All Forum Posts by: Nigel Guisinger

In the commercial appraisals I’ve had in the past have used three approaches. There is the comp, the income approach and the replacement method. They will weight those methods depending on the local market. 

I'm not in that area but one thing to look for is if there is a REIA group near you. That's a great way to meet other investors in your area.

A lowball offer of 100k on a listed deal at 225k is very low and while someone may take it, most would see it as an insult. In order to not insult and to have success, find out the reason for the sale. That key information will let you know if it’s reasonable to send over or not. Remember writing an offer takes time and there is a value there. 

My wife and I set a number a while back and together we hit it. But the thing is, just like others have said when you hit it, you’ll move your number up. I always thought I wanted 100 units. I hit that a while back and kept reinvesting the money. Now it’s about adjusting the portfolio to minimize the headaches and stress while keeping the same cash flow. We both own our own business but I have employees So I have been reducing my role so that I can have more time with my family. Now to use time and inflation to grow our portfolios. My plan is to reduce role and increase cash flow equally over the next few years. The key I figured out was not about a number but time. The real question is what do you do after you hit that number. Do you keep going or do you stop and enjoy it. For years I just kept going. And wrapping up a bunch of assets to reduce time expense is difficult. Buyback in the end it’s well worth it. 

I have three property managers in three states at three different rates. They run anywhere from 4% to 6% but I do have hundreds of doors. The bigger issue I see is mark up from third party service.  Look at total cost and what the do with late fees and notices for eviction. My goal is to hand over the asset and let the managers do what they do. We set our expectations before we enter into a contract with them. 

I have two:

Bought a condo for $38,000. This was my favorite deal I’ve ever done. I was called by the title company that there was a sale fail and the contract said and it assignable The seller had signed the sales docs and the buyer was another bank and they had filed bankruptcy that day. As a result they weren’t going to sign the purchase and signed a release/assignment. The title gal called me and told me to head to her office immediately with a cashiers check. I never saw anything on this prior. It turned out to be a fully rehabbed 2bed condo in a super desirable area of Portland Oregon rents were $1300 on day one and I had over 30 calls in the first 30 minutes. It’s been rented to the same person for seven years. After all costs I bank 30% cash on cash and the asset is now valued over $250k. 

I also purchased an 8 plex from a bank for 550k but was given a 100% loan and 100k for rehab with no money out of pocket. I just sold that complex for $1.25m. 

Both deals were due to relationships that were built up over years. The banks knew I invested and when it was time for them to sell an asset I was the first one they called. The banks moved assets they saw as liabilities and I made a great return because while I had to do some work the value was there. It was a win win and that’s the best way to invest. 

Why would you rehab a new construction? This purchase misses the R for rehab. With a new construction you really can't only hope for appreciation and get a renter that can cover the mortgage. A BRRRR deal has to have the ability to improve the asset. Where do you plan on adding value?

When we got to the table to sign many details of the deal were changed to the point it effected profitability of the deal and ROI. They wanted additional funds and had a rate well above what I was paying on other deals. We worked on the terms heavily prior to and they needed to adjust to be within their guidelines. We were supposed to close last week and then again today and finally I decided to inform them we would be using another lender. It will cost me 30-45 days and tens of thousands in fees and additional cost but I am a stickler for doing what was agreed to and in the end I lost my comfort and trust in their integrity. Finally their head of lending and I spoke and it went even further down hill. I've done dozens of deals And they all adjust somewhat but this way the first time in 12 years and $20m in purchase that I had to fire a lender. The lead multi family person there is the reason I will not do business with them.

On a positive note I have a great relationship with my local broker here in Oregon and he is helping me complete this deal now. The only reason we were using Lima one is because this is a deal in Tennessee and originally my regular lender doesn’t lend that far away. 

I just terminated a contract with them. I will not be using them for any future deals 

A prudent investment mentality isn’t right or wrong in every case.  The question comes down to what is your plan with the property.  Are you buying based on cash flow or appreciation?  If you buy now and it cash flows you don’t need to worry about asset value if you have the percentage of cash on cash that you want and you plan on holding long term. Think in terms of income required each month and income you receive each month.  If your plan is to buy and hope that any property just goes up, I suggest just going to Vegas and putting it all on Red on the roulette table because hoping it goes up is just a gamble if you don’t do the research and have a game plan. Remember money is made when the market goes up and when the market goes down.   

One of the smartest investors of our life famously said “The best time to buy is when you have the money and the best time to sell is the day you die.”

Run the numbers and then do it again and make the decision you feel best with. If the numbers work don’t cheat yourself. But if they don’t you need to walk.