All Forum Posts by: Wes Short

@Lain McCanless would say the BiggerPockets calculator is a great to for a quick and accurate analysis. Really helps cover all the bases.

Also, when you say operating STRs are you transitioning away from those for any specific reason?

@Cody Maheu Would agree you are taking the right steps when entering a market. 

Believe the 4 team members that David Greene mentions in long distance investing are Contractor, Broker, Property Manager, and Lender. 

Think looking in other markets is a good idea and if you have the right team it can be down its just building those relationships. 

@Chrissy Severance A lot of good suggestions above and the CCIM courses are a great in depth education on investment properties. 

Another good resource is Adventures in Commercial Real Estate. they have a lot of models that will help you get familiar with how to create an income statement and where all the line items fall. Also have a really good class that teaches how to model in excel. 

Depreciation is normally an after tax calculation ingredient that will determine after tax cash flow and returns. Will also impact the walk away money for a client at the sale of a property. 

@Peter Tate first off congrats on the first purchase! Not sure what unit count you're considering but the nice thing about jumping above 4 units is the bank will put more weight on the performance of the property than your own personal finances. 

Of course your personal finances and debt to income/debt to assets ratio will be a factor but if the property is really solid that could help you to get a loan at a lower down payment amount. 

Also, some banks will consider doing Loan to Cost instead of Value and this could help with the amount of money you need to come up with upfront. Have had a client walk away from closing with a check from the bank instead of having to bring money. 

A lot of good creative options. Seller financing is always a possibility and it never hurts to ask the seller/seller's broker if thats possible!

Not sure about property management software but at that size most single family management companies will be willing to stretch to up to 20 units. Normally they will offer or you can negotiate a slightly lower fee than there normal fee for a single family management. 10% down to 9 or 8%. 

@David C. as a newer multifamily broker I can say that it is similar to residential where each broker has different levels of motivation and drive. There are some rock stars and some just looking to knock out a couple deals a year. 

As @Chris Collins mentioned the market is hot but I still always try to jump on the phone with each buyer, get them the full financials in the form of an offering memorandum, and answer any questions I can. Its very valuable to me to communicate with buyers because it lets me know the markets thoughts on my listing but also helps me build my buyer pool. 

One thing that is a big motivation is if you call a broker and let them know your willing to have them rep you on the purchase. It definitely increase the incentive to assist you. 

Being able to talk about the property in an intelligent way also helps me know that you are serious and not just a tire kicker. Also dropping a line about your current portfolio, whether its single family or other, will also be a plus and let them know you have experience and have the ability to close a deal. 

@Chris Collins @Charles Seaman@David C. would love to know from you guys what separates a good to average broker from a great one? Have spent a lot of time learning to analyze and underwrite deals and that has helped but what else shows expertise and experience to you guys? Thanks for any help!

@Oscar Sanchez whenever I think about a purchase like that my mind floats back to Rich Dad Poor Dad and try to classify it as an asset or liability. 

Can normally determine that pretty easy but taking action on it is much harder haha especially when looking at a nice car over an investment etc. 

In my experience of underwriting property management would be an item that lands above the NOI line and thus factors into NOI calculation. If you are looking at historical financials for a property you should be able to see a line item that somehow conveys property management. Sometimes it is listed as a leasing cost but should definitely factor into your NOI calculation.

Only thing we currently place below NOI is capital expenditures by the owner/capital reserve. Even though though many banks will look at cap ex reserves when determining loan amount on a debt service coverage ratio basis.

@Eric Chiang we are seeing similar property expenses here in Indianapolis, 10% for small multis down to 5 or 6% on mid to large multis. Would absolutely pay a percent or two more for a better PM, they can make a huge difference in the performance of a property.  

@Daria Berenato think that both are possible. Have definitely heard of people running STR out of a small multifamily. Currently run 2 STRs in a duplex in a college town and it has outperformed long term rentals forsure.

Running STR is easier than you think once you have systems and processes in place.

Would also check airdna.com to see how competitive your area is for STRs and see what kind of furnishings etc are required to compare with the market. 

@David C. think this is a really good question because it seems like the trade off is more cash flow now if you manage yourself but more of a time suck. Or less cashflow and more time. Think @Nick B. makes a good point, if this transaction and managing it yourself for a year or two leads to the next deal then by all means its worth it and will create a faster growth. 

But could also hire management and spend that time finding the next deal etc. 

Would be curious to know what you end up doing!