All Forum Posts by: Brandt Tingen

Just checked the spreadsheet I pulled, there are 14,520 2-4 units in DC, so I misspoke on the 18,000.  It seems you're familiar with DC, so the number you mentioned shouldn't make sense to you from a gut perspective, as there are hundreds of streets in DC where the majority of the row is 2-4 unit.  My comments were general in nature to the typical lack of understanding of the 2-4 unit & commercial space in DC, by residential realtors.  Yes, I do think it's careless to provide specific advise on an income producing asset class that one has no direct ownership experience with, especially in DC with the amount of red tape and pitfalls involved.  There's specific knowledge that can only come with ownership - buying and selling as a broker doesn't make up for the blood, sweat, tears, triumphs, and lessons learned of ownership specific to a jurisdiction.  I'm not concerned or angry about your sales numbers, I'm happy for you if you're doing well in that area and it's something you're proud of which is great.  I will say sales fees are less impressive to me versus an owner operating track record, and no experienced owner operators I converse with in DC multifamily or commercial use this platform.  I came here to accept a colleague request (which is the only notification I have left turned on), I then saw an article that the colleague had commented on, then saw this thread, and then attempted to help a new investor to overcome the discouragement they were receiving from finding a 2-4 unit, as finding a 2-4 unit is very doable.  Maybe you could pre-qual him and line him up with one of the 6 off market 2-4 units you drum up per year, that seems like an easy solution and an easy sale for you. 

@Pavel Jiltsov Got it. Be careful there too. IME residential lenders (I'm assuming you're going FHA) in this asset class mostly "hack" at it, very few are actually highly experienced with small multifamily, so if they're saying it can't be done, in a lot of cases that translates to "I can't (or don't know how) to do it". Keep pushing.

@Pavel Jiltsov One thing to add.  Despite all the advantages I listed above, there are definite cons and pitfalls that await the inexperienced in this asset class.  There is a lot of red tape and bureaucracy involved in setting up and operating.  A huge risk that I see buyers & sellers in this space make is working with the uninitiated.  I often see the properties under-priced by residential realtors by as much as 25% when they are sold (yes you read that right).  I also see and hear those same "professionals" massively under-quote repair costs, forget to mention important due diligence items that if not checked can be a nightmare for the new buyer/operator, and make ridiculous claims that fly in the face of building codes/basic supply and demand factors/actual operating experience, and the like.  Again, you'll find a property, but make sure you are networking with actual owner operators in this asset class across different neighborhoods to learn the due diligence steps and pros/cons of operating different unit mixes in different areas, and to learn other lessons "from the trenches".  

@Pavel Jiltsov I rarely look on BP for anything anymore because of the quality of information, a lot of armchair quarterbacks who aren't actually in the arena operating (don't actually own/operate said asset type in said jurisdiction that they comment on) - and the same talking heads are (IMO) wracking up comments for business development reasons. The notion that there aren't many multifamily properties in DC is ridiculous. I pulled the list from the tax records the other day and there are approx. 18,000 2-4BR properties in DC. Anyone, and I mean anyone, who looks hard enough long enough will find a good deal on a 2-4 unit in DC, they aren't hen's teeth. Also the notion that you need a bunch of money to get involved is also ridiculous. DC offers down payment assistance to those buying 2-4 unit properties, you can negotiate the closing costs, seller financing and creative financing happens regularly. I have first hand experience with a buyer who walked from the table with 80% of their EMD check back, and no additional closing costs, on a 2-4 unit. If you don't have the cash, the renovations can be financed. If you find a good deal experienced operators will partner with you. Small multifamily is much more like commercial than it is residential, commercial banks will make loans on them for this reason. BP IME is not a great resource for legitimate information from commercial operators - for that, just look in the tax records and cold call the owners of the type of property that you want to buy and ask them questions, tell them you're just getting started - 2 out of 3 will be happy to talk to you and lend you a hand. The wealth building upside and cash flow on these properties can be very substantial, keep grinding until you find a deal, and don't engage with trolls / naysayers, they'll just sap your energy.   

@Chris Mason You have no basis to assume that anyone isn't being honest.  Furthermore, there are numerous real estate investors who don't end up having much, if any, taxable income after all expenses and depreciation are calculated in a perfectly legal matter.  My client uses a CPA that specializes in Real Estate and does not cut corners.  I think you would be wise to not broadly insensate such things, especially when you are completely ignorant to the details of a particular situation.   

@Jonathan Taylor Smith What are the lowest down payment reqs you know of for non O/O 2-4 unit?  I guess payroll is an option, but then wouldn't that be opting in on an unnecessary double tax? 

Anyone have any contacts for lenders who make lines of credit on multi-family rentals?

Hi All,

FHA loans are great for owner-occupants with a W2 job, but can be prohibitively restrictive for those who are self-employed or run small businesses. Have a borrower with excellent credit, cash reserves, track record, but low stated tax income, who is having a tough time finding a product for an owner occupied 2-4 unit that requires less than 25% down. Any suggestions?

Thanks

I saw this service on LinkedIn.  Essentially they eliminate the tenant's need for a security deposit by charging them $29 a month in exchange for a policy with the landlord that will cover unpaid rent, damages, etc.  Sounds nice but was wondering if anyone has any SHTF experience with the service.  I think a nice deposit is an incentive for the tenant to tread lightly on a unit, but maybe this is a good idea.  I am wondering if Lease Lock underwrites those that apply for the service, so that those most likely to cause damage / not pay are screened out and not able to obtain the service.  

Wow I am interested in the same service.  I wonder why no one has chimed in.  Yes sounds great, but what's the claims process actually like?  And after a claim is filed, the price stays at $29?  Would be good to have a few applicants try to apply and see if they are approved, I wonder if the Lease Lock application underwrites the applicant based on factors and only offers them the service if they pass.