All Forum Posts by: Alex Stariha

Quote from @Greg Kasmer:

Alex - First of all, congrats on raising the monthly rent rolle to $42,000/month! In addition to the numbers you mentioned I'm wondering whether you have a strategy/funding approach for your next deal. Basically, if another 32 unit was available next month, would you be in a position to execute? If you plan is to syndicate it and/or have other funding available, then my thought is to hold onto the loan as is and maintain the cash flow - because it's a lower rate than you could get now. However, if you're strategy is to own a majority/all of your projects and don't have the cash available for your next deal then I would think refinancing to pull cash out would be the best scenario. You're not going to go wrong either way, but I think it depends on your position for the next project. Good Luck! 

Greg thanks for the input. That is one of the forks in the road for me. As of today I have funded all my own deals through the standard save money and deploy method. As of now I wouldn't have the capital for the next deal. So I would either have to use hard money or syndicate. I ran acquisitions for a syndicator here in the Chicagoland area for 3 years and know how it works I just don't know if it's the path I want to go down. I think harvesting the equity and having it ready for the next deal is what seems right for me today. 

Quote from @Adam Ward:

@Bill B. I think you hit the nail on the head here.  62.5% would keep things straightforward and allow the purchase to be fully tax deferred.  Also appreciate you continuing to push the skin in the game issue.  I'm currently learning first hand how important it is.

@Alex Stariha Thanks for chiming in.  So it appears a portion of your purchase was taxable.  Not the end of the world by any means, especially if it was a good buy.  Good luck with the new acquisition!

 Yes part of it was taxable. My mindset is I'll take any amount of tax deferment over zero and it was the right deal for the time so it worked out well.

@Adam Ward

I just did this on a property here in Indiana with almost the exact same scenario. 

I disposed of a 4 unit building original purchase price was $262,000 Sales price $502,000.00 total proceeds to 1031 intermediary was $240k. Owned just by my entity. 

My partner and I purchased a property at $1,137,000 with 20% down. It was purchased as a TIC 50/50 owners. Even if I put the full down payment myself the ownership will look as if I purchased a $568,500 building because of the TIC so there would be a taxable event there.

Make sure on your 1031 election sheet you clarify that it will be a % ownership. 

Lima one capital has given me some pretty competitive quotes in the past for 70% LTV 30 yr fixed rate.

@Kyle Swengel

I have done 2 cost segregations studies one for a 32 unit value 2.925mm and another for a smaller 1.25mm value deal. In my experience it will come out to be close to 15% of purchase price as bonus depreciation. Every CPA will want it done a bit differently. My CPA didnt want the 5 or 15 year to be over 15% because it could create a taxable event per their words. 

Overall it doesn't cost you any money to engage a cost segregation specialist. They will request some details on the property and generate a round about idea of what the cost of the study will be and what the depreciation benefits will look like. Once you have that its just a decision based on numbers. 

Most CPA's do not have the expertise in engineering to run a cost segregation study. Lastly in my experience most CPA's unless they themselves are RE investors wont give you the best guidance on RE. As for the recapture on the backend as long as you sell and 1031 it all gets kicked down the line. 

I used KBKG they were fair.

Hey everyone I'm on the fence on one of my current deals on weather to stick with the high cash flow or cash out refi to invest in the next deal.

In short I purchased a 32 unit property last February with a monthly rent roll at the time of closing of $30,200/month. At this time I've raised the rent roll to $42,000/month.

Current Bank Debt

5 year fixed rate term @ 4.25% 25 year amortization with maturity date of January 2027

Net Cash flow after debt service $174,520.00

Loss to lease $5,104.00/month (will chip away at this on a monthly basis)

Agency debt refi (freedie)

Cash out $730,000.00 and own 1 outlier 4 unit free and clear (value of outlier $450,000.00)

10 year fixed rate term @ 5.85% 30 year amortization

Net cash flow after debt service including the paid off 4 unit $104,137.16

Loss to lease $5,104.00/month (will chip away at this on a monthly basis)

Looking for some input from other multifamily investors.

Thank you!

Hey everyone I'm on the fence on one of my current deals on weather to stick with the high cash flow or cash out refi to invest in the next deal.

In short I purchased a 32 unit property last February with a monthly rent roll at the time of closing of $30,200/month. At this time I've raised the rent roll to $42,000/month.

Current Bank Debt

5 year fixed rate term @ 4.25% 25 year amortization with maturity date of January 2027

Net Cash flow after debt service $174,520.00 

Loss to lease $5,104.00/month (will chip away at this on a monthly basis)

Agency debt refi (freedie)

Cash out $730,000.00 and own 1 outlier 4 unit free and clear (value of outlier $450,000.00)

10 year fixed rate term @ 5.85% 30 year amortization

Net cash flow after debt service including the paid off 4 unit $104,137.16

Loss to lease $5,104.00/month (will chip away at this on a monthly basis)

Looking for some input from other multifamily investors.

Thank you!

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Thanks everyone. Christopher I agree either leave early or stay late that honestly solves the problem. It's a 30 unit complex so it's a large jump but luckily I just implemented software to help me manage and that should make my life easier.

I am analyzing a deal that is exactly one and a half hours away from my home. As of today I have 15 units but they are all within 25 minutes of my home and self managed.  Do you think an hour and a half is too far to self-manage?

Also this is my full time job along with rehabbing.