these type of stories, always say things like "0 to 5 properties in 11 months". But in reality, at least for me, that 11 month "over night" start-up in REI took about 3 years of build-up.

At first the build-up was an intentional education period. Reading books and getting into the mindset. Listening to the bigger pockets podcast every single day during my commute to the office. Perfecting my spreadsheet and analysis. Getting to know the numbers, looking through other people's deals. 

Then the education became more specific .. what is my investment approach, getting my budget and cash in order, what markets and type of properties to target.  This phase involved a lot of conversations with friends of friends/family who were actively doing it as landlords. I was talking to anyone and everyone, just putting the word out there of what I'm trying to do.  And it attracted tons of advice and education. 

After about 6-8 months of pretty intense education, networking, and thinking about REI daily. I was ready to attack. I felt confident, educated, and well positioned mentally & financially to acquire a property.

I spent my 30 minutes a day looking for deals in my area (Northern NJ). MLS, zillow, auction.com.

But I couldn't find any deals to cash flow and/or fit the 1% rule.  I remembered the advice of many, "stick to your numbers, stay patient".  So I did, and months passed by.  Performed analysis on close to 75 properties which came close to cash flowing. Went to see and perform another level of diligence on about 20 of those. And probably made about 5-7 offers. Most of them were at least 10% under asking. But on about 3 of them I went aggressively after it and was outbid. 

Frustration started to settle in. I started to wonder how can I change my approach? I wondered.. do I need to find a better pipeline of off-market deals? that must be where all these investors/developers are snatching things up. Should I just start playing the volume game and making many many more offers? I didn't have the time and that felt like it'd lead me getting into a deal just for the sake of it. Do I have to go out-of-state? NJ is such an expensive housing market and almost never shows up on the list of top REI states. I continued networking and asked these questions of everyone.

I eventually decided to change the market I was searching in.  Thinking I would go out to PA where properties & taxes were much cheaper. I really wanted to be within a 2 hour drive to ensure I was intimately familiar with my first investment. I wanted to be able to meet the tenants, see the house, be there for inspection, do some basic maintenance work myself. 

As I expanded my search area and as part of my networking came across an agent and fellow investor who suggested looking in Northwest NJ. Where the 1% rule was found for duplexes listed on the MLS and the competition for properties was not anything near what I was experiencing in the areas 45 minutes outside NYC.

We took a trip and saw 5 properties.  And make strong offers on 3 of the 5.  And low and behold, ended up purchasing all three duplexes at once!!   And all three offers were accepted !!

Finally a break through, closing 3 properties at once for a newbie! (attorney thought I was crazy).  But it was the few years of trail-and-error before this that lead me to having the confidence and education to pull that off. 

I hired a property manager to help navigate the new world of being a landlord (with a full-time demanding job that is about 100 minute+ drive away from the properties).  The early months, it felt like something major was breaking every single month in one or multiple of the houses.  The duplexes are older (built in 1920's or earlier) and prior landlords treated them as the C grade type properties that they were.  Quite honestly, it still feels like there is far too much maintenance eating away at the cash flow.  Luckily the tenants have been good, mostly all paying on time, no turnover. So just have to get a handle on somehow slowing down the maintenance bills. 

Next up, I was a renter and decided we were going to purchase our primary residence.  I always wanted to house hack by getting a property which was a separate "mother-daughter" suite type of situation. Again patience was tested as this also took more than 18 months (actually started the process well before closing on the above mentioned investment properties).  

Then one day, during one of the hottest residential markets ever experienced, we landed a house in the exact location we wanted which had a separate detached carriage house and renter in place. And property #4 (rental unit 7) was acquired ! 

Lastly now I'm trying to leverage my time and money into the larger multi-family assets and syndication world. Spent a bunch more months educating about that world, networking with people, phone calls, webinars, books, etc. etc.  And finally found a sponsor and deal I liked and will be getting into our first syndication deal.  My hope is to become intimate with the syndication process from the LP side first. Invest in a few deals and build relationships to eventually be in a position to co-GP a deal in the future.   My hope is that actually to pivot a career into that space, leaving the 9-5 world. 

That is the my story for now. 

If you take anything away (as a newbie), its that patience is truly needed and while even making peace with that, it may still be tested. Always continue to educate so that when the opportunity comes you'll be fully confident and have resources/network ready to call upon. 

I'd be happy to engage with anyone who is interested in more of the details above. Or simply connecting to chat. One thing I love about the REI world is that everyone is very eager to help and chat with each other. Very different than my industry for full-time profession.

Matt

Unfortunate to hear about your experience with them.

I met with Oscar and a few other people in their office to hear about their business and operations. Although it sounded good and they had an organized presentation, didn't feel 100% right.

I ended up doing a little bit more research on some of their projects and heard about some suspect end products (i.e cheap product, things not done right, etc.) That research + my gut feeling after the meeting led to me avoiding moving further with Investar. Also I found it strange that although I asked to get an email stream of upcoming deals, they never did that.

@Cameron Hastings

Message me and Let me know if you find other investing alternatives or if you want to partner up in some regard. I still have yet to get my feet wet in the RE investing "game" but am eager to do so.

@jonathan boyle 

Sure. Reach out to them. Here is the website.

https://investarcapitalgroup.com/

They brought me into their office in Hackensack. Explained their approach, how they add value, and some past projects. Asked for a proof of funds. And then start sending what they have on wholesale via email. 

Curious if anyone has done any work with Oscar Ladino over at Investar Capital Group in Hackensack, NJ ? 

They offer wholesale properties to investors, lending, rehab, and selling.  As an investor you can select one, all, or any of those services.  They focus on distressed homes in Bergen County, NJ.

Considering leveraging their wholesaling and rehab services to help get me off the group in my Real Estate investing journey. As I currently work full-time and am having a very hard time finding properties in my area on the MLS or auction sites which would turn enough equity for the effort. Also have no experience in construction and therefore lack the confidence to make an estimate on those costs when evaluating properties. Thinking about using a company like this to help navigate those areas until I gain some experience.

I've also been interested in JC Heights for quite some time now.  Like @Ryan Goldfarb said .. I haven't seen anything on MLS that has an attractive price in the very specific area of JC which I think is desirable for the priced out Hoboken/JC crowd.

I have seen a few properties come out of clear flips/re-models and sell at some very high prices. In fact I know a couple friends who have actually made the purchase of such units. I checked the price and before pictures and they were buying these things dirt cheap and had to do a complete gut and remodel. Unfortunately either those deals are getting snatched up before it hits MLS or maybe its been someone giving direct offers.

We are forgoing the cash flows to use the rent being paid to offset the carry costs after refinance. So we're projecting the refinanced loan payment + taxes + other non-improvement costs at around $2k/month which is what the current rent being paid is. 

Therefore the aprox $10k of profit (after your estimated selling costs) is still valid but we would only be tying up $45k after the refinance.  The $140k is the initial capital and then we are hoping to get about $95k of that back through the refinance. 

Therefore we're essentially locking up $45k for about $10k or so in equity. Now we would have to sell the home to realize that profit, which currently the initial structure does not specify when that event would be. And its complicated because the tenant is the other partner's parent whom may wish to stay there for long term. Therefore we other sell to them, wait until they want to leave, or kick them out upon a desire to sell. 

We would refinance aprox 60% of the appraised value which would be $190k (that's the $95k/investor I referred to us getting back in pocket after 3-6 months).  That leaves about $130k of equity in the home ($65k/investor).  So each investor would have a remaining $45k of initial capital tied into the property after re-financing. 

Does that logic and game plan work out ?