All Forum Posts by: Sean P.

@Joe S. good point and glad you brought it up. You’re correct that there’s a sense of immediacy in making the entire investment in a short period of time. The cash flow from the investment would be intended to replace a W2 income and the funds would come from my retirement account. I’m sure that’s not an uncommon situation. What may be somewhat unique is the retirement account isn’t technically a 401k that I can access whenever I want - it’s private company stock which I can only cash out upon death, termination, or retirement. So in order to access the funds and start investing, I have to leave the job (and the salary). Doesn’t allow for much of a gradual transition. 

Technically I could line up a replacement job and let that pay the bills while I invest slowly (and that’s definitely one of my contingency plans) but in some ways that does defeat the purpose, since leaving the corporate world and focusing all of my time on an investment business is probably the biggest appeal for me. My goal is to achieve enough cash flow to replace about 75% of my w2 salary (my wife will keep her job, and benefits).

If this sounds like the world’s dumbest decision to anyone, I’m open to hearing some hard truth from people who have been doing this. But ultimately I’m not opposed to taking a calculated risk as long as I have a complete picture of the situation. 

Apologies if this drifted from the topic of the original post but I think Joe’s question drives to the reason that I don’t have an easy way to slowly build up the experience that I asked about initially. 

Thanks everyone for your input so far!

@Drew Sygit and @Evan Polaski thanks. The potential for professional property management to serve in lieu of personal experience is promising to hear. Sounds like it will vary from lender to lender.

Based on input so far, it sounds like I would need to decide on either doing a handful of 2-4 unit properties that are local so I can self manage, and use multiple residential loans, or a medium size property (whether mhp or not) which has professional management and would likely be long distance. 

Thanks again for your input.

Sean

Really helpful @Randall Alan. I appreciate the context, as well as the specifics regarding multiple Fannie Mae loans, as well as the vote for self managing. Good things for me to consider. Thanks!

In approx 18 months I intend to invest in multifamily as an active investor. I will have access to ~1M in cash for down payment and closing costs (I would also have reserves, separate from this capital). However, as I learn more about commercial loans, I’m discovering that lenders will require experience with similar types of investments, as well as net worth and liquidity requirements. Short of spending several years building experience with smaller deals, what would the folks on this board recommend?

Investors: should I partner with someone, harnessing their experience (and net worth/liquidity)? I’m not interested in being a passive investor and relying on someone else for the sweat equity. If I supplied the cash and sweat equity, how likely is it for an experienced investor sign on for a fee rather than a share of equity?

Mortgage brokers: are there commercial lending options that can work without experience? I'm generally familiar with DSCR loans – do they require experience? Interest only options would be ideal.

Is there a better strategy that I’m not thinking of? Would love to hear recommendations from people on this board.

• Credit ~800
• Presuming 25% down, but open to whatever numbers work out best
• Non-owner occupied
• Long distance (no specific geography selected yet)
• Professional management
• Leaning towards MHP initially, but open to apartments if the numbers work
• Priority is maximizing cash flow, especially in the first 1-3 years