All Forum Posts by: Charles Carillo

@Sergio A.

If true passive income is your goal, I would recommend investing passively in different real estate syndications. This is one of only ways within real estate to be 100% passive. If you want to be semi-passive there are other options; purchase a small apartment complex and hire 3rd party property management for example. Some investors want to be fully passive while others just want to oversee their property manager. You will need to know what types of properties you want to invest in as well; multifamily, mobile homes etc. Lastly, would be the type of returns you require. Traditionally, the more units that make up your portfolio, the more consistent your cash flow will be.

@Yakir Sheli

Are you planning on incorporating debt into your investing strategy? This will increase your returns if used correctly but, I would not base my whole investment strategy around a minimum cash-on-cash return. Of course this is important but there are several other factors to be aware of. You don't want to push for the 9% return so much that the eligible properties are in poor areas. I would rather purchase in better areas with better tenants (better chance of appreciation) then dealing with D class properties. 

I am not sure if this is a single family property but it is very difficult to consistently cash flow with SF or small MF. One tenant moves out, one HVAC system needs to be replaced etc. I own small MF and they do consistently cash flow because we purchased multiple similar properties over the years (near each other) but for the first-time investor that is buying one small property, it is an unreal expectation that you will be cash flowing every month. Just something to keep in mind.

@Misty W.

With this type of property, in this property size, local lenders are your best bet. I would contact every local bank and credit union within an hour drive of the property and see if they are interested. It will take sometime but you will receive feedback directly from the lender (while avoiding a broker's fee).

I imagine you have worked COVID into your numbers, projections and your offer price. The bank will want to know about this when you reach out. Lastly, have you considered seller financing?

@Rob Greenawalt

I think it really depends on the property size. We receive emails weekly from people passing us deals that are requiring a 3% "finders fee" on $20mm and $30mm properties. This of course is a crazy amount of money and illegal in Florida (unlicensed real estate sales). I have heard from other operators that are giving 3%-5% of the general partnership to the GP that brings the deal (this equates to about 1%-2% of the whole deal). I think it is great that you are analyzing the deals as well since this is a great benefit to your partners and uncommon with other bird dogs I have spoken to.

@Ryan Daigle

I was discussing this same question with my partners weeks back and our thinking was yes this will lower returns to investors but if there possibly is an increase in cap rates (due to uncertainty) in the next several months (along with a decrease in lending rates to under 3%) it might not affect returns that much. We were borrowing money in the low to mid 4s last year and if you cut your interest by 25%-30%; that is going to make a huge difference.

https://www.inman.com/2020/04/...

@Michael Spangler

It sounds like you have performed your initial due diligence but once you have it under LOI you can start working through your due diligence checklist. I would never assume that there is no deferred maintenance. If they are short term owners and have performed some CAPEX in order to raise rents there are also a number of capital expenditures that they could have saved on which do not increase rents such as; mechanicals, roofs etc.

@Jaskaran Singh

The best way to find a real estate agent is to be referred to them from someone who has accomplished what you want to do. For example; you want to buy a small multifamily that cashflows, speak to someone locally that has done so and ask them for a referral to the agent, title company, inspector, lender etc. The fastest and most efficient way I know of.

@Elandrous Peoples

Driving for dollars is one of the most popular ways. Another popular avenue is purchasing specific lead lists and reaching out to them. These lists include; utility shutoffs, unpaid property taxes, divorce etc.

@Alex Wood

I would check to see if the current mortgage is assumable (an assumable mortgage is an existing mortgage loan that can be taken over by a new borrower.) This would be the easiest way to do it. If not, maybe have the current owner reach out to the current lender and see their willingness to hold paper on the property if it is sold.

I was also told by multiple lenders that 18 months is also being required on certain agency debt as well.