All Forum Posts by: Nicholas Lehman

Hello I have been feeling a bit uninspired lately by the multi family inventory and prices currently on the Anchorage market. In my estimation at current interest rates and current rents most 4plexes availabe in Anchorage do not appear to be very good deals. Are there any resources for finding multi family properties in Anchorage that may need some rehabbing yet are still financeable with an FHA loan.... but are not currently on the MLS? Like from a wholesaler perhaps?

I want to thank @Jimmy Murray, @Jacques Cyr, @Ivan Barratt, and @Ryan Cox for your responses and suggestions.  I am going to look into this "Waterfall" structure idea more carefully as I previously had never heard of it before!  Commercial real estate investing is new to me and until recently this dream seemed alot further away than it is now.  Thanks again for sharing your suggestions!

I recently bought a fourplex in Anchorage Alaska and have done well enough with the rehab and managing that my parents are now interested in investing in Alaska as well. They are interested in getting something like a smaller commercial property between 6-8 units and putting up the money for the down payment. I have stated that i can help with finding the property, management, maintenance, some rehabs etc. what we are having trouble is pinning down exactly how to word our LLC agreement so that we are all on the same page and no one gets thier feelings hurt. My parents are suggesting something like having shares such that if they put up 95k for a property and i put up 5k then they would have 95% of the votes receive 95% of the cash flow after all bills (and me being paid out 8-10% for property mgnt etc) and i would get 5% with the opportunity for me to reinvest in the property to sort of “buy” shares from my parents to where I could gradually earn more of the cashflow, principal reductions etc. I am working towards the goal of a lifestyle of all passive income or property management type work and i am just wondering if I should be asking for more or if there is any better ways people have come up to structure deals with their families. Thanks.

I recently bought a fourplex in Anchorage Alaska and have done well enough with the rehab and managing that my parents are now interested in investing in Alaska as well. They are interested in getting something like a smaller commercial property between 6-8 units and putting up the money for the down payment. I have stated that i can help with finding the property, management, maintenance, some rehabs etc. what we are having trouble is pinning down exactly how to word our LLC agreement so that we are all on the same page and no one gets thier feelings hurt. My parents are suggesting something like having shares such that if they put up 95k for a property and i put up 5k then they would have 95% of the votes receive 95% of the cash flow after all bills (and me being paid out 8-10% for property mgnt etc) and i would get 5% with the opportunity for me to reinvest in the property to sort of “buy” shares from my parents to where I could gradually earn more of the cashflow, principal reductions etc. I am working towards the goal of a lifestyle of all passive income or property management type work and i am just wondering if I should be asking for more or if there is any better ways people have come up to structure deals with their families or from other people providing financial backing in this industry.

Hello

I am fairly new to the investing world having just bought my first fourplex last year.  Recently the duplex across the street went up for sale and i am thinking how nice it might be if i could get it for the right price.  They are asking 365k and the one side that is rented goes for 1400 which includes all utilites for the tenant.  A potential lender told me if i put 10 percent down my mortgage payment would be about 2300 with todays rate and counting for pmi.  Just curious how good/ bad this deal is given there is still vacany rates, maintenance, cap ex, and other monthly costs to factor in.  How should the numbers play out in a duplex and what would be a good offer price to make deal worth while?

I purchased a fourplex in the Anchorage Alaska area earlier this year. Each unit has its own forced air heater and 48 gallon water heater. The furnaces are 20-36 years old and the water heaters are 10-16 years old. Presently the furnace in the unit i am currently living in is not working and the home warranty company is trying to say that the repair is not covered under their exclusions so i am considering replacing the whole furnace on my own. Since the hot water heater is packed in this little mechanical closet with the furnace i am wondering if i should also replace the hot water heater. Also the heating company has offered to do a small discount if i do more than one unit. Should i replace the furnace and hot water in my unit? Should I also consider replacing the furnace and hot water heater in another unit at the same time and maybe next year or so replace the heating systems in the other two units? Or do you recommend only fixing or replacing things as they break? Thanks for your suggestions!

Originally posted by @Landon Grover:

Nicholas,

Take it from a guy who did his first fourplex deal in the last year, it's ALL about the cash flow! Carlos was right in that one should not buy off potential. Is it possible to be successful when buying off potential? Absolutely! However, that's a varsity move for a beginning investor and one should stack every possible card in their favor, not against them on the first deal. Keep shopping/negotiating until the purchase price makes sense based off the actual income.

Start networking with the Rex team. (Next meeting is end of April) investors from all over anchorage are always looking to take new people under their wings.

Hey fantastic advice thank you. Hope your fourplex is going well! What would you consider good cash flow in Anchorage? Its looking like if I occupy one of the units I would be just a little bit in the red but that is counting 5% vacancy and 10% in total rents going towards repairs.  When four units are rented out then I am flowing about 500 a month and that is with paying property management. Granted there is some remodeling and work to be done but nothing too major.  What kind of cash flow are you able to get when you count reserves and all operating costs?

Originally posted by @Carlos G.:

You should purchase based on current cash flow not potential.  

The price seems a bit steep for 1 unit apartments.  Something like this would  be a better deal considering cash flow and it had an owners unit.  That you can always rent out instead and purchase based on cash flow.

http://www.alaskarealestate.com/Search/Property/Pr...

 Thank you for your reply! True the unit I am looking at does not have an owner per se I would plan on living in one of the four units.  The unit you are showing there is in Mountain View and that is a part of town I really don't want to live or own property in.  Just seems like they have a lot of problems there.

Originally posted by @Alexander Lommel:

just curious if you will lose earnest if you back out now?

 Negative I would only be out the inspection cost

Greetings, I am under contract to buy my first fourplex in Anchorage Alaska. In this area inventory of available multi family units is low, rents are fairly high and it appears to be a bit of a sellers market. The unit I am buying (or possibly not buying) is a fourplex with four 1br/ 1 ba units. All have washers and dryers. The inspection revealed a host of cosmetic repairs, water heaters on the edge of their life spans, some faulty window seals and it is in need of an exterior paint job. Some of the units are under rented and some are at 1000/ month which is about right for market rate. So i am trying to do some last minute analysis as i keep running numbers the worse this place seems to look. But then i look at what else is available and i go back to thinking that i am getting the right place....can anyone help me analyze this property a bit? Sale price with seller paid closing costs:338k Fha loan: 3.5% down, 3.25 interest rate, Current rents:700,915,995,995 (i plan to occupy the 700 unit and remodel it and increase the rent) Estimated repairs and remodeling: 15k So i keep finding myself saying things like "after I raise the rents it will have cash flow" or "after i refi and don't pay pmi it will be a good deal" On my spreadsheet i take into account debt service(p and i plus insurance and taxes) all utilities, snow, lawn, property mgmt, 5% vacancy, 10% of rents towards Maintainence/repairs/capital gains....it works out to costing me 100$ a month to owner occupy and only cash flow 400 a month after i move out which would take a long time to add up the 15k and labor needed to remodel and raise the rents to get to the 400 a month....is it worth it? Am i being to conservative?