All Forum Posts by: Kyle K.

One must not acquire income property that loses money. If you're obtaining a commercial building, you'd be hard-pressed to do that anyways given generally tighter lender standards and a minimum DSCR you've got to reach.

But the big thing to note is you can have your cake and eat it too! Why sacrifice appreciation for cash flow? Why not have both? Its absolutely possible!

But never buy a property that is a money black hole with expectations of appreciation. That's just too much undue risk for me, especially if you're doing that in the more undesirable locations in the nation.

NR seems like a joke and I'm all for learning, mentoring, and education. I'm fairly confident they can't teach me something I don't already know.

While we're on the subject of education, I hear wonderful things about CCIM. I cannot personally vouch for it because I've never done, but I hear it has a solid curriculum. Has anyone here gone through the CCIM training?

Internships are great. The problem is finding someone, or some company, with which you would like to intern. As mentioned earlier, real estate investment groups are a great place to find someone to intern for. Perhaps you can find a great mentor at a real estate seminar. You'll know when you've found someone that you want to learn from and when you do, pop the question.

I never said that we structure our properties with the lowest down payments. On one of our latest properties, the down payment was 27% of the purchase price.

To increase the cash flow of our properties, we've introduced the FLEA (Forward-Looking Expense Allocation). The FLEA is a method of providing coverage for projected expenses over the holding period of the property. The FLEA provides for extremely high levels of cash flow relative to the initial investment amount while still maintaining high internal rates of return.

Granted, the IRR on our investment properties are lower with the FLEA than without; however, many of our clients so value the cash flow and the expense insurance that the FLEA provides that they are willing to sacrifice a little IRR.

On some of our larger projects, a single investor may not have the required capital to go in on it by himself. In those cases, we form syndications and spearhead the whole process thus making the property, essentially, a passive investment vehicle.

Our clients want to know where to put their money nowadays. Why not put it into an investment that is secured by income-producing real estate, partially guaranteed and that will deliver a high level of monthly cash flow (12% starting cash-on-cash return) and deliver a 50% return in two years? We walk our clients through the entire process and analysis and, needless to say, we earn them many fond returns...

Nationwide,
You're right, 15%COC isn't anyting to jump at, but combined with the overall appreciation of the buildings and stellar IRR, 15% COC is just a nice added benefit.

I remember you asking about how we're able to cash flow at Cap Rates in the 5-6% range. I wasn't trying to blow you off, but, as you might imagine, that's information I don't care to share on these forums. If anyone is truly interested in our investment products, he or she should feel free to contact any one of us at Epifany Properties.

Cash flow is an interesting topic. Surely, a property needs sufficient cash flow to cover expenses, debt service, etc. in order to run smoothly. If one is investing in a property for the long term (5+ years), you probably place a premium on cash flow. When we structure our REIs, our properties cash flow. We may have put down more than 10% on said property, but when your COC is 15% and the IRR is 31% before taxes, it doesn't matter. You're looking at a great investment.

So, how exactly do we structure these investments? :)

Once again, one shouldn't look at any one particular factor when determining whether or not a property would make a good investment. Cap rates alone shouldn't do it. After all, according to many of the above posters, a multi-unit with a cap rate <7% couldn't possibly be a good deal. Just the same, an "incomprehensible" IRR calculation shouldn't be the sole guideline either for determining whether or not a deal is good or not.

One of the biggest points that seems to be lost in this discussion is how a multi-family property is valued. Unlike single-family residential values which are based solely on the market and, thus, subject to speculation, an investor can increase the value of a multi-family property by increasing income and decreasing expenses. Its a pretty simple concept, but its been lost in this discussion.

I think I'm stating the concensus, but the next level is continually improving and striving for better, no matter what that may be. You may have reached the highest level you wish to obtain in real estate, but you're looking to reach the next level in some other aspect of your life (and, if you're not, you should be). Perhaps there's a new mountain bike trail you wish to conquer. Maybe you lift weights and you want to break your previous record. There are countless ways to reach "the next level." Once you stop, you die.

To cash flow with multi-units in So Cal at those low cap rates, it takes quite a bit of cash down. The cash flow is nice as its the lubrication that makes any business run smoothly. But, as Rob said, as far as real estate investing goes, you have to look at the property's internal rate of return! And that's why, despite the low cap rates, people continue to invest in Southern California.