All Forum Posts by: Stephen Brown

@Cara Lonsdale I know your post was 8 months ago but I wanted to mention that when we went to @Michael Blank to partner with we also did not get far. But I feel that Michael is probably doing ok income wise right now and is waiting for the market to turn downward so he can unleash his investors when the profits are super high. On our last deal it took about a month longer to finalize the raise and we gave up a bit more than we should have had to to entice investors into the deal.

I'm hoping that for our next deal we will have more investors in our stable and not need to go outside for as much money as we did. We had a $4.5 million raise, so we needed all hands on deck so to speak to meet it.

@Sam Epperson are you on track to buy that Multi Family by November 1st? I have found that my partner and I are talkign to alot of agents and we are going through an awful lot of deals to find the good one. I have spoken with other investors and they are using 120-150 deals. I don't thinks LOI's, just properties for sale.

My partner just went through the podcasts and the SDA and was able to have an accepted LOI in Virginia. Unfortunately after examining the actual financials he backed out of the deal. Seemed that the actuals in the OM didn't line up with the actuals in Excel.

Our first deal was 8 months before a contract, and another 6n months to close. But it was a good one. 101 unit, $11 M, B- property in a A area, rents were $150-$200 below market. Should work out well for our investors.

@Tyler Kastelberg I have the same question as @Michael Le. What did you find wrong with the SDA. I would love a copy of that PM. I ask because I found there was great strength for a straight up deal but lacked some flexibility. So I have been working on my own modeling software and would love input.

One thing I am trying to come up with is an accurate way to quickly look at an OM and determine if I should move forward. Because I am so analytical I tend to take the fours to look a one deal to find that I don't want to do it. I want to get that down to 10-20 minutes. So any suggestions there would be helpful.

@William Huston, that was my hesitation to getting into Multifamily. My SFR are averaging $300 a door, so shouldn't my multifamily do the same?

Well they don't. Making $100 a door is good. It is true, like @Joe splitrock and @Theo Hicks the real words in Multifamily are Cash on cash, ROI, and IRR.

Our first deal was in Ohio, 101 units, $11,000,000 purchase price. B- in an A neighborhood. We needed more outside investors than we personally had for the syndication. Our piece of the deal is very small. We will be happy to make on our portion $19 a door, year 1. Total for deal is probably $150 a door, which is good.

When I changed my focus, I was able to move forward with my business partner. Here's how I look at it now (very simplistic).

If I own 1 SF rental that nets $300 a month, that's $3,600 a year.

If I own 1 MF rental of 5 doors that nets me $500 a month, that's $6,000 a year.

It really is a matter of scale. Both are 1 building, 1 roof, 1 management company.

Hope that helps.

Hey @Taylor Walber, consider this. Can I live for free? The MAO that @Brandon Reed spoke of is an excellent example for an investor buying an investor property. I use it all the time. And the info the @jason DiClemente gave is great to, because when it comes to rentals, the income from the property is very key.

If you are going to live there, what mortgage can the rent from one side support (PITI)? If it can pay the mortgage payment, then the cost to live there for you will be repairs and vacancy reserve.

This is not a purist way to look at it, but it is one way. My sons first house was a 4 bedroom, where he rented out the other 3 bedrooms. He paid retail (why listen to Dad) and their rent paid the mortgage. He got married, moved out, costs have gone up, and he made a few adjustments, rented out the 4th bedroom and continues to hold it. It may not be a spectacular investment, since he bought it 'wrong'. But he was happy with it then and now.

Just my two cents.

My son began PSB Investment Group. I joined him. We went to a Lindahl bootcamp. We were educated newbies before attending. I knew about single family rentals. My son had educated himself, for free, about Apartments.

At the bootcamp the main push is to tell you so much stuff that you are afraid to go it on your own and really feel the need for a coach/mentor. Getting that first LOI out there is scary - what if they accept.

I would agree with alot that @Joel Owens had to say.

You can do a great deal of your own education if you keep digging and digging.

If you have $20-$50k you will get a coach, they will hold you hand, they will push you, they will help you understand underwriting, they will help you in many, many ways. Unfortunately, most will never buy an apartment.

Our first deal happened about 14 months after we started in the business. We closed on a 101 unit in Ohio June 29.

By the time we went to the bootcamp, my son had already had an LOI accepted. Unfortuately there were two reasons he didn't complete the deal. 1) The broker fudged the numbers and 2) he didn't have enough sources of investors to pull the whole thing together.

At the bootcamp, when we met with the 'salesman' to help us decide - he out and out said there may not be much they can teach us. I and my son were surprised. We ended up getting coaching for 6 months at $14,000 mainly because they would review all of our deals before submitting an LOI for a year - plus the other events that are included. The Sponsorship one is the best.

As it turned out, after about 3 LOI's we didn't need their help. We didn't get alot out of the coach. Lindahl has a wealth of information for his coaching students on line. The bootcamp is not a great place to network, unless you can find people with money to invest, because most know as little as you do. Some, with money to invest, don't realize how hard it is to get a deal - so making their contact is great.

Would I recommend a coaching program? If you don't know anything and the coaching fee is not going to kill you and you really think you will do it, then yes. For a raw newbie it is a big help.We continue to attend Lindahl's other events even though they are a pitchfest of his and others programs.  We go to those for the networking.

I know that the BaltimoreREIA has a Commercial Profits program that has much of the same information. They are talking about making it into a video course. When they do, I'll probably buy it for reference. i went through it and it was very, very good - but that's in Baltimore Maryland ($1595 I think - coming up soon (I get no $ from it))

I don't disagree that someone very successful should charge for their time, and maybe when I get there I will change my mind, but I do think that some of these prices are too high. I hope they remember what it was like when they were at the beginning.

I like @Matt Clark idea, but does the mailman put them in there. How do the residents know they are there? Are they locked? Does every resident get a key? We recently bought a 101 rental townhome community in Ohio and we thought we would have that problem so I reached out to ParcelPending.com. Turns out, so far, we don't have a problem so we haven't pursued it. I also saw an interesting article from the National Apartment Association that charges the tenants to have a package pickup locker.

https://www.naahq.org/news-publications/communities-set-package-delivery-programs

@Cisco Hood I would like to give you NON LEGAL ADVICE. 

1) if the mortgage stays current, the bank will not call the loan - it hurts them with the FED.

2) If you do live there for 2 years you will not pay any capital gains tax when you sell.

3) If the loan docs say 1 year, then it's 1 year.

4) As @Omar Khan said, have a lawyer look over the docs. Want to find a cheaper attorney? Go to the title company that closed your loan and ask their attorney to look over the mortgage and note and have them tell you how long you must stay in the property before renting. Make sure they show you where in the document it defines the time frame.

5) If you INTENDED to stay there, then you have a case that things changed and you had to rent so you wouldn't default. If you didn't INTEND to stay, but intended on renting, you may have to stay for whatever term there is in the contract.

6) When I first started doing this I had told my banker that it was an investment/rental from the beginning. They still wrote it up as an owner occupied, and improperly answered my questions about "all this owner occupied stuff" during settlement. I did suspect, too late, that it was being written up wrong but I didn't want to rock the boat.

@Marci Stein I need to weigh in from a landlord standpoint, a landlord that likes keeping security deposits.  I think that  @Jim K. and @Kai Van Leuven

I would be interested as well. I always thought it would be good to install solar or wind at the tower so it is self sustaining.

I totally agree with @Dennis M. I had a tenant like that and every month it was something else. Basically I feel they wanted me to offer them a cash prize to stay - which I never do. Finally I offered them the happy clause (I like the name).

There is one concern, lawsuit. Was the mold test an air quality test - or did they find actual mold? 

When I have had them done, they have taken the air quality outside and inside. Then when comparing the 2 it shows whether there is a problem in the house or it is normal for the area. 

If they found actual mold on a surface then remove it. More than likely, if it goes to court, the report can be demonstrated that it is insignificant and not present long enough to cause health problems.

If the tenants asked for a report, and they know that you did it, then they will ask for it. If you don't give it to them then they will think you're hiding something.

Either way, I would offer them the happy clause, and get a refund of your tenant placement fee you paid.

Whenever they exit, get them to sign a form that absolves you of any liability, like the ski resorts use. It really won't stop them but it may make them think they can't.