All Forum Posts by: Michael S.

I haven't looked into costing yet but I am fairly confident that in certain areas you could build for cheaper than buying. If I get time this summer I plan on getting a builder's license so I can be a step closer to completing a new construction project. My situation may be a little different as I have a couple workers and would only be subbing out certain parts of the build. If one were to pay a builder or if someone doesn't have experience in construction I don't think you would come to the same conclusion.

It's only cheaper to build if the land is cheap :)

1 Vote

Originally posted by @Account Closed:

Originally posted by @Michael S.:

Originally posted by @Account Closed:

Originally posted by @Michael S.:

Have you looked into going modular using a modular design-build firm? We are on our 6th modular project and about to do another 200 unit all steel modular fabrication development. Much more cost effective and faster with the same, if not higher building standards.

Do you have a website?

Yea it's Kuvella.com

They don't do many one-off single family type homes but when it comes to apartment and multifamily construction, that's where the benefits pay off.

Do you own the company? Where is it based? Im in SM and would love to discuss this for a few of my projects. We have a 200 unit in process up in NorCal

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Originally posted by @Account Closed:

Originally posted by @Michael S.:

Do you have a website?

Yea it's Kuvella.com

They don't do many one-off single family type homes but when it comes to apartment and multifamily construction, that's where the benefits pay off.

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3 Votes

Originally posted by @Dave Van Horn:

@Chris Pena

I don't know the specifics of the property but speaking from experience, a Commercial investment under 70 to 100+ units isn't always what it's all cracked up to be. The financing isn't the best (the loan could recast after so many years, and the bank could call the loan in full if you or the property don't qualify), you can get nickel and dimed with common area expenses, and it's not enough scale to have onsite management and maintenance. Also there's higher rates on the loan usually, more down payment required, and commercial insurance required which is more expensive. All of which would cut into your cashflow. And being an owner occupant doesn't give you any additional benefits like it would in residential (because it's over 4 units).

My question is.....why not get a private 2nd on your primary residence and use that money to acquire the the commercial deal? And if you need to cross-collateralize it with the new building as well, you could. That way you can stay in your house AND buy this new place.

I don't agree with you here Dave.

1st of all, common area expenses which are part of your "expenses" is already calculated to a certain percentage and set aside and is to be expected. 2nd, I have a great manager managing my 3 buildings which are a mix of 2-4 units. 3rd, down payment is pretty standard on 5+ units. Of course down payment would be less on 100 units, not sure how this really matters. However you are right about owner occupying a unit when it is over 4 units not having any additional benefits. Although you are technically correct about most of your points, I think it's counterintuitive to steer someone away from a 7 unit and compare the benefits to a 100+ unit. Really not comparable and one can become very successful with 5+ units if done right.

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Originally posted by @Ali Boone:

Hi Ralph! Ooh, pharmaceutical chemist...that sounds fancy :) And we're neighbors...I'm in Venice.

If your goal is to replace the work income of your girlfriend, just be sure you are up on running numbers as you start shopping. To replace an income, you have to have cash flow. There's not typically much for cash flow in SoCal. So if cash flow is the goal, you'll have to get creative. Out-of-state offers cash flow, or you have to work the appreciation route here. Even that is sketchy right now because we are closer to peak prices right now than not.

Not trying to be a buzzkill, but just want to emphasize how important running the numbers will be if that is your goal!

(if you want any help on them, check out https://www.biggerpockets.com/renewsblog/2013/01/1...)

Reach out anytime if you ever have questions!

Ali makes a great point here, it is very very hard to cash flow here in SoCal. It's best to look out of state for cash flow deals. As for appreciation, it can be done, you just have to get in in the right areas. Make sure you do your research. Good luck to you. Look forward to learning about your journey.

1 Vote

Why use a HML in the first place? With my experience, HML's still want to make sure you have skin in the game. Why should they lend to you? What other assets do you have? And I can guarantee without prior deals in your back pocket, an HML will not give you that much money. The only time it is a good idea to use a HML is if you need cash fast because you came upon an incredible deal that just hit the market (or off market) that you know will be snatched up in a day. When time is against you than you use a HML. But if it is not, why not just use a traditional lender?

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Originally posted by @Tony Cimino:

Michael,

I thought I took that into consideration with the 10% fixed costs.

When buying at 35,000, 6% = $2,100
When selling at 10,000, 6% =$6,000

Leaving $1,900 for other concessions, like home warranty, and small fixes.

Yes my fault, overlooked that. Thank you

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Depends on your goals. If your looking mostly for cash flow, than multi family is the way to go. But if you want to buy and flip than either is fine. It's case by case. If you see a duplex or fourplex that is an unbelievable deal and you cant pass on it because you know you can make a great return in a year than you get it. Same goes for a single family

1 Vote

I read this pretty quickly and looks sound but not sure if you calculated closing costs on both sides of the transaction (buying and then selling). Figure about 3% in closing costs when you buy the home (2% commission and 1% in closing fees) and than 7% when you sell (6% commission to agent and 1% escrow, title, etc.)

1 Vote

All Forum Posts by: Michael S.

Michael S. has started 2 posts and replied 40 times.

Post: Cost per unit (new construction) in Minneapolis

Post: How do you build an apartment complex?

Post: How do you build an apartment complex?

Post: How do you build an apartment complex?

Post: Sell my primary home to buy a 7 unit multi

Post: Hello All! Newbie investor here, from California

Post: Using Hard Money Lenders to Then Refinance for Long Term

Post: Beginner investor looking to learn basic concepts of flipping

Post: Single family or multi family?

Post: Beginner investor looking to learn basic concepts of flipping