All Forum Posts by: Christian Brodin

Do you want to take your real estate business to the next level?

Do you want to attract more investors to help you build a larger portfolio of properties?

If so this course is for you.

Learn how to:

- Think like a professional investor. Know how they think and what they look for in a presentation or offer (returns, experience etc.)

- Make a compelling presentation that focus on exactly what a professional investor is looking for

- Attract more investors through target networking

What will you get:

- First hand knowledge on how to communicate with investors based on 10 years of experience

- One on one review of your current presentation to help make it more powerful

- Access to a growing network of investors to help further grow your business

- Exclusing coaching for 1 month

What will you not get:

- We will not sell you any products during the event

- You will not be getting professional advice. This is purly annecdotal information gaind from a 10 year career in the real estate investment business. All participants are strongly adviced to seek professional advice before making any decissions regarding their business or investments

Group is limited to 6 participants and will be served on a first come first served basis.

http://www.eventbrite.com/e/learn-how-to-attract-more-investors-tickets-17991347605

Do you want to take your real estate business to the next level?

Do you want to attract more investors to help you build a larger portfolio of properties?

If so this course is for you.

Learn how to:

- Think like a professional investor. Know how they think and what they look for in a presentation or offer (returns, experience etc.)

- Make a compelling presentation that focus on exactly what a professional investor is looking for

- Attract more investors through target networking

What will you get:

- First hand knowledge on how to communicate with investors based on 10 years of experience

- One on one review of your current presentation to help make it more powerful

- Access to a growing network of investors to help further grow your business

- Exclusing coaching for 1 month

What will you not get:

- We will not sell you any products during the event

- You will not be getting professional advice. This is purly annecdotal information gaind from a 10 year career in the real estate investment business. All participants are strongly adviced to seek professional advice before making any decissions regarding their business or investments

Group is limited to 6 participants and will be served on a first come first served basis.

http://www.eventbrite.com/e/learn-how-to-attract-more-investors-tickets-17991347605

Sign up and download our FREE Book Successful Apartment Investing - 17 Fundamental Principles for building cash flow and long term wealth investing in apartments. 

Edward,

The deal looks good!

A couple of things to keep in mind though. A C area might give you higher vacancy and higher bad debt. If you get good residents that will be a great, but if you get someone who doesnt pay rent you might find it difficult to evict them, and find new residents. You might even have higher turn costs.

Also, have you had the property inspected? It pays to have a home inspector come and do an inspection to highlight what CAPEX you will have in the near future. Better to know, than to guesstimate CAPEX costs!

Best of luck.

Christian

Diante,

This is for apartment buildings, but you can easily transfer this to buying a SFH too.

In addition to the points below I look for future location. (What will the area look like in 10 years?), and school district.

Here are the 6 most important things you need to check for when buying an apartment building are:

1. Foundation (water leaks, cracks, tilting, exposed areas etc.)
2. Structure (settling, pest/termite, humidity/water etc.)
3. Roof (when was it last replaced?)
4. Plumbing (Cast iron, galvanized steel, polybuthelene, copper, pex)
5. Electrical (Copper, Aluminum, breaker boxes, GFCI)
6. Heating and Air (Maintenance, cooling aide, rodents etc.)

As a Rule of thumb, if the building was built after 1965 and before 1985 chances are that the builder used some kind of “innovative” (read cheap) solution trying to save money.

This includes aluminum wiring, vinyl or T-11 siding, galvanized steel piping, Polybutylene piping, double paned windows of dubious quality etc.

Avoid these products if you can. If you cannot avoid it, make sure this is in good shape when you buy the property. It can save you TONS of headaches down the road. Also confirm with your insurance company that they cover these issues (especially electrical aluminum wiring).

PS if you live in an area with air conditioning, be careful about the rules concerning Freon.

PS if you live in an area with pests, bugs, etc. you have to take extra care that you aren’t buying an infested property.

Want to learn more about how to find a good deal, and avoid losing money?

Check out www.theapartmentinvestor.com

Brandon,

Kevin is right. If you are not putting down any money for this property and you are still left with $2,600 in profit. The only thing I would be concerned about is your CAPEX. You need to get a proper inspection of the property to make sure you dont get any nasty surprises down the road and that you didnt account for or put aside money for.

That said a 2. something CAP Rate is very low. If you can use your 0% down on an alternative investment with better margins I would probably do that, but if not then getting cash flow for free is not a bad alternative...

Just make sure you know the condition of the building!

Finally, If I read you correctly you can also get $100 rent increase per unit without doing anything? Then suddenly your returns go up dramatically!!

C

PS: Rent levels only matter when you take into consideration what area you are buying in. We have properties in some parts of GA where $500/month gives us amazing residents

Travis,

I know you made your decision, but as a general rule you always want to chose the term that is closest to how long you will hold your property. If you know that you will have it for 30 years then you should definitely do this, but if you will only hold your property for 5 years then maybe go for a 7/1 ARM (assuming that both loans are amortizing over 30 years)

A simple way to look at it is to plug the numbers into a spreadsheet to see when the two loans will converge in terms of money that you are paying for interest principal. Don't forget to include any down payments that the lender asks you to pay.

Many people end up paying more for their mortgage because they never live in the house for the full time that they have fixed their interest rate. Actually many people move sooner than they think because their needs change over time (family members increase, people getting older, etc). 

That said, any decision that makes you sleep well at night is always good for you.

C 

Mark,

Like I said in the post I don't know so much about SFH, but in the MF world this is very, very common.

C

Carlos,

Great question.

There are a couple of things that you need to consider:

1. What is best for tax purposes

2. What protects you in terms of liability

3. What does/ does not your lender allow you to do

4. How many owners will there be in the company

I am not too familiar with SFHs, but a good place to start is to ask your lender. Then you can move on to the other questions.

We almost exclusively use LLC because we are very comfertable with the format, the lender requires us to have a newly formed LLC, and our investors know about it too.

Christian

How to exit the partnership – plan is to put a value on the assets/cash we have at that time and allow the other members of the JV to buy out the partner. And if current partners don't have capital to buy out, open it up for a new partner to replace them. Anyone have other ideas/issues with this thought?

This is fairly standard clause called right of first refusal. you definitely want to make sure that you as the GP or Managing member has control over who the interest is sold to, and when it is sold. The best advice I have for JV groups is to pick your partners with great care. it will make or break your business.

Do you have a clause for voting on major decisions. when property is sold, financed, budgets, tax appeals etc.??

Another thing to consider  is a Tenant in Common structure so that each ownership is totally independent of the other investors. YOU SHOULD CONSULT A LAWYER OR ACCOUNTANT TO MAKE SURE YOU DONT MISS ANYTHING SETTING THIS UP!

Taxes on sold properties that we then reinvest into more – Do we take the tax hit, or is the purchase of additional properties counted as a business expense, or if not is a 1031 possible. We could have this happen multiple times a year too, so looking for something not too complex.

This is a pure business decision in my opinion. do you take money off the table and pay taxes vs keep on rolling over the investment using a 1031 exchange. in 2007 we decided to do a 1031 exchange to save taxes, but had to reinvest into a falling economy. in hindsight we could have done better by just paying the taxes.

- also dont forget transaction costs. with such a heavy rotation of investments you will pay huge transaction costs in addition to any taxes. Lawyers, accountants, broker fees, stamp duties etc. etc. (have you modeled everything in your IRR analysis)

1031 exchanges can be really tricky if you haven't done them before and have good access to new projects. you could even be forced to take on unprofitable projects to meet 1031 deadline and not risk your money AS ALWAYS. YOU SHOULD ASK A 1031 PROFESSIONAL!