All Forum Posts by: Nick Robinson

Investment Info:

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

Purchase price: $1,250,000
Cash invested: $429,000

Is an 8-unit in PHX, AZ. Was my first commercial loan. Did a 1031 exchange on a duplex I owned in Riverside, CA to come up with most of the down payment. The cash invested includes all fees for loan, 1031, LLC etc.

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

I believe from looking at the numbers that the idea is to go to bigger. Your capital is more protected from the extra doors and your cash flow can grow exponentially. Example 1 door rents go up $25/mo you make $300/yr. If you have 10 doors that go up $25/mo thats $3,000/yr. Also the economies of scale work in your favor the bigger the complex you buy.

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

I found this deal through Marcus and Millichap.

How did you finance this deal?

I financed it through a 1031 exchange and added capital I had saved. The previous property was a duplex in Riverside, CA.

How did you add value to the deal?

I have added value to the deal so far by instituting RUBS to each unit.

What was the outcome?

So far everything is going great! Even over COVID I have been getting about a 5.6% CoCr. There have been about 3-4 brokers contacting me about selling and have valued it over $250,000 from what I bought it at a year ago. Also my principal reduction is about a 5% return. So monthly to be making a 10.6% return (CF and Prin. Reduction), having the property in an appreciating market (Phoenix, AZ) , and have a management company take care of it is a great deal.

Lessons learned? Challenges?

Biggest challenge I think for me has to be with coming up with the capital to invest into bigger deals. My plan is to own this for ~5yrs and then do another 1031 exchange and add money to buy a bigger complex. It has been nice to have a property management company even though the first couple months were a little bumpy and I could make another 2.2% CoCr monthly managing it myself. For me though its not worth the hassle of trying to manage something out of state and dealing with the day-to-day

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Valley Income Properties (Management Company)
Paul Bay (Marcus and Millichap)
CommLoan ( Loan Broker)
US Bank (Lender)

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Huntsville.

Purchase price: $226,000
Cash invested: $226,000

Was bought with a self-directed IRA so bought it out right to avoid the UBIT tax. Has been cash flowing and a solid consistent investment.

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

Decided to change a profit sharing plan into a self-directed IRA.

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

It was on the MLS

How did you finance this deal?

ALL Cash

How did you add value to the deal?

It was in good shape when I bought it just had some minor cosmetic and drainage issues

What was the outcome?

Has consistently produced income and been a stable investment in a great area

Lessons learned? Challenges?

It was the first time buying out of state and continued to build my confidence to go on to buy my first commercial deal out of state.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Huntsville.

Purchase price: $226,000
Cash invested: $226,000

@Fred Cannon

It depends what you want it. If the rentals you have make $700/mo x 6= $4,200/mo that’s a good amount to live on for retirement. If you can take $75k on each you will have $450,000 plus make $1,800/mo in cash flow. I personally would take that money to invest in an apartment building. You’ll need about 30%down so you can buy a $1.5mm building.

@Kari D.

If I was going to do anything I would go with a HELOC but be careful using a HELOC or borrowed money. It is a great tool to grow and acquire more assets, but don't over leverage yourself. Make sure you are buying a positive cash flow property and you can pay back the HELOC with out the help of the new property.

@Patrick McGrath

Patrick,

After reading the article it sounds like that guy thought he would get 15% annual returns. Like everyone else that has posted he obviously didn’t do his homework and doesn’t understand what was being offered. This is an issue with going with non accredited investors or people that don’t understand what they are investing into. I believe with cardone Capital they say you will average a 15% return which includes the payout or refinance of the building.

I personally invested some money in cardone and he has been paying me about 4.65% monthly for the last 3 years even during covid.

I also get a K1 every year. He obviously also didn’t understand that when you invest money it’s never a guarantee that you will make money. The S&P500 has averaged a10%return since it was started but you can still lose money based on when you buy and sell the investment. No matter what or where you invest you have to have a long term,@ least 5 year, outlook.

Successful people come to a decision and act quickly and make changes slowly. Unsuccessful people take forever to make decisions and act and are quick to change their minds.

@Chris Matheson

I agree he could be messing with you because your initial offer was low. How much lower were you than list price?

Is he trying to get more for a 1031 exchange?

Where is the building?

@Shivam Patel

I would be careful speculating especially with everything going on. It is highly unlikely that your house will appreciate a great amount between now and next fall when you will get your masters. You also have to remember that you had loan costs when you bought and closing costs when you go to sell. So that will eat up some of your appreciation. When looking at real estate for passive income I would suggest taking a long term look 5-10 year. It’s not a get rich quick thing.

@Shivam Patel

Shivam,

When will you be done with your masters? If your plan is to move the money into a 4-unit why not buy the fourplex right off the bat? I agree if your renting out rooms in the house it would still be a primary residence. Also if you live in the house two of the last five years it still counts as a primary residence so you don’t have to worry about being taxed or doing a 1031 exchange. My advice in the future would be to invest in properties that cash flow, be conservative in your underwriting, and don’t invest hoping for short term appreciation. If you have a negative cash flow that will kill your investing career.

@Celia Moore

Totally agree

Double a dollar 20 times = $1,048,576

Double a dollar 20times then get taxed 25%=$72,570.64