All Forum Posts by: Paul B.

Originally posted by @Ronald Rohde:

Very curious to see if the trend continues to reach west coast or NY level of valuation. DFW proper is no longer really affordable, its just cheaper than California..

 DFW is certainly less affordable than it used to be, but the party would end long before we reach NY/SF valuations. The whole reason companies (and jobs, and people...) keep moving here is that it's a cheaper place to do business. If the advantage no longer exists, then they will stop coming. Bottom line is the explosive growth of the last several years is not sustainable indefinitely. But it could continue for several more years. And if that is the case, there is money to be made in the meantime.

Originally posted by @Jason Chen:

Dumb and clueless foreign investors are awesome

I can't wait until I start rehabbing and flipping high value properties and then have them overpay for them

Selling to "dumb money" is nice. Just don't expect it to always be there. 

A turnkey rental will get you a few hundred bucks a month cash flow at best. You would have to buy a lot of them to replace your W2 income (unless you have a low W2 income). If you enough money to do that, you should just do large multi-family. I am not sure you can buy turnkey MF the way you can with SF. It's more active to find a good deal. Unless, you wanted to invest passively in syndications. That's even less work than SF turnkey, if you find a good sponsor.

The group that I invest with follows a model that does not work well in South Florida. However, Orlando, Tampa and Jacksonville are all fair game.

Re: your question about expenses...property taxes will be much higher. The rate is usually something like 2.5-3%. Of course, the property values are lower, but still, take it into account. And your assessment will probably go up upon the sale of a property, so don't just look at what the current owner is paying. 

The ability to live in one of the units should be useful to you. If you have to break a lease any pay thousands, or sell another house that you would rather keep, that kind of messes up the math. 

I never buy anything anymore. Maybe fewer contingencies? If it's a great deal, someone might take it with no inspection contingency. I wouldn't recommend that for a beginner. And you need a loan, so it might be hard to compete with a cash buyer. Good luck, but if you don't get it, make sure you learn something.

Originally posted by @Joseph M.:

@Paul B., What kind of annual ROI is usually typical in a syndication deal? Are you able to pull your money out or is it basically tied up? Are you usually invested in long term buy and hold syndications are are there some where properties are bought to redevelop or value add an existing property and then flip?

Do most syndications require one to be an accredited investor or has this changed with the newer SEC rules /JOBS ACT. 

The deals I consider offer at least 10% cash-on-cash annually (most of which is tax-deferred due to depreciation), as well as some capital gain upon a sale. The goal is to double the initial investment in 5-6 years, which is about a 17-20% annualized return. The money is tied up. It has to be money that you don't need for 5-7 years. In the last few years, the market has been hot, so there have been sales or refinances for a return of capital after only 18 months to three years, but past results don't guarantee future performance. Having said that, the goal is to sell within 3-8 years. It doesn't make sense to be tied to a syndicator for decades, so those who want to hold forever would not like this strategy. One of my deals is a value-add - it hasn't paid me a dime yet after 13 months, but it is already worth much more than what we paid for it. We don't really use the term "flip," because you would want to hold at least a year for tax purposes. I would say we buy poorly performing properties, but not non-performing properties. Another one is a yield - I immediately began receiving quarterly checks, starting three months after closing, but there isn't a huge upside since the place was in good shape already. 

I have seen some sponsors only offer their deals to accredited investors. The folks I work with operate under the SEC exemption (I think Reg D 506b but I don't have it front of me) that allows up to 35 non-accredited investors, as long as they are sophisticated and have a pre-existing relationship with the sponsor. I have recently heard of cases where multi-family deal sponsors are using crowdfunding thanks to the JOBS act, but I haven't invested with any of them. In my opinion, a good operator should have a strong pool of investors already and wouldn't need to use a crowdfunding site. 

Is it a good deal? Maybe. If you can really get $1,000 per month, then it passes the 1% rule (monthly rent is at least 1% of purchase price). That means don't pass on it yet, but you need to dig deeper before buying.

What strategy? Probably buy and hold. I don't think you're buying at enough of a discount for a flip. Could be a great opportunity to house-hack if you would like to live there. 

Exit strategy - see above - it's probably not a flip, so get long term, fixed rate financing, as you have already posted - don't buy something you can't hold for many years, in case the market slows down - Maybe in a few years, if you're successful, you can 1031 it into a bigger property. Or you might hold it forever. It depends what your goals are. 

Missing info? Yes, it would be good to know what your expenses might be. Taxes should be available from the county website. Note that they will jump up after the sale. Can the tenant pay their own bills or do you have to pay them (individually metered or one master meter)? What are comps selling for in the area (i.e. are you overpaying?). Is the area growing (I know all of DFW is booming but is there any reason to be concerned about this area)? Why is the fourth unit vacant? 

I invest passively in class B/C multi-family syndications here in DFW. I often attend multi-family Meetups around town where you can network with other local multi-family investors. I can send you some links of events you might attend whenever you are going to be in town.