All Forum Posts by: Treivor Cashion

Merry Christmas to all you wonderful people and hope y'all have a great New Years as well! Question from a newbie investor...

I've listened and read quite a bit on small MF units (2-4 units) and the prospect of higher cash flow and the ability to house hack sounds great to me as a beginning investor just starting out. However, I met with an investor that I connected with here on BP this past week and he brought up some really interesting points that I hadn't really thought about - specifically, that small multifamily properties can be more of a management hassle since tenants can butt heads. What happens when Larry parks on Sally's side of the drive way or one tenant blares music while the other likes a more quiet environment? While I do think that good tenant screening has a lot to do with solving this type of issue, people still can get on each others nerves for whatever reason and in the long term this could (in my mind) jeopardize the likelihood of repeat residency and could just be an overall headache that no amount of tenant screening could solve. 

Also, when it comes to an exit strategy, small multifamily properties are generally bought and sold between investors instead of an average Joe looking to buy a house who is more willing to buy that property for it's emotional appeal rather than how good of a cash flow they can receive from it. Therefore, the likelihood of selling it to someone for a favorable price is much slimmer and the margins are much tighter than compared to SFRs, at least at first glance.

So I guess what I'm asking is, what is your experience with small multi-family properties and have you dealt with issues like this before? Is there something that I missed or more things that I should consider with these types of properties? As much as I want to get on the hype train with these property types, I want to make sure that I get all the angles, both good and bad. 

Any and all advice and insight into this is greatly appreciated from this newbie investor :) thanks all!

This is very informative and helpful information. As stated in my original post, I have no experience in the DFW area in buying small MF properties and I wasn't quite sure on what exactly was realistic at this point in the market. However, since I work as an analyst at a bank, I am very aware that housing prices are extremely high here and that the chances of finding such a deal with my narrow criteria might be slim to none at this current point in the market (specifically the purchasing price criteria). 

There is a ton of development going on here in the DFW area from the limited experience I have and from working at a bank that primarily deals with residential and commercial real estate loans locally, so I absolutely agree that going to those areas BEFORE the major development begins is a big part of investing successfully in this market. When you mention "learning the politics of the city" and "finding neighborhoods that are getting new development", how exactly would you suggest learning about these two important factors to succeed in REI in the DFW area? I follow some market researchers that I gain access to through my bank, some local news through the Dallas Business Journal, and I'm about to start driving around (driving for dollars) in some areas that I've heard thrown around at my bank by some of the real estate lenders, but beyond that I don't know where else to gain some general market information and more insight into the politics of the city...any suggestions for a newbie on how to get educated in that respect? Also, just off the top of your head, where do you see the most opportunity in the DFW area for small MF properties? Thank you so much for your insight!

@Erik Sherburne That's a great point. Time is our greatest asset, so if we're not using it efficiently, we're not going to make time for the reason we work so hard in real estate...our close family and friends. 

@Jay Helms Hm, that's an interesting view, I haven't heard of that as an issue before...what do you generally deem as acceptable and most successful in your rent-to-purchase price ratio?

@Jeff Richardson Good stuff, love setting the bar high! Could you elaborate on your strategy to achieving a 100% ROI on a property you buy? Do you rehab homes at hefty discounts, put in repairs and flip over a short period, or something along the BRRRR strategy where you buy and improve the property over time while receiving cash flow from tenants and sell if a good opportunity presents itself? And what variables influence your calculation, like is your investment considered the whole purchase price of the property (loan + down payment + rehab) or simply your cash investment? I'm trying to wrap my head around how a property receives a 20% COC return, but will give you a 100% return on investment in two years...thanks for the insights!

Hello Fellow BPers,

I just recently graduated college and started to gather a passion for REI. Right now, I'm educating myself on the subject through books, podcasts, this forum and other avenues of learning. I've gotten to the point where I want to start developing a business plan to lead my investing philosophy and approach to REI for the next few years, and one of the items I'd like more expansion on is my deal criteria. So my question to you guys is, what sort of criteria do you investors use to analyze the potential of deals, what numbers do you look for and why do you use these measurements? Furthermore, do you have easily "translatable" criteria for when you enlist a realtor or wholesaler to start searching for potential deals? Or do you only give your "bird-dogs" information such as square footage or bedroom #? And do these criteria tend to be more quantitative or qualitative? Which ones are the most important to you when deciding on if you want to move on a property or not?

Sorry if that was a lot of questions, but I have so many right now, since I'm just starting out! lol

Just as something to work off of, I'm from the DFW area in Texas and I'm looking to specifically invest in small multi-family properties (2-4 units) for the purpose of long-term buy/hold for cash flow. So far, I've established that I want:

Quantitative:

-Minimum 10% CoC Return

-Minimum 6% Cap Rate

-Estimated minimum equity position of 30% (using ARV, not including downpayment)

-Rents must be at least 2% of the purchase price

-$250k purchase price or below. 

-Maximum $15k in rehab costs.

-Minimum monthly cash flow of $200/month

-OK with high LTV, as I plan to finance my first property using an FHA loan w/ 3% down

- 1.25x DSCR

Qualitative:

-Minimum 2,000 SF

-Minimum 2 bed / 2 bath

- 2 to 4 units

 -Must be in a nice neighborhood, minimum to zero crime rates.

-Must be near an affluent area, with a growing/thriving job market and preferably a growing population (like DFW)

-Wood flooring

-Foundation and structure of the building must be sound, with no major repairs needed. 

As a small disclaimer, I have not done a lot of analyzing deals in my local market yet, so I don't know how attainable these criteria are. However, I will be getting started on doing that sometime in the next few weeks and adjust them accordingly to realistic standards as necessary. However, I feel like this is a decent baseline to start and would love y'alls insights and opinions! Thanks for your time helping out a newbie investor!

Sincerely,

Treivor Cashion

This is some great insight, I let my girlfriend read this and she just kind of smiled and nodded that you were spot on. I have no one in my family or close circle of friends that do a lot of real estate investing, and with the 2008 financial market crash still on everyone's mind when you mention real estate, everyone I talk to is more skeptical than excited, unfortunately. I think the part you mentioned about surrounding yourself with others who have not only achieved what you wanted to achieve, but surpassed it and are still going, is great advice. I'm in the process of reaching out to extended friends and family to get into talks with people who are in to the real estate industry and have flourished at it, specifically with MF properties. I've already started a list and will be reaching out to them in the next couple weeks! But more so than any other investment, I believe you when you say that it's the most efficient vehicle to building wealth...and that's what I want to do over the next 5, 10, 30 years to provide the best possible life for my future wife and kids, along with my close family and friends.

Wow @Jeff Richardson, what an amazing accomplishment! Congrats to you and your wife and best of luck closing on those last two properties. Enjoy the financial freedom, I want to be where you are in a few years! Any advice for a young guy just starting out with REI and thinking about getting married? I'm sure you and your wife have had many talks about this whole REI thing, cause I know my girlfriend is sure skeptical about it, especially considering what happened less than 10 years ago in 2008 lol

@Dan Beaulieu haha hey man, if you want to try and convince her otherwise go ahead and be my guest...I don't know how much experience you have dealing with European girls, but maybe you'll be more successful than I've been for the past year lol thank you for the kind words though!

@William Corcoran yes sir, I most certainly will! I definitely will have some questions about the general DFW area, and maybe once I build enough capital/knowledge base we could work on something that would help us both out!

@Chris Soignier glad to hear it Chris, I hope I have half as much success as you once I start getting out there and making some deals!

@Angela Fadahunsi hey, that's awesome to hear Angela! Dallas is an awesome place, lots of great opportunities and fun places to visit! Best of luck to you and your husband during your move!

Thanks @Bryan Pham, I will definetly do that sometime soon in the future! The more I read and "educate" myself, the more I feel like I don't know anything, so I'll have some questions for you I'm sure haha

Hey ladies and gents, my name is Treivor Cashion and I'm currently living in the beautiful Dallas, Texas area! 

A little bit about me, I'm originally from College Station, but I moved here when I started college at the University of Dallas in Irving. I recently graduated in May 2017 with a business degree and I'm currently at the same university taking grad classes to receive my MS in Finance and should be done with that in August 2019. Near the end of senior year in college, I started talking with a buddy of mine about investing in general. We'd all seen Shark Tank and always thought it would be awesome to learn how to make our money make money haha so I started reading up on sites like Investopedia, NerdWallet and similar sites like that on personal finance, investing and how to become financially free. Through messing around like this on the internet, I stumbled across Bigger Pockets. More so than stocks, bonds or any other marketable security, the idea of owning something tangible and real and finding creative ways to make properties cash flow struck me as more exciting than the movies I'd seen about Wall Street. While I still do want to self-manage my own marketable securities portfolio, the more I listened to the BP Podcast and read the articles and blogs, the more I was drawn to Real Estate Investing. The idea of owning my own portfolio of properties, searching out creative financing, finding ways to add value to homes, provide a wonderful place to live to tenants and receiving residual income while doing it? Sounded like much more satisfying work than just growing wealth on paper through securities. Anyway, I don't want to ramble. Here's where I'm currently at in my RE investing journey...

My goal is to buy & hold (and maybe flip, once I build enough equity) small multi-family properties in the Dallas or College Station area, for the purpose of long-term monthly cash flow to become financially independent by the time I'm 30 years old (currently 22). I listened to a BP podcast a couple months back on the many opportunities that small multi-family properties provide and ever since I've been obsessed with learning about how to find, finance, close, renovate, manage and profit from small multi-family properties. I've talked about it with my girlfriend, who I've been dating for over a year now, and we're planning on getting married. Haven't proposed yet, but the money to buy a ring is starting to build up in the bank! :D anyway, I showed her the theory and numbers behind the concept of "house hacking" and once I discussed it thoroughly with her, she was on board! So now I am currently in the process of educating myself on REI (through books, podcasts, this forum and searching my local markets) and saving capital for my first investment. I've read the vast majority of articles on here, the Beginners Guide and I'm in the process of reading Rich Dad Poor Dad and Cashflow Quadrant, with the goal of reading one book on REI every two weeks. I'm also planning on posting on this forum at least once a week, to learn more from you guys and stay active in this awesome community that Josh and Brandon have put together. I'm also working a full time job while taking grad classes, and saving around $500-750 a month to put away for my first multi-family property. So anyway, that's where I'm at...can't wait to meet and network with some investors on here! I have about 6 months of financial analysis work experience with the bank I'm currently employed at. Thankfully, I've gotten the chance to analyze pro-formas and current properties in and around the Dallas/greater Texas area, so I'm getting some experience in that respect, but I'm looking every day for the next best thing! Looking forward to what the future provides!

~Treivor