Investor · Miami, FL · Member since 2017 · 229 posts · 271 votes
Hey guys just wanted to reach out here and get some advice. I live and invest here in South Florida (Miami) and I’m hoping some of you more experienced investors can let me know what you would do in my shoes and why. After just completing my first successful BRRRR I’m back on the market looking for my next deal. My first deal was a small SFH that I’ve now got up and running as a rental. I put up all cash for it which, took the pressure off of turning it around but still seemed like I wasn’t taking advantage of any leverage. Now that I’ve got my cash back I’m definitely looking to scale up but I don’t want to end up just plunking down my money as a down payment on something turnkey and give up on finding something that I can add value to and refinance out later. In my market 150k isn’t really buying any apartment buildings so I’d like to know what you guys would do were you in my shoes and trying to scale up. Thanks
In Miami dade it will be really tough to find single family properties for 150k. Just like @Marc Middleton said I would look into condos giving a good return or consider diving into the Airbnb route to maybe help bring in more capital for the next BRRR.
A couple other options could be having seller hold a note with owner financing while you rehab deal and then refinance after you raise its value. Another option could be a partnership with someone looking to do the same but no prior experience in the BRRR method. You can really use that experience to your advantage as it is not something commonly executed correctly.
I just ran across a 2/2 condo for under $100k in North Miami that's about a 9cap and no rental restrictions. Would be a good 2nd property for you.
Or use $100k of the $150k as leverage and get something for $300k in Eastern Broward/South Broward. I've seen some good properties in Dania & Hollywood recently that would be good buy n holds.
I just ran across a 2/2 condo for under $100k in North Miami that's about a 9cap and no rental restrictions. Would be a good 2nd property for you.
Or use $100k of the $150k as leverage and get something for $300k in Eastern Broward/South Broward. I've seen some good properties in Dania & Hollywood recently that would be good buy n holds.
Condos are not valued on cap rate they are strictly dependent on comps.
I just ran across a 2/2 condo for under $100k in North Miami that's about a 9cap and no rental restrictions. Would be a good 2nd property for you.
Or use $100k of the $150k as leverage and get something for $300k in Eastern Broward/South Broward. I've seen some good properties in Dania & Hollywood recently that would be good buy n holds.
Condos are not valued on cap rate they are strictly dependent on comps.
I didn't talk about the value in 5-10 years right? I spoke of the rate of return.
properties are properties; doesn't matter what it is when determining a cap rate. A condo returning 9% or a house returning 9% or a commercial retail space returning 9% is all the same:
@Marc Middleton You seem to be missing my point. You are advising someone that a 2/2 condo for under $100k with a 9 cap would be a "good 2nd property" for them when you never provided any information to justify what makes it a "good deal" since it's strictly valued on comps and the 9 cap is irrelevant in terms of VALUE. I'm not talking about COC.
You seem to be missing mine actually. Poster asked what to do with $100k-$150k and that was one of a couple suggestions. I didn't realize I had to post the address, comps, agents phone number, condo budget, and everything else.
If he's interested, he'll let us know. Other than that, you're not helping or answering the question above.
In Miami dade it will be really tough to find single family properties for 150k. Just like @Marc Middleton said I would look into condos giving a good return or consider diving into the Airbnb route to maybe help bring in more capital for the next BRRR.
A couple other options could be having seller hold a note with owner financing while you rehab deal and then refinance after you raise its value. Another option could be a partnership with someone looking to do the same but no prior experience in the BRRR method. You can really use that experience to your advantage as it is not something commonly executed correctly.
@Chidi Nwadike@Gabriel Amedee@Marc Middleton@Brian Garrett Thanks for all the suggestions guys. I think what I've been leaning towards is like some you guys mentioned possibly using another lender or HML in order to tackle something bigger while not completely exhausting my funds. I think that since my first deal was fairly successful I've just been a little hesitant about using funding from a hard money lender to buy because I know that the rates and points can really eat set you back if you don't have a fairly strong and quick exit plan. Either way i guess if i want to grow i need to take the risks.
Jason reach out to me and I may be able to point you in the right direction. I’m down here in S Fla as well and I get what you are dealing with. I can tell you that 9 Cap in North Miami is something I would Take a long hard look at, Any area in N Miami at a 9 Cap is either not really a 9 or in a D area,
Jason, here's an interesting scenario that might make sense for you, based on a current fourplex that I am aware of: Fourplex located in Florida priced at $319,000. You offer $310,000; put 20% down or $62,000; finance $248,000 at 5.5% to 7%. Assuming 5.5% for an annual debt of $16,987 P&I. The current rent roll totals 3,300 per month, or $39,600. In my opinion, this looks like a good investment that will pay debt service while building equity, without using up all of your cash.
Jason, here's an interesting scenario that might make sense for you, based on a current fourplex that I am aware of: Fourplex located in Florida priced at $319,000. You offer $310,000; put 20% down or $62,000; finance $248,000 at 5.5% to 7%. Assuming 5.5% for an annual debt of $16,987 P&I. The current rent roll totals 3,300 per month, or $39,600. In my opinion, this looks like a good investment that will pay debt service while building equity, without using up all of your cash.
The only downside to this is that there would be $62k+ cash just stuck sitting in the deal.
That depends on how you look at it. If your mind is focused on a fix n flip, that's a different mindset. In this scenario, you are putting $62,000 as down payment, with rental income paying for the mortgage toward the building of your equity, AND conservatively speaking, if you keep at minimum $10,000 annual rental income after expenses and debt, then you are making a cool 16% annual interest on your $62,000 investment, in addition to building the equity. That's leveraging your $62,000 smartly.
Hi George, I'm a newbie, and enjoyed your suggestion! But I found different numbers (I made some assumptions): $39,600 income (-)$15,840 expenses (tax, insurance, utilities, others) rule of thumb 40% (is it too conservative?) (-)$16,987 mortgage $6,773 cashflow
CoC ROI $62,000 down payment $3,000 closing cost (estimated) $7,000 repairs budget $72,000 total invested
$6,773 / $72,000 = 9.4% CoC ROI Do you think is it low?
Hi Fred, yours is not a bad estimate. I don't think a 9.4% COC Return is bad on this deal. However, I know a few more details on this one that may make it even better: The Operating Statement shows operating expenses of $9,980, and electricity is paid directly by the tenants. 40% is a good rule of thumb when estimating before we know actual expenses, but ultimately we need to get into the details. Also, it's important to try to assess where expenses can be potentially reduced, realistically, while being conservative and assuming more expenses than might be stated. (This is one reason it is important to physically inspect the property). The operating statement here includes a repair budget of $1,600 (your $7,000 is a good conservative estimate, but if the property is in good condition, we can hope for $3,000). Your closing cost estimate I think is low. It is more likely $10,000 to $12,000. If we take these assumptions and operating numbers:
$39,600 income
(-) $11,380 expenses (with $3,000 repairs budgeted instead of $1,600)
(-) $16,987 mortgage
$11,233 Net Operating Income
COC Return
$62,000 DP + $10,000 closing costs = $72,000.
Even budgeting $3,000 annually for repairs and maintenance, assuming we add another $7,000 for improvements after purchase, $11,233 / $79,000 total investment = 14.4% COC return. This is what would make this a solid deal.
I'm in your same shoes. I just got through refinancing a duplex that I own and I have some cash to invest, but not enough to tackle a big project on my own. Let me know if you would be interested in possibly partnering up. We seem to want similar properties (multi-family) and have similar strategies (buy and hold). I live in Westchester (Miami).
@George Griffith If you're aware of a 4 plex for 310K that's definitely an property I would be interested in. I'm assuming that any legal 4 plex at that price has got to be in Broward County or farther north although I could be wrong (maybe something off market). Anything in Miami Dade cash flowing 825 a month per door are either 1/1's (which would still be under market) or a serious value add. Are all rents at market rate or is there room for increase? I'll PM you because I would really like to know more.
@Yasmani Delgado I think thats a great idea. I am also open to partnering. I have contemplated trying to take down something larger with a partner previously. There are a few 5 - 20 units in the low to mid 1M's that I think would be interesting possibilities if we could come up with the down payment or negotiate with the sellers on terms and add value for a stronger equity position. We should link up and discuss possibilities. Let's connect via PM and see if we can align our goals into something we can do together.
@George Griffith If you're aware of a 4 plex for 310K that's definitely an property I would be interested in. I'm assuming that any legal 4 plex at that price has got to be in Broward County or farther north although I could be wrong (maybe something off market). Anything in Miami Dade cash flowing 825 a month per door are either 1/1's (which would still be under market) or a serious value add. Are all rents at market rate or is there room for increase? I'll PM you because I would really like to know more.
@Yasmani Delgado I think thats a great idea. I am also open to partnering. I have contemplated trying to take down something larger with a partner previously. There are a few 5 - 20 units in the low to mid 1M's that I think would be interesting possibilities if we could come up with the down payment or negotiate with the sellers on terms and add value for a stronger equity position. We should link up and discuss possibilities. Let's connect via PM and see if we can align our goals into something we can do together.
Hi Jason, there are a lot of opportunities in the area for smaller multifamily properties. One thing that you will have to consider when looking into multifamily properties over 4 units is financing, as anything over 4 units is considered a commercial property and is looked at differently by lenders.
I would suggest looking at Wholesale deals that come up consistently in the Miami area, ( I am in Miami as well) Duplexes to 4-plexes are a good source of income and are more easy to get financing. Let's connect as I have some properties coming in on a constant basis that may suite your needs.