All Forum Posts by: Tyler Kesling

Thanks for the insight @Randall Alan on how current owners and markets might react to the ease on rates. I also appreciate you sharing your story. I've really enjoyed just reading through the forums and listening to books about individuals paths and successful and the challenging deals.

I've got big goals so I'm going to do everything I can to get to 60 doors before the end of 2026 and the deals I'm going to get into are going to net me a minimum of $100 cash flow per unit. With the direction things look to be headed, I don't think that's unreasonable. If I have to use every dollar I have access to and drain my life savings dry, so be it. I'm burning the boats on this one and making it an obsession. I've built my mindset to believe that my W2 is a prison that I have to escape. It's a great motivator. Plus 20 doors will help pay for a PM. I have zero interest in becoming a LL. I'm not opposed to buying a four to start if I can find a PM in the area that will service that and then turn that into a 20+ 12 months down the road. 

I would think with the HELOC, I could run with that until I can do a refi and with the interest rates starting to come down, there should be some gains to be made and I can repay the HELOC in short term.

I know the 401 penalties are steep but my thoughts are if I can gain enough cash flow to leave my current career, do I really need to worry about whatever money is in there to draw from 20 years down the road? I feel like by the time I can withdraw without penalties, I should have enough cash flow and appreciation that my "retirement" years should be taken care of.

I'll have to see what happens when it comes to lenders, I guess. My plan is to be as knowledgeable I possible can so the deals I present are rock solid and convincing enough to get my money. I think I know enough people with funds to jump in if the first deals get bigger than my pockets. 

Thanks again,

I have a goal of purchasing my first property July 2025. I'd love for that to be at least 20+ units and I'm curious how some of you financed your first deals? Lessons learned? My current goal is to create enough cash flow over the next 3-5 years that I can quit my W2. 

Some options I'm running in the background of my brain while still learning the basics would be, in no particular order.

A- HELOC.

B- Sell my current house and either rent short term to get some momentum or use part of my equity to put down on a new home and the rest into a rental. 

C- Raise the funds from friends and family.

D- Just use cash from savings and start small.

E- Pull from 401K and really take a risk on my returns. (Cash Flow is my goal) 

Pros/cons, other creative ideas?

@Gino Barbaro Thanks for the advice. I'll check into the subscriptions. 

Thanks @Bradley Buxton. 

When I'm practicing underwriting, I'm finding a property that looks interesting, trying to find out median rates in the area and do some math to get to the NOI then divide by 6% and come up with some sort of value. I'm just not sure how to find out what a good cap rate is. I'm just pulling 6% out of mid-air. I read somewhere that "A" properties should be 7-8%, B 8-9%, C 10-11%, D 12+ but again, I don't really know how to sus that out myself.

Still new here- I know I can find the cap rate by dividing the NOI by the market value but what's the most reliable way of finding the market value? Example, say I have a 10 unit property, $800 per month. 10u x $800 x 12 months x .9 occupancy x .5 expenses = $43,200 NOI. How do I know what cap rate to use to find out what the market value of the property is?

Thanks @jameswilcox for the insight. I drove the property yesterday and I'd say its probably a C+ or B- property in what i would call a B  neighborhood. The houses in the neighborhood are actually really nice. Anyway, Lex is one of the markets close enough to me that I could potentially invest in when I'm ready. Can you help me understand what expenses would drive that number up? I'm trying to learn what all I need to be investigating when analyzing a market. Thanks again

Yeah, that makes sense. No idea why they would state they're $200 under comps and not doing it themselves so maybe I'll see if I can get that $100K and send you 25% for the lead. Win, Win, Win. My initial infant level of knowledge would tell me it's a combination of being poorly managed (I calculated they're spending nearly 65% on expenses to only have $305K NOI on 95% occupancy at $875/m, if that's even the average rent/unit currently occupied). I had read 50% is a fair number to use for calculations which would raise the NOI by, drumroll...15%, but this is purely speculative) and perhaps the funds or energy to go through an upgrade if they're looking to get out of it anyway. Sell as is type of thing. This is in Lexington KY which AI says have grown 5.1% YOY but the latest data I saw for this particular zip code is a year old and says it's the lowest in Lex with a median of $900/m so +5% only gets us to $945. Look at me, figuring this out as I go in real-time!

I've since learned that the DSCR maxes at 10 units but even those are rare so just take that out of any equation. I'm still not 100% what the advantages to that are anyways, even on a 2-4 units but I still have a lot to learn.

So what percentage would you tack on to your fund raising to cover taxes, insurance, and upgrades? Is that just case by case or is there a general rule of thumb for each property class? 

Is it ok to post a link to the crexi listing or address here so someone with more experience can help me on what else to look for and how to find the additional info? I admittedly didn't read all the rules for the forum. I realize that once someone creates a letter of intent they can start on the due diligence phase to learn the financials, physical, and legal but what else can I learn about a property before making an offer? I'm just trying to learn and find example properties that I can play around with.

Nice. Thanks for the reply. My higher NOI is based off of .5 for operating expense instead of the 65% or more that $305k would be. 76U x $875 =66,500 x 12 = 798,000 x .5 = $399k. I don't know, but I've read half of your gross income will probably go into your expenses. I need to learn more about the DSCR but I thought there was a loan similar to that for multifamily. The extra $200 per month was based off the numbers provided on the listing. I'm just trying to make sure I understand the mechanics of how this works. I love processing numbers. I realize I'll have to dig in a lot more into the details before I can find the right deal. Thanks again for the insight and I'll keep all that in mind on my next analysis.

One week into my journey and I'm starting to analyze deals. I found 80 units / $5M / 95% occupancy / 6.11% cap (claim) / $305K NOI / also included in the listing is comps stating we can get an extra $200+/ month. I found an ad for the complex for vacant units at $875. My calculations say that this complex should be getting closer to $400K NOI at 95% creating a property value of $6.5m.

I buy the property with a DSCR loan at 7% for 30years for an annual payment of $300K. 20% down is $1M from investors.

Increase rent (value add) over then next year to $1150/m creating a new NOI of $524K. This allows me to pay investors around 22% return ($524K-$300K=$224K).

After "x" number of months/years I sell/refi the property at a new value of $8.576m ($524 NOI / .0611 cap). Pay back the investors their $1m and bank $3.5m.

Just the basics but what did I miss?