All Forum Posts by: Matthew Terry

Jason, my main question is if the asking price is negotiable. The "Turn Key" marketing is false when the inspection report shows there is $20k worth of repairs needed.

Does the 1% rule even exist in Phoenix metro area? I've seen some properties marketed in outlying cities like Coolidge or Casa Grande that claim 1% rule, but those areas introduce higher risk of vacancy and lower appreciation, IMO. 

I'm taking initiative to analyze deals on a consistent basis for practice and to uncover potential opportunities. I recently saw a multi-family property, 16 units B class in a decent area for $2.4M on Loopnet. Seller will only do seller financing, 30% down and 5% IR 30yr. The claimed NOI is $129,500, 5.4% CAP rate. Debt service would be around $108,000 on a $1.68M loan, which leaves $21K. That is about 2.9% return on the $720K down payment. I don't know if property management was part of the NOI calc. Assuming it is and assuming you wouldn't have to spend another penny on repairs or improvements, why would anyone use $720K for a 2.9% return and all the potential hassle and risk of running a 16 unit building? I made 7% on Fundrise this year. Selling cash to a hard money lender would get 4-5% easily. LP in syndication would generate double that. Even a dividend stock portfolio would easily return more. All these examples are completely passive. Is there just massive speculation in the Phoenix multifamily market now? Am I not considering something? Do sellers price their properties high on Loopnet for an anchor when the buyer negotiates down?

For reference: 
https://www.loopnet.com/Listing/643-E-Brown-Rd-Mesa-AZ/17255707/

Fekel, AZ is a big state. I'm not a flipper but maybe if you narrow down the city or neighborhood others can chime in. If you are talking Phoenix Metro area, profits can differ drastically depending in neighborhood.

Hello All,

I'm interested in turn-key rentals outside of AZ to get my portfolio started and some deals under my belt. Markets like Kansas City, MO and Memphis, TN look great due to the low capital needed to get started and 1% rule everywhere. I started searching in these areas on Roofstock.com but ran into some red flags. 

Roofstock says that the sales price is non-negotiable (you can offer more, of course). However, I looked at a few properties for sale right around comps and then read inspection reports and the reports indicated they would need $10K+ in repairs to even be insurable or for a bank to lend on it (damaged roof, mold, asbestos). When the sale price is $50-60K, that is a huge % increase in repairs. In addition, these are safety and health risks in these homes that have current tenants with multi-month leases locked in. 

I called Roofstock to inquire about some of my concerns. I was on hold for 5+ minutes until I got sick of waiting and hung up. Anyone have better experiences?

Voted up. All good questions, would be interested in guidance as well.

I can tell you Mesa has one of the most, if not the most, expensive water and trash utility costs of all the Phoenix metro cities. If you are paying for this and charging your tennants a flat rate, it could really eat into your profits. Especially, if these tennants have teenagers that take 45 minute showers, etc. If you plan on holding this long term, it probably makes sense even if it is expensive up front.

Hello BP Mates,

I'm a new investor very interested in BRRRR strategy, but my capital is limited and I want to ramp up fast.

I understand that traditional lenders require a seasoning period before I can finance a property I paid cash for with conventional 30y mortgage. I've seen anywhere from 3 months to 2 years. 

Any advice on how to find lenders with the shortest seasoning period? Or how I should structure deals to ensure the shortest seasoning period? Having to wait 2 years before I can pull my capital back out would cripple my goal.

Hello BP Mates,

New buy\hold investor here, but I want to ramp up fast and I'm planning for the future.

If I'm buying residential properties with traditional or BRRRR method, there will be a time when my debt is out of line with my income. This may happen in as little as 6 or 7 properties. I have an LLC holding company and will have each property in their own LLC for liability reasons mainly.

Any advice on how to continue leveraging low interest 30y mortgages when my debt-to-income approaches 50%? I listened to one podcast and some advice was to fine a bank that will do a commercial loan for multiple residential properties. Any other suggestions? I want to avoid 8+% for private money if possible as it will narrow opportunities. 

Hello BP mates,

I'm a new investor in Phoenix, AZ acquiring my first rental property in October 2019. I'm looking to ramp up quickly as my target date for retirement is in 12 years. I have a 13 month old son, Liam, and my incredible wife Jamie is fully invested in our financial freedom initiative. 

We are interested in rehabbing distressed properties or acquiring off-market properties to help people in need. Buy\Hold single family or residential multi-family in C and B neighborhoods in up-and-coming cities like Goodyear, Coolidge, and Casa Grande or long distance investing in low-barrier cities like Memphis, Kansas City, and El Paso. We wouldn't be opposed to commercial multi-family opportunities.

We are resolute in running our properties and dealing with the real estate community with transparency and integrity and will never put profit above the safety and great experience of our tennants and teammates.

Looking forward to building relationships and knowledge on BP. Feel free to reach out or connect.