All Forum Posts by: Brian Metz

@Andrew B Degnan, this is just a snippet, but on SFRs, as the BP bubbas mention often, turning a 2br into a 3br is a great way to add-value and command higher rents. Cosmetic rehabs such as new paint, flooring, etc go a long way. I put in new vinyl flooring, a new bathroom vanity, cleaned like crazy, and put in some cheap backsplash in the kitchen. That property sits at an 8-cap right now so spending just under $5K/unit has increased the value of the property $10K/unit because now I can charge higher rents, which increases NOI. So to answer your question, increasing the NOI of the property will increase the value of your multi-family.

@Bryan Hartlen, sure thing. With a bridge loan I'd be paying a higher rate, compensating their risk-reward ratio. But it'd allow me to have the leverage to go in and fix up the units, raise rents, and allow all of that to stabilize. The conditions with many bridge loans can be structured toward value-add/rehab properties. After 6 months to a year of stabilized units, I'd go to a different bank where I'm looking to secure long-term (20-30 year note) financing. In effect, that bridge loan was the short-term platform to get them stabilized in the eyes of a larger bank. Hope that helps, hit me up with any other questions!

Cheers,

Brian

I did a cash out refi of a 6 unit and they did not need to see all the units. I’m sure you’re aware of this, but it’s a mistake I made so worth sharing...whatever bank you’re wanting to use, make sure you know their seasoning requirements. When I was shopping, some lenders wanted to see those raised rents steady for a min of 6 months to a year or they would only lend on LTC not the value the appraiser came back with. I should have started with a bridge loan to season it and then secured long-term financing.

Cheers,

Brian

Just shot you a PM

 No sorry, I just meant the cap rate for the area.

Hi @Ethan McRae,

My advice is to "average in." Think of this like buying 10 shares of a company's stock every year. You're averaging in your price despite the ups and downs. So in RE, if you start buying a property this year and one a year, you're kind of averaging in.

Second, if you look toward commercial properties (more than 4 units), you can help yourself with valuation because it will be based more on the income than the comps in the area. I started off with a 6-unit and it was appraised based off the income and cap rate. Yes cap rates will fluctuate during economic downturns, but I believe it's still different than a traditional comp.

Third, if you have some experience when the market downturns, banks and others may be happier to lend to you when everyone else is running away. At that point, you've proven that you're in the game and know how to work it. If you're just getting started then, people may be more skeptical about what you can do.

Like @Mike Sola said, I wouldn't factor in appreciation. I'm currently under contract for a duplex that was built in the 90s for $90K and now I'm buying it for $70K. When analyzing deals, I ignore appreciation, equity paydown, and any tax benefits.

Cheers,

Brian

Not sure if you're doing a commercial or residential refi but I've had a good experience with Wells Fargo if you're willing to use a larger bank. Not sure what the exact situation with the property is though.

Cheers,

Brian 

I think that's just going to be situation dependent. If you think you can BRRRR it all back then maybe go for it. I still have trapped equity but can use a HELOC to tap into that equity.

Definitely Joe Fairless and Theo Hicks' book. It provided the most tangible info I've read in a book, with less of the theoretical, feel good nonsense.

Cheers,

Brian

 On my first property I utilized a handful of calculators from BP, watched YouTube videos, and read as many articles as I could. While it still wasn't perfect, using a diverse array of spreadsheets and instruction gave me some confidence as to knowing if my analysis was in the ballpark. After that, you gotta take the plunge at some point!

Cheers,

Brian