All Forum Posts by: Neil Cronkrite

I'm in a similar situation - I have a primary home with sub 3% interest and around $125K equity. But I'm leaning towards selling because after accounting for all true expenses (vacancy, utilities during vacancy, management fee and commissions, repairs, and saving for repairs) there's very little (under $50 a month) or no cash flow at all. One thing I've learned even more in the last year is that the 50%+ rule in alive and well in SFH investing.

 Great point, it's easy to make money when cap rates were consistently decreasing and rents were on the rise. 

Love the NNN space! Not all cap rates in NNN are lower than multifamily. It's all about the stability and reduced expense inflation risk.

@Christopher Zmolik Welcome to Bigger Pockets! I started by listening to a lot of podcasts. Then I wasted some money on overpriced single family homes. Learned a lot. Then I really dug deep into my interests, niched down, and went where very few investors are going in commercial real estate. You write that you want to retire early, but know that great real estate investing is a long term game. 

 Not always. A little bit like oranges and tangerines. Larger properties tend to have more favorable interest rates, better economies of scale in maintenance issues, lower economic vacancy, better property management terms, and more. Plus, folks specifically invest in syndications to have all of the benefits of being a limited partner. 

Investing in real estate is as general to saying you're going to invest in business - what type of returns are you seeking for what reason and on what timeline? Maybe I just love NNN too much, but make sure you think about any and all types of real estate, not just single family homes and multifamily.

I see some really terrible STR underwriting, so just be careful on occupancy rates, nightly rates, and accounting for all potential expenses. Remember, unlike other real estate asset classes, the landlord is on the hook for so many more expenses that can eat away any cash flow.

I good way to attract partners is to develop specific interests and skillsets. I use the word attract intentionally. When you focus on finding partners, you aren't focusing on what you can control, rather what other people are doing. When I was trying to focus on multifamily deals, I really could differentiate. Everyone wants a value-add B class asset in a A class area. When I started to niche down into specific NNN asset classes, I could really differentiate my interests, my underwriting skills, and my deal buy box. That level of focus helped attract other investors with similar interests who wanted to scale.

Great, thanks for those extra details. If the majority are Section 8 tenants, can you even raise rent on those properties? Raising rents will be great for cash flow, but since these are SFH, it won't technically impact valuation. Banks will more often than not appraise on cost per square foot not NOI. Make sure you're also getting below market value from a cost per square foot approach to make the deal sweeter.

You could pick up comps in better neighborhoods which could raise your cash out refinance opportunity. Don't count on this, but it could happen if you do the proper due diligence. The downside could be lower than market rents, extra maintenance costs, and increased vacancy.