All Forum Posts by: Dave DeMarinis

@Shawn Ziegaus if you are starting out and not “He’ll Yes” on using a property manager, you definitely should self manage to start. You will learn how to manage the property and that will help you manage a PM in the future if you choose that route. If you know how to manage units your self, you have a MUCH higher probability of successfully managing a PM in the future.

Bonus Points if you write and build processes as you go while you self manage.

@Dennis Cobos where is your property (zip code)? You have a great start here above. One other thing I would do is mystery shop the PM’s with email and phone call response to a listing similar to yours. That will tell you a lot.

@Zachary C. At Astro Property is very hands on with a high level of performance. I have management in house but Zach was very responsive when I looked at 3rd party and I’ve heard very good things.

@Al Caan What market Al? I'm a lender and heavy value add buy and hold investor. Also, what are the monthly rents and unit configurations? If these are the numbers on proper underwriting - you will easily be able to retain some partnership interest in the deal (w/o bringing money) or assign it to someone for an instant cash profit.

@Andre Walker a few things to consider that are positives for condos. 

#1 Depreciation is higher and better because generally you don't need to allocate land to the purchase price

#2 HOA does replace your outdoor CAPx.

#3 Insurance - you might be able to have lower insurance because the HOA has exterior responsibility

However, it is extremely important to review the HOA financials and make sure they are flush and healthy. Otherwise, you can be required to fund HOA shortfall and/or have the property/community go dysfunctional. AirBNB might help your cash flow and it sounds like they support it.

It sounds like Turnkey is the best option for you. I prefer the growth prospects of Huntsville over Chicago as well as the much more friendly taxes and landlord laws. I don't do turnkey but I'd ask for recommendations. I've heard good things about Spartan Invest which expanded to Huntsville and I think others can make recommendations.

@Stephen Glover is spot on "the rules are set based on their confidence in you, and your relationship with them." I wouldn't plan for 100% funding of acquisition and repair with your first BRRRR.

#1. If you finish your first rehab on time and budget, you will be the first person in history to do so. Have reserves.

Lenders should have criteria for you and they will either do LTV off ARV or Cost+rehab. For your first deal, I think any reputable lender will want you to have some money in the deal, regardless of LTV.

HML is a great solution for any or all of the following.

1. Borrower won't qualify for traditional financing but asset will. HMS heavily weights the asset in underwriting.

2. Property won't qualify for traditional financing but you have a plan to rehab and/or tenant it and then it will qualify for long term financing

3. You need to close very quickly. A good HML can fund in 2 to 7 days.

However, in all cases you want to have a plan to refinance within 3 to 12 months. DM with the specifics and I can give you more help.

Hi Vernon - what size MF are you considering? Small MF is actually the only segment I don't like in Huntsville! The one exception would be if you can take a SFH and create a small MF - that is a strong segment.

Here are my issues with Huntsville Small MF.

1. Rent Compression - <$750 rents is really tough to retain income. The 50% rule totally breaks down as the rent isn't high enough for percentages to scale and help you. When SFH rents are readily available in the $900 range (3bed/1bath) 1 bed apartments will be in the $476 to $650 range. Those low rents don't support your costs.

2. Location - the Duplex to Fourplexes I see are not mixed in with SFH and are in the worst and most transient areas. I don't see anyway for a cycle of investment to happen to improve those areas and support the higher rents needed to retain a profit. (for a long time anyway)

3. Turnover - 1 and 2 bedrooms Apartments have higher turnover (specifics depend on market) than 3/1 SFH and low rents can't support even the cleaning and painting required for easy unit turns if they are happening every 18 months.

4. Utilities - the low rents don't support a return to install multiple meters or even a reasonable RUBS which further erodes the P&L with rents that can least afford it.

All that said - I would love to hear from someone having better success in Small MF in Huntsville or who sees it differently.

I don't know of any successful investor who's fundamental strategy was market timing. The price correction only matters if you are selling. 

RULE 1: Don't sell in a downturn. Simple :-)
RULE 2: Don't be forced to sell in a downturn by bad financing (it is your early properties so get fixed rate, 30 year debt)
RULE 3: See rule 2.

@Annie Witkamp Congratulations Annie. That is great news. I've been very impressed with what we've seen so far in Richmond. It looks like a great market.