All Forum Posts by: Michael Orlando

Happy to connect! My partner and I buy multifam in Cleveland (east and west side - usually 20 units and up), but I know he has some off-market duplexes he's working on in Lakewood. I'd be happy to make the intro if you're interested!

500 - 600 in cashflow sounds reasonable on a smaller property.. What type of property is it? If you're cash-flowing decently, it doesn't sound like you're overpaying, but do you have any idea what comps have sold for?

This is definitely dependent on quite a few things.. What's your current financial situation? Do you have a good amount of capital to deploy? Do you plan on self managing? What are you cashflow/returns goals? How quickly do you want to scale?

There's so many different approaches to take, but I would say it's best to first think about the answers to the above questions and then that'll help others give you some opinions as well!

Ohio has some solid markets - Cleveland for cashflow, and Columbus for appreciation. Cinci and Dayton have their benefits too! My partner and I invest in Cleveland though and love the returns we can hit. 

I would definitely discuss with PMs and ask a few questions.. What's their occupancy been like (economical occupancy)? What types of jobs do their tenants tend to have? 

Are there hospitals in the area? Big name stores less likely to go out of business like Walmart, Target, grocery stores, etc..? Usually this helps insulate from economic issues tenants may face if the employment base is good. 

Also, if you buy right, you can hedge against a lot of economic issues. I would stress test your rents and make sure you feel comfortable about how the metrics are shaking out. I don't think a worry about a downturn should totally discourage you though!

In our area, I tend to see Facebook marketplace still working really well and the classic Craigslist post too.. But honestly, a good ol sign still might be the best lol.

I think it depends on the demographic you're advertising to though!

@Chan Le We're still able to buy for a 7 cap where my partner and I operate, but we put a ton of time and effort into sourcing off market deals. At the moment (even here in Cleveland), a 7 cap is tough to come by from a broker since a lot of out of state money is moving into our market from California and even overseas. 

If you value your time very much you might want to consider going the passive route.. That being said, what returns are you willing to accept for a completely passive role? We're hitting about 10% COC, but that number seems to be harder and harder to hit. Also, in major appreciation markets, many people syndicators are shooting for 6-8%. What returns you require would definitely push you in one direction or the other.

Getting into multiple medium size multifamily properties will definitely take up some time - I just left my full time job to do it! So, if you have the capital available, my thoughts are that you should definitely look at being an LP, or at least JV-ing on deals with partners you trust if you still want a smaller (but still slightly active) role.

@Leah Weisel Congrats on the acquisition! My partner and I invest mainly in Cleveland, but are under contract for a 24 unit in Cuyahoga Falls. We're looking to start building more of a presence in Akron/Canton as well. 

When it comes to areas, I think it really depends on having an experienced PM for whatever product you're managing. That's what we've come to find at least.

Hey Parker!

Here's my thoughts:

1. I definitely would NOT pass on it just because of the size. If it has the potential to be a killer deal, definitely go for it. You'll be able to scale faster this way. However, the lending requirements will differ for commercial so you'll have to make sure you're covered there (meaning you'll need to meet the net worth, liquidity and track record requirements from the lender). 

2. I would go to a local bank and start building a relationship with them. Local banks will many times lend on loan to cost as opposed to loan to value which will help you cover the renovation cost. For example, a community bank may lend 80% loan to cost of the entire project which would mean less cash out of pocket upfront and probably cheaper/less risky than HML. In addition, many times if you refinance into a long term debt solution with that same bank to pull some cash out, they'll give you a very low cost to refi.

3. I would say find a contractor you trust that can also handle the project management. 12 units isn't really large enough to warrant a dedicated project manager. The contractor should be able to handle this. Just make sure you interview a few of them and find someone legit. 

4. The sooner the better. Some may not want to waste time unless you give them some cash upfront for taking a look, or some might look to do it for free just to build the relationship. However, try to get them in ASAP. i.e. during the beginning of the due diligence period. Or, you could have them walk the property even before placing an offer if you're there walking it yourself. Either way, the latest you'd want to have them is probably early in the due diligence period so you can make sure to accommodate anything that pops up or if you want to get different opinions on the job. Section 8 units tend to be pretty simple cosmetically - paint, floors, basic cabinets, basic bathrooms.. so it shouldn't be anything crazy, but always try and get them in early since many times you might end up having to switch contractors. 

5. The property probably has something going on that you haven't seen yet. If a few units aren't livable,  are there serious mechanical, electrical or plumbing issues going on that will be a huge expense? Are there serious pest issues? Is the neighborhood a war zone? You'll have to take a look at the property in person and identify what's going on. Maybe you get lucky and there's nothing crazy bad, but I'd say if it's a steal and it's been on the market for a couple months, there are probably some unseen hurdles.

Hope this helps!!

@Roger Covin I would second Jake and Gino as a good platform for mentorship and gaining knowledge/confidence. Really helped me get going and now I'm syndicating my first deal!