All Forum Posts by: Brett Radi

Like Marc said, cashflow is a personal thing.  I personally wouldnt spend $300k to make $700 a month.  Also, what happens when one of those units isnt rented for a month or you have to spend a month rehabbing a unit after someone leaves because they had a cat who peed everywhere even though you didnt allow pets?  I live in a different market and do commercial, but I will give you a real life example of a deal I am doing now with similar numbers as you.

$900k purchase, 3 tenants, 25% down, $3,250 monthly cashflow. 

Now, if you are purchasing the triplex and living in one while lowering your personal housing cost or having a bit of cashflow on top of it, by all means do so.  The important thing is to start investing.

 Idaho.  I am looking at creating my own requests beyond what is publicly available.  Such as, requesting the road be paved and sidewalks at the very least but preferrably done in brick to add to the historic feel.  Think Savannah, GA where the industrial buildings along the river were turned into hotels, restaurants, shops and offices. This area is an industrial extension to downtown that has all but been abandoned and is an eye sore at the moment.  Maybe tax abatements during the stabilization, anything to lower my costs and the city add to the desirability of the area.

I am looking at a commercial/industrial building that would be a good reuse project for retail/apartment multiuse in an area that the local government would like to be cleaned up a bit.  This would be an extensive and expensive project, but would benefit the city and community greatly.  My question is, does anyone have any experience with government subsidy negotiations or presenting my expectations to the local government of what they would need to do in order to make this project work for both of us?

I look at the deal as one big picture instead of each door.  I am also strictly value add at this point.  So if I find a deal that pays me 1.25x almost the operating cost almost immediately with the upside of 1.5+ after any rehab and/or stabilization, I pull the trigger.  That figure also includes the debt servicing.  But I am also not looking for small multi family.

-Are your two businesses currently renting space somewhere else? If so, how much are they spending each month on rent? Is the location of this building good? Why doesnt it currently have any tenants? If it previously had tenants, what was the NOI?

Those are some questions you can either answer here for feedback or ponder on your own. As for the 20%, put 10% down, finance 80% and have the seller be second with the other 10%. Way more common in commercial than residential and you dont really have to put 20% down but rather the bank will loan 80% LTV.

Im guessing an investment property loan?  I am getting a commercial loan right now at 3.95, 25 year amortization, 5 fixed, 10 call, if that helps.

 Sorry, missed this post before posting.

Month to month tenants, 30 day notice to vacate and renew with the favorable party? Shouldnt have to deal with eviction or that route.  If she fails to vacate then the local sheriff should be able to help her out?  Im not in Ohio, just bouncing ideas off those more familiar with Ohio.

Some here have said get a HELOC and invest in more properties. My question for them is, other than long term appreciation/inflation, what is actually gained by doing that? Doesnt replace his job unless there is some sort of base knowledge of making the right deals and finding properties that actually do cashflow in this market. One suggested that the rich get HELOCs and leverage their money that way, not sure who you consider rich but that isnt how I do things or any of my friends do things. I reckon if you wanted to do a cash out refi(not telling them you were using the money to purchase another home because they tend to not like that) then you could do that. But I caution you to tread very lightly and not over leverage yourself like others on here have suggested.

My suggestion would be to do a 1031 on your Ogden property and invest in something closer to where you are now, AFTER careful research and making sure you really know your market. There are some deals to be had in your area and I am sure with diligence and research, you can increase that Cap rate. Im assuming you arent 100% familiar with a 1031 exchange and will give you this bit, you would have to invest whatever the sale price is of the Ogden home and not just your net profit in order to avoid paying any capital gains. A one for one exchange should cost you somewhere around $1k but I am guessing you could flip that property into 3 properties in your area and maybe do a little sweat equity(sounds like you may be handy or at least capable) and increase your net worth that way and cash flow. A HELOC just adds more debt and more stress to your life. Like others have said, one or two things go wrong and you could end up sinking the whole boat by over leveraging.

Some here have said get a HELOC and invest in more properties. My question for them is, other than long term appreciation/inflation, what is actually gained by doing that? Doesnt replace his job unless there is some sort of base knowledge of making the right deals and finding properties that actually do cashflow in this market. One suggested that the rich get HELOCs and leverage their money that way, not sure who you consider rich but that isnt how I do things or any of my friends do things. I reckon if you wanted to do a cash out refi(not telling them you were using the money to purchase another home because they tend to not like that) then you could do that. But I caution you to tread very lightly and not over leverage yourself like others on here have suggested.

My suggestion would be to do a 1031 on your Ogden property and invest in something closer to where you are now, AFTER careful research and making sure you really know your market. There are some deals to be had in your area and I am sure with diligence and research, you can increase that Cap rate. Im assuming you arent 100% familiar with a 1031 exchange and will give you this bit, you would have to invest whatever the sale price is of the Ogden home and not just your net profit in order to avoid paying any capital gains. A one for one exchange should cost you somewhere around $1k but I am guessing you could flip that property into 3 properties in your area and maybe do a little sweat equity(sounds like you may be handy or at least capable) and increase your net worth that way and cash flow. A HELOC just adds more debt and more stress to your life. Like others have said, one or two things go wrong and you could end up sinking the whole boat by over leveraging.