All Forum Posts by: Tyler Kastelberg

@Account Closed You just described the calculation for capitalization rate, calculated as net operating income divided by purchase price. This is a great way to justify a purchase price - many institutional investors use capitalization rate as a valuation tool. 

@Keith Meyer Investing with an asset manager or "sponsor" can be done either privately through a firm like mine or on a crowdfunding platform like RealtyShares and Fundrise. Investing privately with an asset manager allows you to access deals with very little restriction, so long as you are a "sophisticated" investor. The SEC will require that you certify you are "sophisticated" and thus understand the risk associated with the investment. Sophistication is not associated with income or assets.

My understanding is that sites like RealtyShares and Fundrise limit their investor pool to "accredited" investors, which tends to bar many middle class folks from taking part in their offerings.

As a sponsor who raises private money, I'm typically able to structure deals with less risk and greater return than available on crowdfunding sites. However, crowdfunding sites have been great for both sponsors and investors as they allow easy access to capital and diversification.

In both structures, return rates are estimated but never promised. Like an equity position in a stock, you're susceptible to the ups and downs of the market.

I hope this helps! Feel free to message me if you'd like to find a time to discuss.

@Syed Shah My business closed a purchase in Portsmouth, VA (next to Norfolk) earlier this year. I'm a big fan of Ghent in Norfolk and Olde Towne or Parkview in Portsmouth. Though hard to find, anything around ODU can be a great student rental.

Virginia Beach is a military favorite, but like the rest of the state, there is very little inventory.

Best of luck to you! Feel free to DM me if you have further questions.

@Nav Madhwan Bigger is better. You'll have less competition in the 5+ unit category, and you'll better spread your tenant risk. Between 5 and 50 units, there are no Fannie Mae investors and very little institutional investors. It's a great arbitrage opportunity if you have good property management!

@Jacob Prelle Jacob - Great question to pose to the forums. I'm a fellow Tustin resident, but all of my investments are made in my home state of Virginia. I pool investors and purchase large multifamily and office assets that yield (cash on cash) at least 10% for investors. I'd encourage you to syndicate your $100k with an asset manager with whom you trust and will be able to generate greater returns for you outside of California.

Hope this helps!

@Aaron Fanning Yes - It is possible to invest in real estate through a self-directed IRA. The catch is that it can't be your own project. I.E. You'll have to invest in someone else's project. There are numerous asset managers that would be happy to sell you a portion of ownership in their investment projects.

See link to more info: https://www.thebalance.com/how-to-invest-in-real-e...

Let me know if I can help point you in the right direction.

@Hannah Diment I recently closed on a 100 year old building - a few notes:

1) Make sure the foundation and mechanical systems are either in great shape or updated.

2) If you're buying into an old fixer upper, talk to the City to get an idea of the requirements for renovations - they can be cumbersome.

3) Plan for a high operating expense ratio ~45%. Old buildings are hard to keep cool in the summer and warm in the winter, and utility costs are typically high.

4) If you're planning a renovation, make sure you check for asbestos. Abatement can be expensive.

Best of luck!

Keith: Rather than purchase a turnkey in which you still retain the same tenant risk as a local SFR investment, have you considered investing alongside an asset manager on larger deals?

An asset manager will source a deal, find a suitable property manager, and handle the day to day asset management tasks, so your investment becomes truly passive. In large multifamily purchases, you reduce your tenant risk by diversifying your tenant mix. Additionally, a good asset manager will reserve cash for use on future capital expenses, so you don't need to worry about setting aside a portion of your income for unplanned roof repairs. 

Hope this helps!

Ben - Before you buy, take a look at the City's plan with regards to the land surrounding the stadium. Atlanta tried to clean up a disadvantaged part of town by building the Brave's stadium, and it didn't help they failed to allocate enough funds to clean up the surrounding neighborhoods.  

Alex: I like to use LOCs as equity for the purchase of real estate, then raise funds from equity investors to pay back the LOC. You can retain control of the property and lots of upside if you structure the buyout as a syndicate with a promote - similar to how hedge funds and private equity funds buy real estate.