All Forum Posts by: Aaron W.

@Sam Fickel Have you though of investing in a syndication?  The advantages of syndication are you are a part owner in the property, you get cash flow, plus the tax benefits of ownership. You only need to invest your money in the syndication and that's it.

You will need to spend time to get to know the sponsor, but once you find one to invest with, there's little work on your end.

In many ways, a syndication is a better return on your investment than a traditional partnership. It's not for everyone and there are usually specific requirements of the investor. I'd recommend you at least look into it as an option.

Best of luck!

@Vincent Johnson How many units is the multifamily? 

If 4 units or less, then it is still considered a residential property and you can look for similar comps.

If 5 or more, then you are looking at a commercial property where the most common method of valuation is the income method. This is done by taking your net operating income (NOI) and dividing it by the local cap rate. For example, if your pre-rehab NOI is $10,000 and the cap rate is 6, then the value of the property is $166,667. If after the rehab, you were able to increase the NOI to $!5,000, then the new value would be $250,000. The increase of the NOI happens by increasing the income or decreasing expenses.

Best of luck!

@Brian Warren It is possible to get into larger multifamily after your first house hack, but the larger you go, the more the broker and lender wants to see if you can close. They are going to want to see someone with experience on your team. If you don't have the experience, you may not even be considered. It's a different game getting into multifamily. 

I'd start with smaller multifamily properties and build your way up. Or, bring on an experienced partner and build a solid team where you can take down larger multifamily properties. With a solid, experienced team, the sky is the limit. It is just very competitive.

Best of luck!

@Jeff He Finding and getting deals under contract really depends on your deal flow and your offer. If you can offer something the seller likes, then you can get it under fairly quickly. Many, if not most, markets are very competitive right now, so there is a lot of competition.

Depending on they type of property you get under contract, you can be looking at about 30-45 days for residential and 60+ days on commercial properties. 

We have seen the biggest bottleneck for us is on the lending side, especially with the appraisals. 

It is always difficult to go back to the seller once you have an agreed upon sale to discuss previously unseen and unknown issues on the property which may need some concession or seller to address. Before you put in an offer, it is always wisest to try to due as much due diligence as possible and understand what you are getting yourself into. However, there are always certain issues that are not possible to see or know until you do your inspections.

Best of luck!

@Benjamin Knisely You can certainly purchase the properties in both your names. What we did in our partnership was each partner created their own single-member LLC and these LLCs partnered on a parent LLC. You can go further and have the parent LLC own subsidiary LLCs which hold the properties, etc. We did this for liability reasons as we both have personal assets we do not want to risk by putting the properties in our personal names. The parent LLC is also what will be on the loan.

Ensure, however, if you do create LLCs that they are done properly and you do not comingle personal and business. Open a separate bank account and credit card for the business.

Definitely consult an attorney and CPA to ensure everything is set up correctly and legally.

Best of luck!

@William Zheng How you buy the real estate really will depend on whether you can find the deals that fit your investment criteria and goals. If you find something, I would not wait on it. 

When you take a long-term view of the interest rates, they are at historic lows. Even a year from now, IF the interest rates were to tick up, they will be nowhere they were 15-20 years ago. You will still be getting relatively low rates. Sure, they may go up a little, but still not enough to make a huge difference on your mortgage payment. For example, a 100k 30-year mortgage at 3.5% will have a payment of $449/month. This same mortgage at 4.5% would be $507/month, a difference of just over $50.

Make sure your underwriting is solid and conservative to account for any potential fluctuations in the interest rate and higher expenses. When you BRRRR, you should be looking for value add and forcing the appreciation of the property.

Best of luck!

@Joe S. Which markets are you looking for this service?

@Dan Nguyen The issue you are probably going to see right now is the cost and lead time needed for materials whether you are going to value add or do ground up construction. I would say new construction may be a little more risky right now due to those factors. Our construction general manager on our team is advising us against doing this right now, unless you are ready for longer than normal construction times and higher costs.

My opinion is to look for value add if you can. I know the Phoenix market is very competitive right now, however.

Best of luck!

Send me a DM, thanks!

@Darrel Hernandez This can be a common strategy to pull the equity out of the property through a HELOC versus a refinance. There are advantages and disadvantages of each method.

With a HELOC, the advantage is the flexibility of pulling out the equity when you need it. You are only required to payback and are charged interest on what you take out. Typically, you are only making interest payments on what you take out. The downside is the interest rates are a bit higher.

With a refinance, you can typically get a lower rate than a HELOC; however, the largest downsides are the fees and closing cost along with the fact you have to start making principal and interest payments right away.

Can't really go wrong with either method. You should take into consideration when you need the funds.

Best of luck!