All Forum Posts by: Ryan D.

It’s possible they meant $200/unit/month profit, which is decent enough, particularly if you’re starting out.

I’m assuming from you verbiage that it’s a commercial property (otherwise the bank wouldn’t need financial info in the property). You can offer the owners a seller-financed purchase, with your putting 25% down. Then you manage the property for a year, at which point you should have sufficient documentation for a bank loan, & pay off the seller-financed loan. But as others said, you really need to collect more info, & sounds like you’re going to have to do tot he hard way: If the sellers won’t give you leases, then go knocking door to door & get them from the tenants (& expect to come back to them with estoppels). Call the utility companies and figure out under who’s names the utilities are. Etc.

Refinance the ARM to a 30 yr fixed - interest rates are only going to go up from present values.

I’m both a landlord, and pet owner, & I find it unethical to charge a “pet rent”. You wouldn’t charge a tenants extra rent if they decided to have a child, so why is having a pet any different. I have my tenants to pay a pet deposit to cover potential damages, & require renters insurance.

California markets are VERY overvalued right now (along with every major metro on the west coast). Investing for cash-flow will yield you extremely poor results, & tie up large amounts of capital, as the price-to-rent ratio is very high here. This leaves investing for appreciation, and that is highly speculative (as mentioned, you would be buying into an already overvalued market). 

I expect to see a significant correction when the bull market turns, the economy is in recession, & people have less capital to pull out of the stock market to fund downpayments. 

If you want to leave your corporate job in ~ 10 years, & expect to live off of rental income then you will either have to get used to managing tenants, or you will have to hire a management company. You will also have to get comfortable with taking risks, like your 401k loan. You are building a small business, not throwing money into index funds, and to be successful you will have to move out of your comfort zone & do things that are not fun. That's the honest truth. You will get dirty, you will loose sleep, you will be uncomfortable...success is not easy, but it is certainly doable. 

To live off your RE portfolio, you will need cash flow, & it sounds like you are off to a good start with this 4plex. Hire a management company so you can shift your focus & time to growing the portfolio, & away from tenant handling. 

Keep the 4plex (don't slaughter your cow, milk it), and pull equity out via a traditional refinance, or (preferably) a HELOC. Find a bank who will appraise the building based on Income, & not comp sales. Reinvest all the profits back into your business, & don't use profits for personal expenses until the day you plan to start living off the profits.

If it is workable for you, consider making your next multifamily purchase as a primary residence, as the financing terms are better, and you can live in it while you are renovating. Then repeat the process, & continue until you reach your income goal. 

Here is a good BP article that will help you visualize your end goal:

https://www.biggerpockets.com/renewsblog/go-small-...

16 unit’s now, 4 of them in-State. Looking to add to the portfolio, though prices are very overvalued right now, making good investments more challenging to come buy. Plan is looooong term buy & hold. I’m building a source of generational wealth for my family to hold down through generations. Beyond a source of funds to live one, I’m initially looking at the portfolio as a means to fund the college educations of my kids, their kids, & so on.

As Thomas S. mentioned, you can install flow meters in your units, though be aware there can be a good amount of expense involved in this, and you will need to setup these new meters (& the tenants) with their own accounts with the water utility company, otherwise you will still have the bills in your own name. Do your research before you commit to this path, as it can get involved. 

Its ok if the water bill is in the landlords name - just have a utilities charge, separate from the rent, in your lease. You can do this via a RUBS calculation, or take the average for the last year or so & charge per tenant in the building, etc

Chris, remember their are other key metrics than just cash flow. You can make nearly any property cash flow, if you put a large enough down payment. You also have to consider your cash-on-equity (which initially, is your "cash-on-cash") return. EX you profit $250/month for a SFR, but put up a $100k downpayment, your CCR is only 3%, not very good.

I usually target $250/door, at 10% CCR, as my minimum target.

As word of warning - be conservative with your maintenance costs, and factor in a budget for capex (and set this money aside, even if you dont use it). There will always be more repairs than you think, particularly if you are buying in the New England area, where homes tend to be older.