All Forum Posts by: Matthew Saskin

Disagree vehemently with this position.  Debt is a tool, like all others, and can be used responsibly to substantially increase returns.

15+ years of REI here, all MFH, long term buy & hold. We maintain ~65% leverage across our portfolio over time (was ~80% when we were getting started), with enough cash kept on hand to significantly decrease that if needed, or weather an extended storm. Some general thoughts:

• Debt is a tool, use it responsibily/safey
• Be safe, and smart, when it comes to underwriting.  We know our markets very well and still underwrite deals more conservatively than we see in reality in several markets
• Know your product and markets.  We invest almost exclusively in Class C properties outside secondary cities.  Over time, it's proven to be a fairly safe and very resilient asset class.  At that price point, tenants are grateful to have a landlord who actually takes care of the place proactively, refreshes elements of the property before they're decrepit, etc.  In the past several months we've kept up with our standard collections for the most part as I would imagine the bulk of our tenants have been classified as "essential workers" - think grocery stores, med tech, janitorial, etc.  We have several that are on payment plans for rent or we have temporarily reduced rent for.  All a matter of paying forward some of the money we've made over time.

Also, I am the owner of this property, not a wholesaler or trying to broker a deal.

Complete listing can be found below - any transaction will go through my listing broker.

http://www.corcoran.com/nyc/Listings/Display/3501060

Rare, highly coveted new construction 3-family/4-story with Certificate of Occupancy. 18x55ft townhouse on a 100ft lot, newly constructed a year ago and located in prime Bushwick with an ACTUAL CAP RATE of 5.36% and a projected of 6%. This adorable house commands ACTUAL income of $96,600/year. Units are on a high season rent cycle with room to increase income to current market value. Spacious layouts, nice light, high ceilings, arched windows plus the conveniences of central heating/air and laundry hook up in garden level apartment. Ideally located near the Halsey L and Gates J/Z train stops. All mechanicals are brand new from when the building was constructed including electrical, plumbing and roof. Message me if interested in additional details.

I've never paid less than 25% down for conventional financing on MFH.  I've also had a few cases of banks requiring going to 30 or 35% at the last minute.

 To be clear, the tax benefits are in offsetting your income, not in a tax rebate/refund per se.  The primary deductions you'll get are depreciation of the property as well as the mortgage interest you pay.  Remember, these are deductions, not credits, so they only serve to offset the income that you make - income from both the real estate investment activity as well as your primary income/"day job"

Shouldn't be hard at all. I just went through this for a bunch of properties (granted, moving from personal to my LLC, but the process is the same).

 You can request whatever you want, but good luck getting it.  My experience (in buying several severely mismanaged properties) is that the owners will likely have equally mismanaged tax records (eg; all investment activities lumped together, etc.).

My due diligence for an area that I'm "blind" to (have never worked in before) would roughly be as follows:

-Speak w/ local realtors & property managers to determine appropriate market rent for all units

-Get copies of all leases to verify current rent roll

-Speak w/ my insurance agent, get appropriate quotes

-For any utilities I'll be responsible for, find out local market rate for electricy/gas/water & sewer and use what I know to be "average" consumption for those services

-Use estimates I know are sound for maintenance/capex reserves, etc.

 Good stuff.  Len Bosso by chance?  That's who we're working with.

 Put bluntly, don't assume that you, or I, or anyone, can accurately predict where the market is going and in turn, where interest rates are heading.  6 years is a long way out, with a whole host of impacting events in the middle of it (Euro-zone issues, an election cycle and new president, potentially a new party being elected, etc.).  I'm of the believe that you take the financing that's available and fits the bill for the opportunity you have in question - whether that means accepting variable rate risk for the right deal (or for a deal that has future potential for easy refi's to more stable funding, or one that you plan to only be in for less than the fixed period) or holding until you can align a deal with the availability of fixed rate funding.

Exactly.  For any loan (although mostly applicable to commercial) there are really three factors to consider:

1 - Amortization period.  Over what period of time are the Principal & Interest periods calculated (eg; 15 year?  20 year?  30 year?)

2 - Loan term.  Just because a loan is a 30 year amortization does not mean that it will be a 30 year term.  Case in point, the loan I referenced above (20 year amortization/6 year term) means that payments are based on the 20 year amortization schedule, however the loan is "up" a 6 years, meaning either a balloon payment is due or I have to refinance before that. 

3 - Rate.  Interest rate - fixed or variable, and if variable, how soon and frequently does it change and what does it change based on?

For this particular loan, I neglected to mention that I pre-negotiated a guaranteed renewal/refinance at prevailing market rates, so basically, this loan can better be viewed as a 20 year amortization/TBD term/"variable rate" with the first adjustment (from the initial 4% to prevailing market rates)  occurring at the 6 year mark.

Make sense?