All Forum Posts by: Andrew Jennings Freerks

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $160,000
Cash invested: $35,000

A Bigger Pocket member I met at a local networking event had never invested, but really wanted to. He asked the right questions and I could tell he was serious, so I decided to team up with him, and we purchased this run down three flat, and gut renovated the bottom unit, while increasing the rent on the top two units. We also beautified the exterior, fixed the roof, have now rented the bottom unit to a medium term tenant as Albany Medical Center is a 5 minute walk away.

What made you interested in investing in this type of deal?

I know the numbers well in this market. Although it is not a home run, it is a base hit, and I will take a base hit all day long

How did you finance this deal?

Private equity for 70%. The junior investor brought 30% and I ran the deal

How did you add value to the deal?

I sourced, put together, and ran the deal.

What was the outcome?

Nice cash flowing property, while getting almost all of our cash back from the refi

Thank you @Chris Seveney.  Besides the fund management fee, do you build in a percent of the deal?  I am thinking of a lower Fund Management fee, as my company will also have a property management fee, and I will also build in a percent ownership for putting together the whole deal, but I don't really know what is standard (or if there is a standard).

Thanks @Henry Clark.  I have thought of syndication in the past, but shied away from it due to the legal fees to set it up and the regulations.  Thankfully I have friends and family that have done well, so I think I can pull out a sizeable fund $500K+) without going the syndication route, but I appreciate the comment.

Hello fellow investors,

After running my real estate company for 10+ years, and completing numerous value add plays, I am looking to scale up and go after bigger (commercial) projects.  In the past, I have raised $100,000+ for each one of my projects, but all on equity partnerships or by giving the investors a flat fee on the deal.  The larger projects I am looking at, would require more funds (probably around $500,000) and a longer hold period (3-5 years).  Questions I have:

- do I structure the deal where investors are paid out on an annual basis or keep them in as equity partners until we refi once the project is complete (3 to 5 years down the road)?  

- I think equity partnership makes the most sense for the investors I know, so how much does a fund manager usually charge and does he bake in a percent ownership, for running/ finding the deal?

- does anyone have legal paperwork drafts I could have to set up the real estate investment fund?

Thank you all for your help!

 As of now, yes it is.  There is a bill being pushed through Albany that might change this "sigh" but for now you are okay to not renew.  Also, if she is threatening you, I would definitely replace her.  Sounds like the opposite type of person you want in your asset.  

Hi Rebecca, nice to virtually meet you. I see you were looking to purchase your first property. Let me know if you have any questions or need any pointers. I thoroughly enjoy helping people invest in real estate, so happy to help any way I can. 

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $1,250,000
Cash invested: $200,000

238-240 Sheridan Avenue is a 2 unit townhouse, and a 10 unit historic brick warehouse (converted to rental apartments) located just two block from the New York State Capital. We purchased the properties for $1.25M as we saw the rents were far below market, and the purchase also comes with 6 developable lots, which we plan to build on in the coming year.

What made you interested in investing in this type of deal?

Larger property transaction and management is very similar to a smaller multi family but the upside is higher. We felt we have mastered the smaller multi family space, so wanted a new challenge.

How did you find this deal and how did you negotiate it?

Through a broker friend of ours in Albany. The listing was on the market, so we contacted the agent and represented ourselves. During the negotiations we made sure to use time on our side to get a lower price. We eventually negotiated a price, where the seller regretted selling.

How did you finance this deal?

We refinanced a 4 unit BRRR we were completing a few blocks away.

How did you add value to the deal?

Initially, we just increased the rents to market or slightly below. Now we are renting out auxiliary spaces that were left vacant, and adding bedrooms/ dividing large apartments into smaller but more numerous units. Later we will develop the 6 adjacent lots adding at least another 18 units, but we are hoping since the lots are all contiguous we might be able to upzone the area and build 30+ units.

What was the outcome?

Still on going, but so far we have increased the monthly rent roll from $6K to $16K, and I think we will top out at $18K before we start building on the lots. Expenses have pretty much stayed the same.

Lessons learned? Challenges?

Dealing with long term tenants when it comes time to renegotiate their lease, and after that getting permission from the city to upzone the lots.

@Danny Zhu I have a few investment properties in the Bronx, and am also a realtor here. At $450K your SFR will not be turn key, but could be "livable". It would need cosmetic upgrades. You can find very nice 3 bed/ 2 bath condos in that price range though

@Amy Lee I would not renew the lease, and ask the tenant to vacate.  Once they move out, charge them a clean up fee for the dog feces.  It seems like they are being difficult and I would not renew that tenancy.  There are plenty of better tenants out there.  You just have to choose carefully and learn what to look for :)  It takes time but eventually you will develop spidy senses that will help you when picking a tenant.  In the mean time, did you give backyard access in the lease?  If not, then you have the right to control access.  Hope this helps.