All Forum Posts by: Matt Ternullo

I am a fairly experienced buy and hold investor with a few units and a good knowledge of creative financing strategies. An opportunity came up to buy land and develop it in a market I know very well. Most lenders for the construction portion require a lot of experience,  however, you gotta start somewhere, anyone have experience trying to break into this type of financing?

I have had the power of investment momentum pushing me to quickly multiply my portfolio (quick for me, relatively normal acceleration), went from 1 STR 2 years ago, to 3 units last month now close to units 4-7 hopefully in the next month or two. I see myself in the next year or so getting to that next level of investing of 10+ units but see a major road block, financing. I have been able to leverage friends and family as equity partners to date but see that drying out soon. Other than cash out refinancing or HELOC's, what have people done for down payment financing to get from the 1-10 unit level into the 10-100 unit level?

Big tax benefits to a BRRR, assuming your holding it for more than a year you will either pay long term gains or 1041 exchange for no taxes. On a flip, if you flip it within a year you'll pay short term gains.

I invest in NH with help from @Jeremy Nault on the agent side. My first duplex there has been shockingly hands off with good tenants and a good property manager. I just communicate what I want when it comes to leasing and maintenance and it gets done.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $320,000
Cash invested: $75,000

Contributors:
Jeremy Nault

Duplex with 2- 3bed/1bath units located on a main throughway in Manchester, NH

What made you interested in investing in this type of deal?

The unit was currently rented to good existing tenants who wanted to stay, the numbers worked with it cashflowing 8-11% immediately with no rehab.

How did you find this deal and how did you negotiate it?

Met Jeremy Nault through the forums who became my agent and shared this deal which was on the MLS

How did you finance this deal?

Conventional 20% down payment loan

How did you add value to the deal?

Will be adjusting tenant leases to increase cashflow without raising rents immediately. Plan to do a large rehab in 2-5 years to increase rents and forced appreciation on this older building.

What was the outcome?

Just closed, numbers look great, results TBD

Lessons learned? Challenges?

Financing with a STR on my books that isn't yet on tax returns, learned many different financing models in my research.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jeremy Nault - Berkshire Hathaway Homeservices Verani

There are many of these where I invest, I have analyzed many of them. While it is a great passive investment, the fees for leasing and management can be upwards of 30-40% which wipes away most profit. The units generally will produce income, however usually at a 3-6% CoC rate that is more suited for families looking to subsidize their vacation home, not an investor looking to scale.

In all cases of a BRRRR people rent them after the renovation, that's one of the R's.

Recommendation 1: Look at a 3 or 4 family that you could get an FHA loan on and rent out while living in one of the units. It will likely be tough to do a BRRR if you only have 3.5% down because either it needs too much work to get approved for an FHA (unless you do an FHA 203k) or it wont need enough for to appraise high enough get your money out.

Recommendation 2: Find a hard money lender that will cover a down payment in a second mortgage position and get a 20-30% down fix and flip loan. This is risky however because if you don't get that cash out your paying a high interest rate.

You will never get it to appraise for the $350k also with an FHA loan you are saying you intend to live there for a year so if you are not actually intending that, that's mortgage fraud.

I don't have experience with investing in student housing but recently graduated from a large state school and all the houses were 12 month leases, that was the expectation so no one questioned it. People either let them sit empty all summer, lived in them for work at the school or sublet to other kids who were taking classes in the summer.