All Forum Posts by: Chris H.

A bird-dog I use often reached out to me about a potential condo deal.   Ready to go, no maintenance required (this is unusual for me, I usually buy fixer-uppers.)

The numbers: ~$85k purchase price, rented at $750/mo currently but should easily increase to $800/mo. (Zillow thinks $900/mo rent and $105k value.)  

The condo is ground-level and looks like a small house.  I've only done single-family homes and a duplex in the past.   What is different about condos that I should consider as an investor when analyzing?  Are there extra fees I'm not considering?

Keep in mind that the GOP hasn't really had this level of complete control of all three branches and majority of state governments for a long, long time.

It's quite possible that one party being in control will allow changes that haven't happened in previous years.  I'd advise against complacency, though at the same time, not getting yourself too worked up when nothing has been proposed is also good advice.

So, historically, I've been finding undervalued SFRs through either birddogs or negotiating short sales.  However, they've been less frequent lately, and I've been looking at possibly going to auctions.

With MFUs, I rarely see opportunity to fix it up and get instant equity after purchase/rehab like I get on my SFRs.

I'm getting growth by picking up SFRs.  I keep seeing so much advice about how MFUs are better, but I feel like with MFUs- the moment I put all of my remaining cash in as a down payment, my growth will drop to normal buy-and-hold rates (7-8% cap), and it's not quit enough to quit my traditional job at.

For example, if I have $100k, why buy a $500k MFU w/mortgage @ 8% cap rate to make maybe $11k/yr after expenses when I can keep doing what I'm doing (gaining 25k or so in equity or cash on each B&H or flip)?

I see- so because the expenses remain constant, raising the rents raises your overall profit by a lot more than a SFR, so over a long term, the MFU ends up growing by a lot more in value over time? Did I understand that right?

Hi BP community- longtime lurker, rare poster. I've seen many, such as Ben Leybovich, decry SFR properties, but I have a hard time understanding why- from the perspective of a smaller investor.

I work full time, and on the side, I've done a couple flips and own a few rentals.  Since the rentals don't bring enough income for me to quit my job, I continue to work full time and save what I can.

I see a lot of people talking about how multifamily homes or apartment buildings are "better"- but since you have to put large down payments, or agree to owner finance deals that usually don't give you a huge margin- I don't really see how so. It's quite hard to find apartment buildings or multifamily units that are undervalue, since they are usually investor-owned- meanwhile, SFR's seem to be where you can find the most market inefficiencies.

I've been buying SFR's undervalue, fixing them up, and doing a 75% cash out refi to get my money back, enabling me to buy another (and flip or refi again). I'm slowly growing my cash flow and my actual cash base (through flips and savings).

I keep seeing suggestions to look at apartment buildings, but I feel like the moment I buy an apartment building- there goes my cash pile, since it has to be 20% down! So focusing on SFR's seems to enable the most growth for me.

Am I wrong?  Is there a way for me to obtain apartment buildings that doesn't immediately tie me up?

My goal is to hit enough cash flow to be able to safely quit my full-time job.

I've historically bought houses under value that needed significant work. Short sales, foreclosures, etc. I usually target 12-15% ROI after expenses. I live in a region where 3 bed 2 bath homes sell for around $120k.

I'm interested in looking at apartment buildings in the $300-600k range, though I'm not opposed to more if it makes sense. There's a fair number on Loopnet, all going at the average rates of 7-8% cap rate. Obviously, to beat that, I'm going to need to do some work in finding off-market properties that need work.

But investor owners are different from homebuyers. Does anyone have any tips on finding distressed landlords who might be motivated sellers? Or any other tips on finding apartment buildings that might need work before they hit the general market?

Sorry Jeff - I used the correct verbage with the lender but incorrect with you. I did ask for a lending lawyer and my HML sent me a lending lawyer recommendation.

I get what you mean about phrasing the conversation as a flat fee from the start. What do you usually look at for that price?

The mortgage broker seems useful even just to reduce time spent.

Thank you all so much for the replies so far! They've been tremendously helpful. I asked a local HML for a finance lawyer suggestion and got one, so I'll go talk to him.

Thank you particularly to Jeff, Ann, and Bill!

Jeff, what is the reason you recommend using a broker at a flat rate- just to gain experience at expense of margins initially as the paperwork and process is complicated, or because a licensed broker is needed for this setup?

Hi Jeff, believe me, I'd be very appreciative for any help, thank you :)

Yes, I have rehabbed several properties which I have turned in to rentals for myself, and also worked alongside some flippers. I can evaluate a property and estimate rehab costs. I love a good spreadsheet. I do not fully understand lending law in my state and am not a broker.

I am an experienced rehabber who is in a position to know people with money and people needing it. I also would like to lend some of my own money, in between my own rehabs. I am afraid, however, to do so without learning how to structure it properly, and don't know where to look to learn to do so. I suspect the local hard money lenders would not be exactly willing to take me under their wing as I would be competition.

Thanks for any suggestions or assistance!

I'm somewhat surprised at the complete lack of solid information or resources in any of these. The post with the most information I found was:

Most of the posts in these threads lack substance, telling the OP to simply partner with an experienced broker.

Posts like:

I want to find out how to structure the deals properly. I already know how to evaluate, I already have the customer base. I need to know how to structure. I recognize a random person on the internet can't write me a whole guide, but surely there is some recommended reading?

I would like to become a hard money lender.

I have the customers on both sides and a specific business model. I can sell it.

I have the cash reserves myself to lend, as well as know both individuals who want to fund real estate investors, and customers.

I've talked to hard money lenders in depth before and understand the traditional model. I've actually got a specific business model in this case due to a specific set of potential clients whom I've already talked to.

What I lack is the experience and knowledge of the details involved of being the dealmaker, the hard money lender.

Can anyone suggest any resources for me on how to go about structuring this right? Books, websites, personal anecdotes, anything?

Thanks much to any responses and help!