All Forum Posts by: Benjamin Aaker

Hi @Rahat Rockowitz: You should be evaluating the properties individually. There's no norm, but generally there is a small discount for purchasing a portfolio. Because of this, you might offer a bit more for just two of them. In the end, use your own calculations on the two and fire away. 

Hi @Sabrina Mouavangsou and welcome to BP! I did my first syndication buying a 16-plex from a non-profit that subsidized rental units. I thought it would be a great way to have guaranteed income as the seller would continue on as the subsidized rent payer. About 2 months into it, they started finding 'reasons' to boot people off of their program, leaving me with a bunch of worried investors, a 16-plex, and 25% occupancy! There were many sleepless nights.

I (and luck) solved the problem when a contractor looking for long-term motel rentals contacted me about a small motel I own. That was full, but I got creative and quickly furnished 5 units for this contractor. We signed a 6 month lease, but they ended up staying for 1.5 years. He paid 1.25x rent plus a premium for the furnishings and I got the place back in the black without missing any payments. What a relief.

I sold that property 8 months ago and investors walked away with an 80.2% ROI.

All of those rules are tools to help you rule out an investment. They should never be used to rule one in. They also need to be your tools and not someone else's, meaning, they need to work for you. If you have evaluated the deal by whatever methods you have determined to use and none of them fail, then you should go ahead. Fairly vague, to be sure. More specifically, my criteria would not have me invest with cash on cash of 6%. There is a lot of risk of negative cash flow should something go wrong. 

Congratulations on a successful flip. I lost 8 grand on my first one. No shame in starting cautiously. Look back at your two flips and try to find out in what areas you could increase your efficiency. Getting better at each one will make you faster and also help you keep more money.

Without seeing your contract it is difficult to know for sure. Your statement of the monthly management fee makes it look like each unit has a $69 management fee whether leased or not. They probably are still doing work to manage the place, for instance, snow removal and utilities. My contracts do not have a minimum fee and you would be fine to question it with the management company, but it sounds legit even if unusual (for my area of Sioux Falls).

I agree with @Taylor L.. This small size would mean attorney fees would wipe out a large chunk of profits. You might want to consider a joint venture model to start with. That's cheaper to set up.

As far as your question goes, you should look into commercial loans. Expect a 75% LTV, 5 year balloon, 20 year amortization.

I'm big on multifamily. To house hack, you'll need a 2-4plex. Go for the 4plex as it has the  economy of scale. It'll stand the best bet to get you farther to financial freedom quicker than the others.

Since you will be self-managing, make sure it is only a few minute's drive from your residence. I have one 10 minutes away and it is a pain to have to go up there even though it is so close. The distance isn't so much the problem as is the mental hurdle each time.
Nice work on the HELOC by the way. It is a vastly underutilized way to get money ready to go when you need it.

I am a syndicator and started through multifamily. Of course, I got into MFR from single familys. I invested in a couple commercial syndications passively first, then realized I wanted to be more involved. Syndicating is a lot more work than buying it yourself, but can be more rewarding. There are greater risks - not the least of which is that you are responsible for other people's money.

When starting syndicating, your limiting step is going to be finding investors. Start learning the ropes now and talk to everyone you can. After you are started, deals will be your limiter, so begin working on your deal pipeline now. Good luck.

I recommend you consider a line of credit rather than selling. You keep the property and its rent. You also have a bunch of cash waiting and not costing you on interest until you find the place to buy. If you have a bunch of equity in the property, you might even have more cash to use for the next property than if you sold it.