All Forum Posts by: Nick Robinson

@Vianey Monica galdamez

Don’t buy in CA. The return doesn’t make sense and the laws favor the tenant. You can get better returns else where and invest in places that are more landlord friendly. Invest your money where your money is treated best.

@Benjamin Haraway
Ben if you are planning on buying a residential property, 4-units and under, then the lender will usually count 75% of the income of the property towards your income.  If your buying a commercial property then your personal debt is looked at because you are a guarantor of the loan but it ultimately depends if the building can afford the loan.

@Chantelle Hester

Prices will come down. It depends on how you look at everything but even just taking a look at interest rates. They are so low right now and Jerome Powell will have to raise them by the end of the year if we can not get inflation under control. People buy houses/investments on their payment not on the total price. So if interest rates go up the payment goes up so you can afford less of a house.

There is also a lot of bad policies and decisions being made but you can’t just sit and wait for things to happen. Pick your market, study it, run your numbers conservatively. Don’t assume appreciation or crazy rental increases. I have seen to many posts on bigger pockets of people buying houses with negative cash flow because appreciation was great last year. Invest don’t gamble.

@Brittany Bolling
I would not accept any type of crypto currency for rent.  As of right now cryptocurrency is way to volatile and there are way to many different types of coins.  Even in this thread you see a bunch of different coins named and people arguing which coin is better.  If they create a USD cryptocurrency I imagine they will do something similar to what the Chinese have done.  The way they are managing the supply is for every digital dollar they make they take a real dollar out of circulation.  I am also not an advocate for a USD crypto.  I understand it would work more efficiently then the system we have now and we basically have a digital currency now anyway.  The thing I do not like about it is the government being able to control what I purchase and how I use my money.  With a US crypto they can put time limits on your money, say what you can and can not buy, they would be actually be able to control who will get hit by inflation harder by making certain peoples money devalued more than others.  I understand that it maybe a conspiracy theory that they would do that but when is the last time you gave government power and they did not abuse that power. 

@Suzette Murray
I am not a property manager but I know the property manager that I have in Phoenix uses Chase bank.  I know there is a $10/mo bank fee I have to pay but have no idea about the restrictions they have for landlords.  

@Maron Faulkner
You probably will have a hard time with this one. I am sure you could find a lender to count 75% of the income on the SFR. I know the banks are starting to cut back on lending with their liquidity requirement. Will counting 75% of the income of the house give you a DTI under 45%? Been awhile since I bought a residential property I thought DTI was suppose to be under 42%.

@Julien Amparan
I guess I will throw my two cents in even though it sounds like most people have the same opinion.  You should always be buying if the numbers make sense.  Now in this market you may have to go through a lot more deals to find one that works.  Finding a deal depends on the relationships that you build with realtors.  I will say that in todays market you want to make sure you run your numbers conservatively and have a healthy reserve fund.  There will always be a reason not to buy.  What if interest rates go up and the price of the home goes down but the monthly payment stays the same as they are now?  What if they enact rent control?  What if the do another eviction moratorium?  What if they eliminate the 1031?  If you are not a buyer today you wont be a buyer tomorrow.  If the market crashes that means they will tighten up lending.  If you have never bought anything they are going to be more weary of lending you money.  

@Aneury Evangelista
Congratulations!!  You said you did bank financing with 20% down but only invested $75k.  Was the other piece of the down payment and closing costs handled by your partner?  

Investment Info:

Large multi-family (5+ units) commercial investment investment in Mesa.

Purchase price: $1,925,000
Cash invested: $754,000

14-unit value-add opportunity. Bought the property by selling an 8-unit and 1031ing into this building. Renovating the units and raising rents. Appraiser assessed the ARV at $2.9m. Once the renovation is complete I will either refinance pull money out and put long term agency debt on it or 1031 into a bigger complex.

What made you interested in investing in this type of deal?

What makes me interested in this type of deal is that the value is based on the NOI of the asset and not based on the comparables. Since the numbers for commercial MF (5+units) are bigger than a SFR its easier to make the numbers work. If or when I refinance this building I can pull out a large amount of money and still have it CF while locking it into 1-3years of IO on a fixed 10 year term/ 30 year amortization.

How did you find this deal and how did you negotiate it?

This was an off-market deal that was shown to me by a local broker.

How did you finance this deal?

I financed this deal through a local bank.

How did you add value to the deal?

I will be putting in about $30,000/unit. This includes exterior and interior renovations. Some of the major things would probably be landscaping, painting the exterior, flooring, and putting in-suite laundry.

What was the outcome?

Yet to be seen.

Lessons learned? Challenges?

Some of the lessons I learned was that building relationships and knowing who to talk to is the most important thing. Not just in RE but in life.

@Todd Pultz
Are you saying we are in a valley?

From the way you are talking I think we agree on a lot. I am very bullish on America in the long run. This is the best country in the world. I agree that as long as you do not have to sell/forced to sell then you will make your money. Especially with working class housing. In the 70s it was the guys who owned affordable housing that made a killing. Everyone has to determine what their risk tolerance is. Like I said I am still buying in this market and I am putting my money where my mouth is. That being said I am not planning on appreciation. It makes sense as a value add, it cash flows and with the ARV I will cash flow great and be in a position to hold, refinance and use to buy the next investment or 1031 into a bigger complex. Maybe crash is a "bad word". I believe it can get bumpy over the next 6-18months. A correction is a 10% change from the 52 week high. I think over the country real estate is up 17% y-o-y, someone will probably correct me. So if it drops to 20% basically back to pre-pandemic levels it is a "recession" but it is basically just eliminating some of the crazy things we have been seeing in the market. Here in CA it seems like the avg. person is paying about $60k over appraised value. The other day a realtor was telling me the paid $165k over appraised value.