All Forum Posts by: Chris Grenzig

@Ben Lanman Hey man I'm over in the Bushwick area not too far. We invest primarily out of state, so can't help too much if you're looking in the tri-state, but if you ever want to just talk shop or had questions about out of state feel free to drop me a line!

@Aurus J. Sanchez Hey bud I'm 27 living in Brooklyn, I invest out of state and been doing it for roughly 3 years.

Here's the the plain truth from what I've seen in this thread. You got to figure out more options than pigeon holing yourself in house hacking BRRR strategy in NJ or investing in the midwest. There are hundreds of different options available to you and the more creative you get, the better off you'll be. Right now, it feels like you're trying to force yourself to do one thing to meet this goal of $3k a month in cash flow.

First off would love to know how you arrived at the number and why that's your goal.

Also, it's crucial to have big/long term goals, but way more important to have small/short term goals. 

How are you getting your first deal?

How are you getting to $100 cash flow a month? $1000 per month? $2000 per month?

How are you going to find the deals? Fund the deals? Get loans on the deals? 

If you were asking me my opinion, I think you need to take the next couple of months to figure out as many different options as possible and then start narrowing it down. You may want to buy 12% cap rate mobile homes in OKC, you may want to flip land in Massachusetts, you may want to wholesale in NJ, you may want to move to Florida and house-hack a 4 unit. 

@Chris Carson just as reference we own 200+ units in jax and have another 800+ under contract to close in 2-3 months time. 

We just did our first opportunity zone deal in Columbus, and I'd be happy to help if there's anyway I can from looking at the zoning or just talking OZ stuff to see if I can help clarify some stuff for you. 

I'm definitely curios where it is because the OZ in downtown are mostly in some pretty "rougher" areas except some small pockets so it sounds like you could've picked up a gem.

If it were me I'd look at what the zoning permits, and then I'd talk to someone at the zoning office to see what the rezoning process would look like and then potentially what could be built there. If there's an opportunity to knock down and build up, it could be very interesting to spend the money to rezone, have plans done and sell off the a developer in a couple of years. The development would also only help your buildings value as well.

@James Casella Hey we do a free monthly meetup in Westbury usually the 3rd or 4th week of every month. If you're interested let me know and I can shoot you over the meetup group info.

@Sheronda Jarrett

I live in Bushwick, and we invest almost exclusively out of state because of those reasons; mainly in the southeast and midwest. I can't help anywhere close, but if you have any questions about out of state feel free to hit me up!

Happy New Year!

@John Acklen I think a key difference when looking at the vacancy vs turnover costs that @Joe Splitrock and @Thomas S. are talking about, is what is the business plan?

If someone is going to hold a property 10+ years than I think it may make sense to actually keep a higher occupancy and lower turnover. Like Joe referred to, the cost to turn the unit could be much higher than the increase in rent.

However, if the business plan is shorter and more IRR driven than I think the "healthy vacancy" and pushing rents fully to market makes more sense. An extra $100 a month at a cost of even $4,000 is $1,200 a year in additional income a year, but worth between $12,000 and $24,000 (10 & 5 cap) on sale which is a great return on your investment.

So I think the deciding factor is what is your business plan and what is your cost associated with both options.

I also agree with @Theo Hicks to always pad the market vacancy for your underwriting a couple of BPS.

@Toben B. $620 *24 *12 = $178, 560 if you take the $158,00 gross income that vacancy of just over 11%, not terrible, but need to talk with lender to make sure this isn't going to be an issue.

Expenses are definitely low if you're going to have management, but ultimately it doesn't matter, not really.

Ask your manager to put together a proforma and see what your income and expenses are and how much upfront capital you're going to need to hit those. Also, ask to see what they think would happen to income/expenses if you put in more capital or less capital. 

Plug in those numbers and see what your returns are, if they work than buy it, if not offer what makes sense. If there's a big discrepancy on it, talk it through with the broker and explain what you're seeing and why it doesn't make sense. Perhaps theres something you're not accounting for and he knows about and then discuss it with your manager.

Maybe he knows its overpriced and he's testing your feasibility a bit, if you can explain why you're not interested at that price, he may know not to bring you overpriced deals anymore.

Also, make sure you know how taxes are being reassessed for commercial properties, might be different than duplexes. 

Quick maths $158k / 2 = $79,000, I'm going to overshoot and go for a 7% cap rate assuming it's in Tulsa area (I know 45 mins away) where you are from and I get a value of $1,128,571.43. This is roughly $47k a door which is good, we always like to see price per door less than or equal to avg rent x 100.

TLDR: Find a good manager and ask for their help

@James Canoy If this deal is not a listed deal than I think you look for an experienced partner and bring it to them and say I want x% of the ownership side for finding the deal. What that percent is I have no idea, it comes down to so many different factors. But, I think if it's a real deal they will know, they can use their resources and see if it can work.

We've partnered with others who have found deals for us in the past and so far they've worked out well, but we've basically ran the show once the deal was found and brought them in as a minority partner on the ownership side. That way our investors feel comfortable investing because we're running the deal, and the minority partner who found the deal gets a learning experience, credibility, and some profit as well.

I also think being a passive investor first can give some experience, depending upon what you do with it. We have investors who learn a lot and others who don't take advantage. 

@Cassidy Burns I think the 7 unit could be an interesting option if you can verify any deferred maintenance items and you are close enough that you can mitigate any future expense issues by doing some or a lot of the work yourself. If not, then I would avoid.

As far as comparing that vs the duplex, duplexes are treated very similar on valuation as SFR in that it's based on sale comps, not necessarily cap rates. I would say go with the duplex if you feel you can add value and increase rents and you're at a discount to the current market for duplexes. Otherwise I don't think it's a great option.

@Nick Williams I agree with a lot of points made here, just wanted to reiterate or 2nd them.

We've thought there's been a decline/correction/recession for a couple of years, but hasn't happened yet. It's going to be impossible to know, so you just have to take steps to mitigate your risk.

Go long term fixed debt that has a higher DSCR. Also, look at what you breakeven occupancy is so you know how long your income can drop before you have to start coming out of pocket to cover the loan, if you even have a loan!

Buy in areas that are growing in population, wage growth, and where the supply does not meet the demand. While it could slow in the future, or decline in a downturn, it's probably a better bet than a stagnating market.