All Forum Posts by: Nicholas U.

Quote from @Anthony King:

@Matthew B. What is an apartment building? A duplex? 20 units? If it is 1-4 units you can get a conventional mortgage. 5 or more units requires a commercial mortgage.

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If it is 1-4 units you can get a 30 year residential mortgage, but anymore you must go through commercial leading.  Most loans will be 10 years in length but amortization might be over 20+ years.  You will still be expected to probably put 25% down on these types of properties too and will commercial lending they will probably want 3-5 years of taxes to show experiences with rental properties.. 

So with $200,000 you could look for properties safely around $700,000.00 in my opinion.  This will allow you to include loan costs, needed repairs, and a small savings amount to start with for the property.  

I have a number of small multifamily properties at this point and I believe I am ready to start investing in something a bit larger.  An opportunity came up for me on a multi-use building (retail/residential) in which the 1st and 2nd floors are done but the 3rd floor is just open at this point.  It is about 5000 square feet but I am trying to figure out how much it would cost per unit to build each 1 bedroom apartment.  Has anyone done something like this before and give me some general ideas on costs for something like this in Indiana.  

Electrical/Plumbing/Kitchen/Bathroom/etc...   

I have done some research but the number variance is pretty crazy.  

Originally posted by @Corey Frank:

@Todd Olson sorry if this is a naive question.. I am a newb who is gearing up to invest in multi family 4 and under so I don’t really understand how commercial lending works. Do you find these type of terms risky? What can a person do to hedge their risk if interest rates went crazy in the next few years as raised their mortgage payment significantly?

If you are planning 4 units or under a residential fixed 30 year loan should be available with 20-25 percent down.

Commercial property is inherently more risky so this protects the bank.  You can always refinance or attempt to fully pay off by end of loan but there is no guarantee that interest rates won't go up.

You won't likely find any banks able to do a loan on a property with more than 4 units over 10 years.  You might be able to get a 30 year amortized loan over 10 years meaning you are making payments like it is a 30 years but it is due in 10.  At end of life you generally refinance.

Some of it has to do with history.  If they have been a good tenant for a good track record I would be willing to sit down with them and talk about how best to work out the situation.  Evicting or leaving it empty costs money too.  

Right now I have been relatively lucky, but last April when the shutdown occurred in my state I provided relief to all tenants regardless of situation.  I simply told them if they didn't need the assistance I would like them to donate the money to someone who does, but obviously that is up to them.

Now if I had someone who moved in a few months before I would be far more cautious about what they are requesting.  

Just as there are crappy tenants there are crappy landlords.  There are plenty of stories about landlords refusing to make repairs, just like there are plenty of stories about tenants who abuse the system.  

I have had plenty of different realtors who also have their own property management company talk up about how you just can do the bare minimum and the property will be great cash flow...  Yes but I have a soul 

I am not overly interested in articles that talk about major deals and such because I am not close to being there.  There are plenty of YouTubers and such that makes this sound like a get rich quick scheme.  I get some of that is to attract new users and that won't go away but at the same time it would be nice if there were more features or networking for the site.  For example, there is a "Find Deals" section but I don't really see it advertised and pushed.  Giving people incentive to post here before it hits the market would be great.  There are also listings there from 2 years ago...  I don't know how much I can actually trust it.  

I try to get something like 1.15%-1.25%.  Gives a little extra flexibility.  California is a different beast than pretty much everywhere else so you need to change your expectations for there.  

Originally posted by @Namit Salwan:

If I have $650,000 cash to invest. Should I buy one big multi family property for about $2 million or buy 2-3 multi family properties?

This is something that comes down to value and potential growth.  No easy answer for something like this.  In addition, you could get a large profolio of properties as another option. 

Yes this is annoying but there are a few things going on here.  The first is you are correct it probably won't cash flow so the people that are buying it are either not doing the right type of research or they have plenty of capital and just want to use it.  The second is that it is sounds like it is a highly desirable area.  You aren't going to cash flow around college campuses generally.  The trade off is that you don't usually have trouble finding tenants and there may be room for appreciation depending upon what the future growth looks like around there.  

I avoid college campuses and focus outside of them generally.  If a big new apartment building goes up it can be hard to compete.