All Forum Posts by: Rob Flagg

@Anthony Gayden This is so nice to see the breakdown of owner occupied and n/o/o's. Thanks for sending this along!

@Melvin List Awesome, thank you much for the second opinion! I really appreciate it. 

Hi Biggerpockets!

I have a question for those seasoned veterans out there that have more experience in the financing of 1-4 unit non-owner occupied multifamily. 

Let me start with a preface first: We purchased a townhome in July of last year with the ultimate goal of renting out, we are owner occupying this and put 5% down with a conventional lender. In March of this year we purchased a duplex with a bridge loan for 15 months from a local bank here as a portfolio loan, with 20% down or 80% LTV. Our plan is to cash out refi after the duplex seasons to pull our reno money out and get into a 30 year fixed.

Upon speaking with our favorite mortgage broker he informed us that it's a Fannie/Freddie rule that N/O/O multi-families require a 30% down or a 70% LTV.

Here are a few questions:

1) Has anyone else heard of this Fannie/Freddie rule of 70% LTV?

2) Has anyone had any success with a (Colorado-preferred) lender doing 80%+ LTV on a N/O/O multifamily?

Ultimately it's not financially troubling but I would love to lock less equity in this duplex to be able to do more deals faster!

Thanks in advance for your time and expertise!

Best,

Rob

@Julie Sisnroy

Hello!! Wonderful to see another Colorado Springs investor on the boards. I really appreciate your insight, the first property I posted about was infact near "B" street, and I'm really glad I didn't get into it. STRONG cash flow but real sketchy area.

I actually looked at the one at Bijou, 419 E I believe. It's a great opportunity for an experience investory, but being the rookie that I am, I wanted a more sure bet. Less risk/less reward to start as I learn!

My long term goal is to invest in higher middle class SFH, but because I can FHA on my first property I want to target a MF with stronger cash flow. If I find the right MF with cash flow, that will allow me to buy two properties this year, the second being a SFH. Without the first being MF, it would slow my long term goals down.

One thing I am noticing in the area, hopefully this can benefit all future and looking colorado springs investors - target MF that are older big homes that have been divided/cottages attached. The "mini apartment" complex feel for 4-plex's are only found in ares zoned for them. What you get is a street with 12+, establishing an apartment complex with no HOA or central department to upkeep the whole area. These usually attract the lower class of tenants, cash flow is good but stability is not.

@Scott Kelley Happy to see there is another CS investor! I plan on hitting up some SFH/duplex next however I wanted to get the biggest bang for my FHA buck ;). I work for my day job downtown springs M-F, whenever you are in town send me a message, would love to do coffee!

@Susan Pompea Thank you for your input! I really appreciate the time and heads up. I got a bad taste in my mouth from one area that was not in good shape. After digging around I've found some great opportunities! I personally love Manitou, Old Colorado City and Downtown. Manitou and Old Colorado City have some 4 plexes, Downtown has some old style victorian house divided into multi-family situations.

I have found a really good perspective property, if I PM'ed you the info and numbers would you be willing to add your opinion to my consideration? I would greatly appreciate it!

Kerry!

This is absolutely a life changer. Thank you so much for providing this. After some analysis even at an E-1 level, they are receiving about $400 more a month for their living stipend. That gives me a lot more faith in investing in these types of areas.

Thank you again.

Thank you kindly Jean, I really appreciate it! I like downtown Springs, but can't justify cash flow yet, at least from I have seen.

Kimberly!

I am so glad you posted on many levels! First and foremost thank you for your response and I really appreciate it. How many units do you own yourself?

You are absolutely spot on with the south east side of the city. Colorado Springs is still quite nice compared to a lot of run down cities, south east side is truly the only place where a significant amount of robberies, murders and drug trade takes place.

A lot of opportunities I am seeing is west side of I-25 and north east above the airport. I have found some good cash flow in these areas, and think I will take the dive soon.

If I can offer any other advice in CS I would love to! I work downtown and spend about an hour or two each night roaming around the city, studying areas and inspecting properties and surrounding neighborhoods.

To answer your VERY important mexican food question... I actually grew up in San Fernando and frequented San Diego so I am a mexican food snob as well. I actually live in Monument, CO which is about 20 minutes north of CS. In Monument there is a resturant that is the closest thing I have found to Californian mexican. They even have the California burrito (carne asada + fries) I would stake my reputation against :).

Thank you so much for your insightful response! And hello from Aurora, CO. Not to poach in on your area but have you noticed good price-to-rent ratios up there?

Checking on the actual tenants employment will be my first thing to do!

I will keep you noted of any findings. I'll try and snag some pictures of what I deem as an "undesirable" location. While there is trash everywhere and it's not aesthetically pleasing, there are also families in the area, no vandalism and parents feel comfortable enough to let there kids roam around the area.

More updates to come!

Hello Wonderful Bigger Pockets Community!

I have been lurking around BiggerPockets for a decent amount of time now. I was fortunate it enough to sell a successful business late last year and after discovering Real Estate I am excited to put my money to work! I am an avid learner and have been soaking up as much information as possible. I have decided my first purchase is going to be a multi family utilize all of our favorite FHA loan. Once this goes through and I learn first hand I will be moving on to even more!

In my area I have found it's possible to get multifamily places with $200+ monthly cash flow per unit. But I have a huge question for all the experts about my following dilemma.

The city I want to start investing in is heavy military, with three HUGE air force bases the rental market is premiere. As with any city that's sizeable there are good areas and bad areas. At first I started looking for old style cut up houses in nice downtown areas with higher mortgages and higher rents but the cash flow is sub $100/month per unit.

I then started lowering my search to cheaper places, I found a number of multi family (usually 4 plexes) near air force bases that are not the most glamorous place to live. Most of these units are clumped together in sets of 12+ 4-plexes with no HOA means lots of trash around and generally a dumpy area. While it's a dumpy area, and I wouldn't feel comfortable living there at all. While it's a dumpy area, the numbers are there and the consistency is too. The military gives a stipend to personnel to live off base and you can report problem military tenants and swift action will be taken as it's the U.S. governments money.

Most of these dumpy 4-plex's bring in about $200-$250 per unit. After witholding very conservative numbers for vacancy, repairs, capex etc.

My question to every is: would you invest in a place you wouldn't live in but know the money is there? I would prefer to own something downtown but the reality is the cash flow isn't worth it. It makes me nervous investing in a dumpy area and acting as a "slumlord".

Does anyone else have experience with this? I'm excited to hear other opinions on this!

You guys are the best! Thank you in advance for your help :)