All Forum Posts by: Adam Adams

@Cedric My average LTV is probably around 55% The part you missed is that I have never paid market value I pay between 30% & 70% My lenders are local private lenders. Let me give you some history, Step One: 40k in the bank Step Two: Purchase 100k worth of property which grosses 18k/yr. My purchase price is 28k. Step Three: Finance the property with a private lender. The loan is 40k (AKA 40% LTV) Step Four: 52k in the bank Step Five: keep doing the above

I would put real estate against bitcoin all day, every day! There is more power in rental real estate than people realize. For example: Everything I bought this year I did it with just 40k out of pocket and I am grossing 10,350/mo! I dare you to top that with bitcoin, it’s not possible! That’s over 121k every year, for the rest of my life... and I'm just getting started. By the end of next year I'll have this same portfolio double in size with no more than the original 40k. This is accomplished because 1) you can buy real estate with pennies on the dollar, 2) the power of financial leverage (being able to refinance out your entire down payment) I currently own: -5 plex in Massillon -2500/mo -4 plex in St. Louis -2200/mo -3 plex in Alliance -2100/mo -3 houses in Youngstown -1500/mo -2 houses in St. Louis -1300/mo -1 house in Cleveland Heights -750/mo Don't underestimate real estate! #bitcoin #realestate #rentalrealestate #powerofleverage #happinessispassivecashflow #respectthehustle #investor (For the record, the truth is that I did all of this with none of my own money, I brought in partners who had the 40k. They are making half the profits and I am making half the profits.)

@Tom Keating  @Michael Le

You guys seem to have a lot of knowledge on this...

Is there a way we could get a list of every area already approved and every area that requires "pre-review"? Where could we go to find this information?

This year, with none of my own money (or credit): -I purchased 3 multifamily apartments, as long term rentals, with none of my own money and have a 16 plex that should be closing next month. -Bought 6 single family homes, as rentals, with none of my own money. -Fix and flipped 7 houses & 2 condo units, with none of my own money. These are all combinations of 1) partnering, 2) seller finance, 3) hard money lenders, 4) private money lenders, 5) lease option, and 6) subject to. Just get out and start creating win-wins, it's as easy as asking. Best of luck! -AAA

Originally posted by @Kris Miller:

@Adam Adams (& others) thanks for the input, I appreciate the advice. I would call it a lower Class B, well maintained property. The property is 100% occupied. I have the following monthly expenses accounted for:

Vacancy 613

CapEx 818

Repairs 511

Util 100

Insur 420

Lawn 1000

Trash 75

Taxes 947

Mgmt 511 (which I currently do myself)

With your formula I think I am coming up with an offer of 766k. The asking price is 700k. If I finance with 0 down (using all equity from a couple other properties) I am coming up with cash flow of 643 or 43/unit. This is a far cry from what Brandon preaches of 100/unit/month. Am I missing something? Should I not include mgmt fees since I do it myself? How do I investigate rent ceiling? Or do I walk away until I have more DP? I know it’s all a “numbers game” and I feel like I grasp the numbers but I don’t know if I am overlooking something or unrealistic in my expectations. My first MF (a 20-unit) kind of fell in my lap and I barely even analyzed it before going into contract because my gut said it was good and it has been for the past 5 years. I have analyzed this one to death and am starting to look cross-eyed! 

Chris:

1st (regarding the purchase price): 

-Most people in the business would define  "NOI" as an annual figure. I was 1/12th of the price you have, because I used your Monthly figure; knowing that, you are perfect at $766k! 

-The only factors that would change that number is if the local cap rates are above the 8%, in which case you should use the local cap rate instead. So if you are in an area with an average cap rate at 8.5%, than your strike price would be closer to 721K.

2nd (regarding the cash-flow):

-If you are getting a deal that is 100% leveraged, I can see why you don't have at least 100/door. 

-If it was me, I'd probably do a nothing down deal to cash-flow $43/unit, as it is an infinite cash on cash return.

-I am also guessing if you had 20% or 25% down, that you would be cash-flowing 100/door. 

3rd (regarding your expenses):

-honestly your expense ratio looks pretty good, I would anticipate doing better than a 50% expense ratio.

-Why are your lawn maintenance bills so flippin high!? I give you a 80% chance you can get that down around $400/mo and hugely increase your property value. 

Originally posted by @Fritz Ritter:

What would you do if it’s not greater then 85% Adam ? How do you shift the numbers ?

For that information, you can reach out an apartment investor who focuses on repositions (I know there are lenders out there for bridge loans & hard money loans).

I have never purchased anything like that; all of mine have been focused on buying a cash-flowing asset.

From my experience, long term financing isn't available unless it's >85% occupied, so I have always passed by those "opportunities". 

Good luck!

-AAA

Hey Josh Johnson; I can relate to you. Actually used to (10 years ago) own a triplex in Orem (where it looks like you're from). Anyway man, don't compare your self to anyone besides to show yourself what you can do. Because anything that anyone on here has done or is doing... YOU CAN TOO. "Go pick one niche and do" (I put that I quotes because I think I need to trademark that) Anyway, Real Estate is among the most powerful vehicles you can use to achieve financial freedom. This website will be here for you to bounce ideas off the rest of us 'veterans'. I was recently at a small event chatting with Brandon Turner (from BP), and I was just blown away at the guys brain, his drive, his passion, his portfolio. I have been at this for a long time compared to him and have half the portfolio! It's very easy to get caught up in other people's success, their strategies, their stories, etc. Go pick a niche and DO. Also, I hope you learn to love this site. It's an excellent resource, for any level of investor. PS You're going to get a ton of hits on this post with a title like that 😂 Reach out to me if you need anything, -AAA

Hey Kris, I have been in multi family for 13-14 years, closed on 3 so far this year and have 2 under contract. Here is how I do my "quick analysis" on commercial apartment buildings: If it is >85% occupied and a B or C asset: 1) Take gross collected income 2) assume a 50% expense ratio 3) decide you NOI by .08 That's my strike price. So if you said 10,800 Gross Take 5,400 and divide by .08 67,500 would be my starting point. Then if that number seems to work for the property, good. If you need to mobile it around a little, good. Just a tit bit, I like your expense assumption; many sellers try and pretend like the expense ratio is 15%, 20%, 25%, 30%, or 35%... I have not yet seen that truly happen with B&C assets. Always between 40% and 60%. I'll argue that to the grave. Good luck!

Congrats for being in this position man. I don't have any advice, just happy to see you're doing well!

Sellers often try and sell a property based on a ridiculous 25% expense ratio... you will never find a property that actually has a 25% expense ratio. They will be between 40% and 60% Expenses. Do your analysis on a 50% expense (40k NOI) ratio and if it still works, do it.