All Forum Posts by: Paul Cijunelis

Wow @Tayvion Payton you struck gold I think I upvoted every initial reply on this thread. Good stuff.

@Matthew Drouin had a great reply:

"Typically 50% of revenue is going to go right to operating expenses on small multi family. Lessons Learned: I should have transitioned to larger commercial deals sooner. It took me 11 years, 25 properties, and 76 doors just to replace my income. It took me 1 property and 1 deal to replace my wife’s."

@Drew Sygit

@Drew Sygit had an excellent response regarding property class. Only thing I would add here is to take a birds eye view of the area and try to decide if it will gentrify in your favor so the property appreciates at a higher rate than other areas. How much money is entering the local area? Do you see rehabs and dumpsters showing up and roads being repaved or even sidewalks being redone with pavers, etc? Any new commercial, industrial projects nearby? Maybe attend a chamber of commerce meeting and ask around where development will start. Ask the township for their 3-5 year development plan...

@Joshua Christensen brought up some good points as well. Get familiar with proformas. Really a MF deal is similar to a SF deal but there's more moving parts and more at stake if things go wrong. You won't "add" much value to a Class A property. It's already an "A". 

I'll only add when talking to brokers have a "buy box" defined and research commercial deals to understand it as best you can before you have your first meeting or your broker contact will likely consider you to be a low-chance buyer and not take you seriously.

@Preston Dean Mentioned seeing the property. Totally agree! Until you build trust with a team or contact you should view every property esp a MF that is a larger investment. I'd only add to get a professional inspection done with a very thorough team. Sellers are in it to get the most money for their property. As an example I was looking at a multi unit, smaller building and within 90 seconds of viewing the proforma I saw the maintenance/repair figures were "low". Figuring the seller was milking the property and doing minimal upkeep, the inspection team report has so far already helped me bring the seller down several 100K in asking price. Do your due diligence. 

Only thing I'd add is consider off-market as well. Brokers either get leads through a network of brokers in other disciplines or organic contacts. You can do this too! If you want a certain type of MF in a certain area, build a list, make some calls, you'd be surprised. There's always someone getting older, or something going on in their life, and wants to sell out. Going direct saves you and the seller money, giving you a lower cost to entry which helps all your numbers, but you have to put in the extra work to find that deal. It's also easier to neg direct with a seller without brokers in the middle imo. But again, as mentioned, get fam with COC, Cap, IRR, etc.

You said later you had $80k to invest in a multi family. One thing I'll add to an off-market deal is you might find a seller willing to do seller financing.

You said, "I don't think the time exchanged to manage SFH would be worth my time and the cash flow most likely wouldn't be reasonable enough to hire a property manager. I would be open to a 3-4 unit, but my ideal sized property would be 10-20 units."

Comparing workload, a multi-unit property will still require showings, maintenance etc for multiple units. If tenants stay one year on average, you will need to show 12 units for a 12 unit property every year. A SFH will require showing just one. 12 maintenance calls vs 1 maintenance call. Etc. So some things will be easier and more convenient (one roof to repair) but many tasks will simply be a multiple based on the number of doors.

BP forum messed up my post. was going to say this: 

I use eggshell for all of my own properties. Makes the wipe-off work for nearly everything. The semi is a bit too shiny but can work. I actually have some kitchen walls in semiG in my own home. Hardly noticeable. ES works fine though.

Quote from @Makan A Tabrizi:

One bad situation can harm all the properties. Consider the risks vs the small reward...

I'm in Chicago and this is kinda getting popular. Keep us posted on how that situation goes for you. Is this a LT residential interest or more like a shared sober house living situation? Just curious is all. I'll reach out to my PM contacts in TX for you.

Quote from @Makan A Tabrizi:

How do you folks handle nail/screw holes in walls. Filling them in not an issue but I'm seeing some renters are using anchors. Additionally, trying to spot paint even a white wall with white paint doesn't work, let alone other colors. I don't want to have to paint an entire wall (multiplied by the number of walls that have had nails in them) every time a tenant moves out. Thank you for your input.

Keep a cheat sheet for your property(ies) with color brand/codes for each room and common info needed such as appliance info, fridge opening HxW, etc...

Paint should be standard sets of colors for all the properties you have.

Flat means hard to clean, repaint it all. I use eggshell on the walls, flat only on ceilings and high gloss on trim and windows. Flat is easiest to touch up but I'd rather wipe and touch up eggshell than usually repaint a whole wall due to dirty hands, etc. JMHO

Quote from @Robert Medina:

 I’m trying to figure out how I can pay myself and buy another property. ...

Any suggestions would be greatly appreciated. Thanks

Congrats on starting your RE journey! Kudos to you for doing something to create a secondary income stream. there are 5 income streams in RE rentals, possibly six if you do things a certain way.

The reality here is your model (buy box) is suffering from too high an entry and too high a cost of capital. Mortgage rates and PMLs are 8-12% plus points right now so the deal has to be a low enough entry. That's the trick. The entry price is too high.

The trick is to get the second acquisition at a lower entry, so you can rehab and refinance 100% entry costs out. Explaining how to do that is way too much for a forum. Essentially though you need to go off-market. It's highly doubtful, you prob won't find a fully refinanced deal on the MLS or through realtors.

Quote from @Jordan Laney:

I think communication seems to be the issue here especially with your comment on how the PM is unresponsive. Seeing it was only elec as well that is strange. $295 in the winter if the heat is running the blower motor(s) all day could be justified for a larger 6-unit building but I'd have to see the historical elec charges to know. Maybe the tenant set the thermostat high? You prob have that info. the PM should have been all over that unit though to make sure they knew what was going on.

Joseph, the best method for you would probably be the MLS or sites like realtor.com etc. These are properties publicly listed with photos, etc. Realtors have likely walked through and done a broker walk through. Their number is available and you can call them to ask questions about the property.

Why a duplex? it's out of state so this is not a house-hack so why a duplex? What factors lead to this decision?

I would also focus on landlord friendly states if you are planning to rent.

Where's the dryer? Where's the panel? It could cost only one month's cashflow. Is the tenant a long term? Pays on time? When's the lease up? If they move soon, one month vacancy would eat away any savings of a hard "no" and it's wintertime (here) where vacancy is harder to fill...I'd at least discuss with the tenant and have someone do a bid to find out what it even costs for this home.