0-25 units in four months and it all started with Bigger Pockets!

160 Replies

@Collin Schwartz , congrats! I've considered using a traditional LOC with a bank but after doing some research, I realized it typically doesn't work to use it as money for a downpayment.

It sounds like you had better luck using a HELOC instead. Could you explain a bit more about how that worked and if any issues arose using OPM for a downpayment?

I have credit score 800+ and my income is low now since I am self employed.

Having about 70K savings, how can I fund a multifamily investment?

Thank you for your help!

Wow great story!! Keep up the great work and post another update sometime too! Question for you though, how did you find these properties? Were they actually for sale, did you know someone, or did you use a list service to find the properties/owners? I have a couple single family properties now and I am looking to jump into the multi family properties in Lincoln!

Originally posted by @Collin Schwartz:

@Ray Lai

Eight units were MLS (2 deals), six units direct mail/cold calling (3 deals), and eleven units (1 deal) were brought directly to me from my partner as an off market deals. I actually pulled a list from listsource and targeted my ideal market. I then got phone numbers from zabasearch.

 @Taija Walkowiak this is a previous post in this thread. Best of luck! What size of multi family properties are you looking for? Hows the market in Lincoln?

Collin,

Fantastic job! It is a very inspiring story especially during the "hot market" that a lot of people claim Omaha is right now. I am working on my first property as well and I hope to quickly follow in your footsteps for rapid property acquisition! 

The market in Lincoln is similar to Omaha, its definitely a hot market but if you keep looking and jump fast at things deals are still out there. I am looking for anything from other single family properties - quad plex. I would be willing to go larger than a quad though too! So if you hear of anything in Lincoln please keep me in mind!

@George Moehlenhoff I have not taken any distributions from the properties yet. Nearly all have required light to medium rehab and have vacancies to accommodate those rehabs.  My first property closed almost four months ago, April 24th so it has been a nonstop process of remodeling and raising rents. I hope to take distributions in six months but wouldn't be surprised if it was closer to a year as I build reserves and amend differed maintenance. What I do factor in is a 10% management fee for myself, that money will then be used for debt pay down. 

Also since I am 100% leveraged on the properties, using a HELOC for my downpayment and mortgage there is no Cash on Cash returns as I have no out of pocket money. When I use a basis of 25% down my COC returns vary from 12.5% to 26% depending on the property.

@Manuel Angeles I only used my LOC for the down payments and then traditional commercial lending for the rest. Currently my LOC is nearing its max so I will likely be looking for partners and possibly refinancing to pull out additional funds for future purchases. I also may consider using my IRA to fund additional purchases.

I see that you are in the lending industry, what options do you see best suited for buy and hold value add investors?

@Collin Schwartz Usually we do not lend on buy and holds, typically we send those to Sprout Mortgage or Lima One. They can give rates that are more geared to long term holds, in the 5-6% interest rate range. 

At Sprout Mortgage, I work with Chuck Campbell. At Lima One, I work with Dalton Ellis


All of the properties you're buying already stabilized ? or are you repositioning them like what Dave Lindahl does in MultiFamily Millions ?

I am still working to acquire my first property. I live in Los Angeles California, so cash flow is not that good unless you go more into the more rural cities. but there are many opportunities for reposition and value-add plays here 

@Manuel Angeles only two of the properties were turn key, I only increased rents on those two. The rest of the properties have required repositioning. I hope to get in larger units in the near future but its been helpful to learn the repositioning process on smaller 2-5 units properties. Three of the properties I have purchased have been half to almost fully vacant, which has been beneficial for remodeling. Best of luck, in getting your first deal and thanks for the recommendations!

Well done Collin!  I'm a fellow investor in the Omaha area with 6 units.  Given that return is related to risk, would you mind sharing (in general) which parts of the metro you are investing in?  North O, Dundee, South O, midtown, etc?

Thanks!

@Todd J. I have 11 units in South Omaha, 12 units in Midtown (soon to be 16 units), and 2 units on 40th and Cummings. How about you, where are your units located? Are they SFR or Multi's?

@Collin Schwartz hey collin: can you describe the prices for some of your most recent purchases: how many units: what are the costs: what is the cash flow etc? i'm interested and I'm sure more people are! congrats 

@Sebastian Marroquin @Nicolas Conca

I posted this info earlier in the thread but here you go!

Below is a list of my properties and repair/rehab costs.
3 plex, purchase price $260k - $10k (2 units light remodel- new carpet, paint, appliances etc) rents- $3250

Duplex $155: $3k (roof patch, finish hardwood floors new fridge) plus capex of $5k for eventual new furnace. rents- $1800

Duplex $100k: $20k (plumbing, one side medium cosmetic rehab, roof patching) rents-$2000

11 plex (470k): $30k (roof, furnace, unit updates) rents - $7000

5 plex $165k: $40k ( update all units, paint interior/exterior, porch, deck, hvac, roof) rents -$3200 (Owner pays utilities)

Duplex $172k: $0 turn key but will keep $3-4k in case of large ticket item ac/hvac etc. rents- $1900 

I am also closing on a 4plex next month $165k: $20k for updates rents: $3000

All the above properties have room for rent growth but with being so highly leveraged I need to ensure mortgage and expenses are covered until I can stabilize.

Many of the units and properties are being repositioned. I do however project an average of 13%-25% COC return if I was to assume a 20-25% down payment scenario. For all my properties I am 100% leveraged so there is no COC returns, they are just returns. I also pay myself a 10% management fee.

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