All Forum Posts by: Chris Grenzig

 @Jason Williams I don't, but find a mortgage broker who specializes in VA loans or see if they do them and start asking questions. Or just ask someone at Vystar or something and see what they say. Then call a builder and get rough price per SF for building costs and then do a rough rental comp in the area and see if it makes close to any sense.

 @Max Uyeda a little late to the party but hit me up if you want to chat I think I can probably offer some insight. I worked for a syndication company from 2015-2020 as an asset manager and then the head of the florida portfolio, operating from Long Island, NY. In 2020 I started my own company and moved to Jacksonville FL to own and operate our small to mid sized multifamily properties. We've bought 150 units and still own 51 units today. In 2024 we opened up our 3rd party management services to other owner clients in Jacksonville, FL and Orlando, FL and we manage roughly 150 doors right now between single family and small multifamily. 

I'm also 33 about to be 34 so similar age and stage in life. 

Happy to just share my experiences and opinions and you can roll that into other things your reading or listening to and take it for what its worth. Shoot me a dm if your interested and we'll carve out some time or something. 

 @Javier Meza a little late to the party but welcome to the area. We've bought 150 units of MF in Jacksonville and still own 51 units, we also manage for other owners in Jacksonville and Orlando. Happy to connect sometime if you'd like and just chop it up. Also happy to share some other meetups I've been to or jotted down to go to in the area if you're interested in going to some. 

 @Eugene DuShawn Smith unfortunately, as others have said, in todays day and age $20k is probably not enough, especially for a rental property. You might be able to find a semi decent condo in the $100k price range, but I don't know condo's too well, but with where rates are and prices, you probably won't be cash flowing with 80% down right now. You'd probably need to put down 30-50% to cash flow a property, and you should always have extra money as reserves just for the property. 

It's a tough market to make work. I would suggest looking into other avenues like the stock market, ETF's, bonds, etc. while learning more and monitoring the market for opportunities and continue to save and invest. We haven't bought anything since 2022 and we've bought 150 units since 2017 in Jacksonville. I have some other reasons for that just besides market conditions, but it does play a large part. 

I'm not saying it's impossible to do with $20k, but the vast majority of opportunities most likely available to you will probably be bad deals and I fear it will be difficult to wade through the muck to find something that might work. 

I think finding BRRR opportunities right now are extremely tough to make work. Reason being your yield on a rental is not much higher than interest rates right now, so the LTV you could take out is very low.

If you found a property and could be all in at $250k and your rent was $2,000 with only a 35% expense ratio, that would be only $15,600 in NOI a year. If you tried to take out a $250k loan at 7% that would be $19,959.07 in annual mortgage payments for a 30 year amortization loan, which no bank would give you nor would I suggest anyone do.

At $200k all in price for the same with everything else the same it would be $15,600 in NOI and $15,967.26 in annual mortgage payments, again a slight loss or basically breaking even.

In multifamily, lenders typically want to see a 1.25x DSCR, meaning NOI/Mortgage payments should equal 1.25x, which I also think is a solid rule to go by. Using that, you would rouhgly have to be all in at $155,000 into the project to achieve that. Your NOI would be $15,600 and your annual mortgage payment would be $12,374.63 and results in a 1.26x DSCR.

Now imagine we took this last scenario of a 1.25x DSCR with a 7% 30-yr amortizing loan and $2k in rent, but instead of a 35% expense ratio we do 45%. You would then have to drop your all in price to $132k to meet that 1.25x DSCR. Your NOI would be $13,200.00 and your mortgage payment would be $10,438.39 per year.

So let's take the least conservative approach and say you needed to be all in at $200k roughly, I think it is extremely hard to find properties like this widely available where you don't have to spend a ton of money to renovate, account for all the carrying costs like hard money loan, taxes insurance, your closing costs to buy it and closing costs to refinance it, and also add in a contingency. 

Maybe you could find them by doing a widespread direct marketing campaign, but then you would need to add those costs to your property to properly account for it all. 

Now I'm not saying it's impossible or people aren't doing it, but with interest rates as high as they are, with rents having dropped the past couple of years, with construction costs staying elevated after skyrocketing in 2020, it's just not what it was in 2015-2019 in Florida at least. 

If I'm wrong please let me know, because I would happily scoop up properties to BRRR and hold for the long term, I just don't see it.

I second what @Basit Siddiqi said, Padsplit is very hit or miss right now. One of my concerns too is how big is the market for rent by the room for tenants? A lot of investors have been trying it and still are trying to increase their revenue and make deals work that they bought in years past or new ones, and at some point there is going to be more supply than demand. 

Maybe that threshold is 50 more rent by the room listings, maybe it's 5, maybe it's 100,000, I have no idea. However, my suspicion is that the market for rent by the room is not a huge percentage of the overall renter pool, and the more people look to do it, the less you'll be able to charge and thus the increased work to do rent by the room won't justify the smaller increase in revenue versus other types of lease options. 

I'm not saying this to say anything negative against your specific deal, you, or the idea of padsplit in general, we just saw something very similar happen with furnished mid term rentals and short term rentals and we've had a lot of conversations with owners the past 1-2 years about taking their short term rentals back to traditional rentals because it just didn't make sense anymore. 

 I wouldn't say Jacksonville FL is hot right now. There has been an over building the past few years, rents have dropped 10-25% depending on property type and area, yes there is still steady population and job growth but there's been more supply than demand lately. Combine that with increased interest rates and insurance costs it's been a very tough market as of late. I think you can definitely buy into we are now closer to the bottom than the top if all things remain equal, since new construction starts fell off a cliff in 2024 and are shown to stay low for the next few years, but right now in the moment it is tough to make deals pencil out. 

@Danilo Perea we've traditionally focused on acquiring 10-80 unit MF in Jacksonville and Orlando, we haven't acquired anything since 2022. We're focused on the operations of our current properties and our owner clients, and keeping a pulse on the market in general. I'm not too sure that the small towns are fairing much better, but I also don't play in that space so I'm not a great resource there. Appreciation in big areas right now is tough as well. Rents have dropped a ton and have maybe bottomed out, but some properties are still dropping from last year to this year. Also inventory for sale is way up in the single family space so prices are softening and multifamily prices have dropped a ton the past 2-3 years. There's not a clear avenue to appreciation for a lot of people unless you have a very long time horizon, think 10+ years. 

 Ryan, thanks for breaking this down. I would suggest not using $838 as the cash flow figure since you should account for other operational expenses like vacancy, repairs and maintenance, turnover costs, property management (if applicable), taxes & ins (if not included in mortgage), utilities while vacant, capital expenditures, etc.

I would assume 35-50% expenses depending on your market for operating expenses before the cost of a mortgage. That will bring the cash flow further down than previously stated. If I use a conservative 20% in expenses on top of the mortgage/HOA that would only be $478.59 in monthly cash flow, which is still great returns for a property like this.

I say this because as you evaluate the HELOC and new opportunities it could effect the financial picture of the current property. If you took out $100k at 7.5% interest it would be an additional $625 per month which would then put the current property in a cash flow negative situation but maybe if used for a new property as the only loan than both properties could do better.

As far as Orlando, FL or FL in general, real estate has gotten very expensive the last 3-4 years, rents popped in 2020-2022 but have fallen since then and have somewhat bottomed out, but some of our properties have still dropped in rent prices from last year to this year. I think it will be very difficult to find a property for a long term rental that is cash flow positive unless you take a very low leverage loan like 50% or less of the purchase price. Maybe furnished rentals, rent by the room, or short term rentals might be doing a bit better, but based on the small snippets I read and hear I don't think so. 

@Joseph Adams if you can find BRRRs right now in Jacksonville that pencil out accounting for all operating expenses then I feel your finding needles in haystacks. It's tough to make any rentals work right now, maybe in really rough areas but I stay away from that and in my experience they have a much higher chance of unexpected costs which really raise the operating costs. I would imagine fix and flips are easier to find right now, but all of Florida seems to have rising inventory of homes for sale and prices flat or falling. I haven't checked Jax specifically, but I'm sure it's not too different to some other areas I'm seeing.