All Forum Posts by: Nick Alvarez

@Scott Ewell. Depends on what your GOALS are. do you like not being tied to the burden of debt service every month & sitting on equity? or do you prefer to utilize your cash differently to grow your property holdings. I'd run a leveraged return calculation on your existing rentals and compare that to your current yield. depending on the cost of funds- it could really be worthwhile to use leverage wisely

I would hammer out more details/plans with your partner. 

What area do you want to invest in first? How do you want to go about purchasing projects? (traditional, auctions, private transactions etc.) Get a general indiction on the amount of distressed properties within your target area, start driving around neighborhoods for an idea of whats available, network with those in your REIA group. Once you have a specific goal/area/price range in mind, build some models with your partner's expertise on repair costs, ARV, financing assumptions, etc. Once you two feel confident in your model & validate with some comps- start discussing how financing will work- then you could maybe start invoking the help of some "suits" regarding private money or conventional financing, speak with a trustworthy accountant/CPA/Lawyer for advice on your tax plan/implications & exit strategy. I think the most important step prior to engaging various 3rd parties is to make sure you and your partner are both aligned in your goals & expectations- then you can have a clearer picture of what you want when you go speaking to all the other various suits.

@Omar Merced

Sounds fun! glad to hear the city being supportive, hopefully they provide more resources to your endeavors than just their enthusiasm.  Excited to hear updates on this.

@Kurt Kline Like a lot of people are stating above ^^, their are multiple ways to save up for your first deal. yes there are less aggressive ways to save (online savings, MMA accounts, ETF's) or more aggressive (crowd-fund platforms, private money lending, day trading). However, I think it comes down to how bad do you want to get in the REI space & what are you willing to do to, in order to make it happen.

From a practical standpoint- I'm surprised no one has suggested getting a second job. I worked 8 years in serving tables in a restaurant from high school through college. After graduation I got a job in commercial finance- but chose to keep serving tables at night for a year and half because I was motivated to save for my first real estate investment, this was an easy way to stash away an extra $1500-$2500/month just by sacrificing some nights and weekends.  Also- every time I've gotten a raise, I haven't adjusted my spending habits, rather just increased my savings amount. 

I like what @Logan Turner suggested- check out the crowdfunding platforms and asses your risk-tolerance, learn about secured/unsecured debt & see if there are some short term deals you could be apart of. Or teaming up with other investors who need some rehab cash (albeit more prone to risk than online savings)- this would give you first hand experience in the REI world & provide a healthy return.

Lots of fun ideas out there, just requires time, patience, & discipline- since we're practically neighbor's- feel free to pm me if you ever want to meet up and chat real estate.

@Jeff B.: Exactly! always more deals to consider- important to stay level-headed and buy on the real numbers.

@Anthony Chara I love creative financing solutions- I work in commercial finance and we do out of the box deals all the time. However, in this case- just doesn't make sense for us to pay what they are asking. Who knows, maybe they will get someone to pay it- they can wait it out as the market is hot. 

@Jay Hinrichs yeah- it was on the high side. Demand is high! 

@Richard Warner solid PM is a definite must! Best of luck building up your business!

What a ride the last 3 months have been! Been involved in attempting my first deal but we walked away this week as we didn't want to overpay on the building. Despite not closing - I was able to get some great experience and made great contacts up in Portland Oregon. **(If anyone needs a killer PM- we connected with a great company who really helped us out during due diligence-message me for their info)** Just thought I'd post about my experience.

My uncle has been involved in REI for a long time & I told him I wanted to help on the next deal he cam across. Back in November, he showed me this 30 unit complex he was interest in just outside downtown Portland. It was in a decent area with super close access to public transit to access downtown and surrounding areas, rents were under market vs. all the nearby comps. Of course the broker's pro-forma will always paint a rosy picture so I ran the numbers & preliminarily it seemed like it could be a good possibility- built in some healthy reserves and were looking at a 6.5% cash ROI yr. 1. It was listed a bit high but were able to get it under contract in December for $200K under list price. We reached out to a pm to help us do some preliminary work before we flew up for our walk-through, he was really great in getting us up to speed on the market & showing us improvements he had done on other properties to increase rents. We had seen an older appraisal before heading up there & were aware that there was some deferred maintenance needs.

We were finally able to fly up around christmas and do our walk through- and man was that an experience.  Based on our previous information we gathered from discovery & previous appraisals- we knew the building needed work, but after walking through the all the units, deferred maintenance was an understatement!! Tons of life/safety issues & too many interior/exterior issues to list. I'm surprised owners let their properties get like this- its not only bad for tenants but a big risk on the owners side... Our capex estimates increased substantially based on what we'd need to do to pass code but also to raise rents (somewhere to the tune of $500K-$800K). Thus we reduced our asking price & found out recently the owners wont budge. 

C'est la vie ~ Yeah its a bummer it didn't close, but learning firsthand to walk away is a good lesson. I loved being able to participate & get my feet wet in RE and am looking forward to finding better deals out there.

@Max Reznik -- to echo @Mark Peteritas and @Michael L., I like to include a decent % variable expense to go towards big unexpected capex items- that way you are planning on building in reserves to handle these issue's ahead of time.

@Bob Burson in addition to @Jeff B.'s great suggestions. I would also take a look at the department of housing & community development website- they have various resources available 

• HCD California (assuming your interested in must-family in CA).
• CA Housing Code (indexed housing regulations under the CA Health & Safety Code)

Also, the law requires on onsite manager for 16 or more units, not 15 (in CA).