All Forum Posts by: Dave S.

good luck @Vijaianand Thirunageswaram  thanks for the tips!

@Ned Carey Thanks for the reply. I was questioning the expenses too. Most are listed out as "estimated", i guess because the property is that new. What % expenses would you be expecting to see with this size property?

So here are the numbers....

• Property sale price is $11M (50 unit built in 2017, 98% occupied, rents on par with market)
• Rental income totals $860K (rents plus all fees and garage rentals)
• Expenses total $240K
• Able to secure a 75% LTV mortgage at 4.85% (30 yr amortized, 7 year then balloon) coming to $522K
• This leaves $100K for the year. 

Problem is that i don't have $2.75M laying around (yet :-) ) so I will need to obtain it another way.

So Im looking at this and saying that even if i had ~$3M it wouldnt make sense to do this deal as the cash on cash isnt justified. 

Is there a creative strategy that someone can think of that could make this deal work...or even come close????

First off let me give you some background of the situation. 

I purchased the property for about $70K and owe about $50K with monthly mortgage payments of about $280. I inherited the tenant from the previous owner and she has been in this property for atleast 5 years. She pays me $1150 in rent. I do not know her complete story (still have to ask) so I do not know why she has been renting and not buying....probably bad credit. Her uncle is a few doors down (I believe she is in her late 30s). She has been late on a few payments but she has always came through and got current in the 2 years i owned the property. As to not sugar coat this, with in my ownership, she has probably been late on rent about ~50% of the time but again has always paid in full within a couple weeks of the due date.

So this is what I'm proposing, so let me know if you have any concerns or if there is any additional due diligence i need to do...

The property is worth $140K fixed up. I was going to offer her the property for $120K (0% down), 30 year, 6%. This comes out to be about $720 per month. Adding in $80 / month for PMI and $350 for the property taxes, she will be paying the same amount she is now, building up equity and I still get paid. I was thinking about putting a caveat in the agreement of sale / mortgage, that after 7 years (which BTW is when i would pay off my loan if I applied all remaining income (not including PMI) to the principle and is when she would cross over into the 10% equity in the house) that she would refinance and buy me out. I would of accumulated ~$50K in interest, get ~$110K at time of refinance, help her building credit, and not have to worry about the house (too much).

What are your honest thoughts? Good idea, bad idea, how should I make this work, or should i hold course and not change anything..keep her renting?

I will admit, Im new to the entire commercial side of real estate. Using Trulia / Zillow / Craigslist, will only get you so far SFH and even 2,3,4 units but forget 50+ units. So my question is, where do you look for mid sized apartment complexes? Loopnet has a few and you can search online and see a couple here and there but there has to be a better source, what have you guys done in the past to find apartments?

Im looking to purchase a larger multifamily of 50+ units and my searches keep coming back to do syndication. So I would like to ask, can anyone do this? Is there a "step-by-step" guide / checklist to follow to ensure you have all your ducks in a row? Or do you simply start pitching your deal to investors and accumulate the funds needed to purchase the property?

Lets say I have 10 investors (not sure if there is a max number of people that can come onto any given deal or not). Do I just need to form an entity (LLC or the like), with each shareholder having the agreed upon % of that company (i.e. real estate)?

@Tony Nguyen, @Mark Allen, @Gino Barbaro, Since no one else asked for a copy of the the pitch / credibility books, I would like to read through them. :-P Thanks in advance

So reading through a large amount of articles, forums, books, etc. There are of course multiple ways of raising private money that all work but the question is what worked best for YOU and why? Also while we are at it, which method works the least effectively?

Well, @AJ Dhillon you loan someone the funds once you get shown a deal outlining how you will get your money back and THEN how you will make a profit. At that time you can express how much of a passive investor vs active investor you want to be. The profit will be adjusted accordingly. I would definitely invest in a multifamily. Preferably one that has a value add option. Where as we would put down $750K and use ~$200K (would need to allow for overages) in rehab. Turning a partially vacant apartment into a fully occupied one. Not only pulling in more income from the lower vacancy but also due to the higher rents due to the rehab. 

Thanks in advance for taking the time to read this.

So here is alittle background, friend would like to partner with me on a deal. Not sure what that deal is but we are thinking we would purchase a 2+ unit together. The caveats are that he would reside in one side and he only wants to reside in the place for 3-5 years. 

So the first thing that came to mind is that we would do a 50/50 deal. Where we would split everything down payment, expenses, rehab, etc.. However if he is living in a unit, that isnt really 50/50. So I believe I would pitch it where the 1st unit would be my responsibility. If he moves out, he would take on the 2nd unit and we would be truly 50/50. Obviously if we found a larger property we would split those unit's expenses and incomes from the beginning. 

One of the benefits from my side is that we can utilize a low interest rate and small down payment cause he would be living there. Not sure how we would legally structure this and still get that benefit though???

Benefit from his side is that he has a place to live in and flexibility to move (and then rent out) his unit when ever. Also benefits both of us cause we can get a larger place by splitting the down payment.

So I would like to do a deal here as 50% of nothing is nothing, so Im trying to think of other strategies that may benefit us both. Any other ideas?