All Forum Posts by: Brian Briscoe

Investment Info:

Large multi-family (5+ units) commercial investment investment in Spartanburg.

Purchase price: $2,900,000
Cash invested: $100,000

39 unit, B-Class asset in downtown Spartanburg which is dominated by A-Class multifamily units. Will add value by renvoting interiors and increasing curb appeal.

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

Great location - downtown Spartanburg is experiencing a ton of growth and expected to keep growing in the future.

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

Off-market listing from broker.

How did you finance this deal?

Fannie Mae small balance loan

How did you add value to the deal?

Renovating interiors, sprucing up exteriors. Renovation budget is $700k.

Investment Info:

Single-family residence buy & hold investment in San Diego.

Purchase price: $305,000
Cash invested: $20,000
Sale price: $430,000

Condo/townhome in Rancho Bernardo, San Diego. Nice location close to community center, schools, and shopping. Lived there for a year while stationed in San Diego; held as investment property for 8 years.

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

It was in San Diego after the market crash.

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

Short sale, pre-foreclosure, bankruptcy -- we were living a mile away renting a house. It was on the market and we were patient. Our initial contract was at $320k, but the owners filed for bankruptcy and forgot to tell us.... By this time, we had waited a few months already, so we countered with $305k due to the failure to disclose that pertinent information. We also moved in rent-free for three months while we waited to close.

How did you finance this deal?

FHA owner-occupant loan.

How did you add value to the deal?

New laminate wood flooring downstairs and carpet upstairs; refinished kitchen and bathroom cabinets and counters.

Lessons learned? Challenges?

Cash flow is king. While we bought after the crash at a good price, we didn't cash flow... it was a burden at first, but after several years of appreciation, we walked away with $140k.

Investment Info:

Single-family residence buy & hold investment in Fruit Heights.

Purchase price: $195,000
Cash invested: $3,000
Sale price: $315,000

House-hacked in a way. Bought this house from my in-laws using a VA loan. I had temporarily moved in with them right before boot camp, so this address was my "home of record" - it was the address on my drivers license, where I was registered to vote, etc. Turns out, that was enough to get a VA loan with almost nothing down.

What was the outcome?

Held it for 12 years -- sold it to get into multifamily.

Lessons learned? Challenges?

Lessons learned - too many refinances will add to the loan balance over time. We did not benefit much from debt paydown.

In addition to the above: city-data.com or bestplaces.net

Also, a lot of national brokerages will publish reports on larger metro areas.  Marcus & Millichap or Cushman & Wakefield for example.  Milken Institute will also have some very useful data.  In my hometown, the local university business department has a real estate program -- they'll also do annual reports on the state of the market for various asset classes.

I also look at rental websites.  Apartments.com is pretty good for finding rental rates.  Trulia has really good tools.

howmoneywalks.com and richblockspoorblocks.com also give good insight...

Finally, when all else fails, Google it!

DocuSign is not necessarily a must-have.  There are several other e-signing competitors that do the same thing.  It is nice if you're blasting out the same doc to lots of people... but if you're not, Adobe Acrobat works well for single contracts too.

Regarding call forwarding apps -- definitely listen to what people recommend, but your team will interact differently, so try a few and see what works best for you.  Of course, look for 30-day trials wherever possible.

Definitely something you need to remedy, especially since it's likely to get worse over time.  Recommend getting a landscaper (or a few landscapers) out to provide an estimate to keep the water away from the building, then re-evaluate whether or not the deal works with that extra expense.  If it's not going to work, ask for a credit and be ready to walk away. If it still works for you, ask for a credit anyway.

We're just beginning... big companies in service and hospitality industries are announcing furloughs.  Small businesses, restaurants, bars, etc. are temporarily closing their doors.  This will drastically affect many tenants ability to pay rent.  Also realize that this will also affect the rental pool.  If you evict someone for not paying, you won't likely have a line of people waiting to sign a lease in their place.  

We've recently discussed this with our property managers.  We're going to operate business as normal and see what happens (so no rent reductions). We'll send the same reminders and notices for late or missing payments.  If a tenant is temporarily furloughed and can't pay the full amount, we'll ask them to pay what they can and discuss options with them.  We are willing to put tenants on a payment plan as long as they're paying.  A vacant unit earns no income.

Incidentally, we've committed to about $500k in renovations over three properties in the past month -- most of the work is underway.  We'll still push forward with those, but we're going to wait and see on the other planned renovations.  We may need to convert capital expense dollars into reserve dollars if this lasts too long.  

Speaking of reserves, we keep enough in reserve to pay for 2 months expenses with no income.  We also ensure our investments can handle 25% vacancy rates...  As long as most of our tenants are paying, we'll be fine for several months.

We are due for investor distributions in April...  We haven't decided yet, but we may scale those back slightly to make sure we have enough cash on hand.

So, lesson learned -- keep sufficient reserves for a rainy day (or epidemic), don't over-leverage your properties, and be flexible...

We closed on a 32-unit not to far from where you're looking (Columbia, SC).  We went to a handful of local banks that are portfolio lenders (meaning they won't sell the loan on the secondary market).  We lined up suitable financing pretty quickly which included renovation funds.  We used CresCom bank - not sure if they operate outside of SC.  Regardless, like @Account Closed said, call a bunch of local banks... focus on the portfolio lenders, because they'll ahve more flexible terms.

If you call several banks and they all have net worth requirements, I'm sure there are plenty of people who'd put their balance sheet on the line if the numbers are right.  You'll probably have to give up a percentage of owership though.

You're welcome.  I hope you got the answers you were looking for.  

We have several repeat investors and several first-time investors and we do ask them individually what they've invested in before.  We have some whales with big checks and some who can only do a single investment.  We have several that eventually want to syndicate themselves... 

I have 3 partners and we all have different circles... we each have an avatar, which is the investor profile that we feel that we can appeal to the most.  I've been very succesful with a certain demographic and typically look to appeal to that profile when I'm developing content. My avatar tends to invest $50k-75k into one (and only one) investment. My partners have different avatars which represent the demographic they naturally appeal to and that's where they focus.  One of my partners brings investors in that bring multiples of $100k to the table.  

End of the day, theoretically it's easier to rasie $2M in $500k chunks, but if you only know people that can invest with $50k chunks, may be easier to catch 20 trout than 4 whales.