All Forum Posts by: Derrick StClair

Willing to buy dinner to pick your brain : )  - About to embark on my first 10-14 unit multifamily investment in Long Beach California and I've always been a big advocate of talking to experienced professionals to learn lessons and got'cha's prior so looking for local investors. 

please reach out! thank you. 

@Kevin Douglas & @Juan V Lopez - literally doing the same, I'm based in LA but looking in Nevada, Arizona, SoCal, and Denver but I haven't spoken to anyone who has owned a car wash before which I would LOVE to do. Do you guys know anyone? Maybe @Frank McGovern want's to volunteer :) lol 

Hey BP team,

Currently doing a remodel of a property I own in San Mateo but the contractor just sent an overall budget for everything but didn't break down labor vs materials. Just wondering if you're aware of some standards "rule of thumb" for what an overall construction budget should be for Labor vs Materials as a percentage. 

For example: Kitchen Remodel, bathrooms, sand floors, recessed lighting, etc cost = $120k (what percent of that should be materials such as cabinets, fixtures, recessed lighting, etc)

Hey Guys - hoping there are some experts out there as google is deeming to be useless on this matter. 

My question is simple (so I think), is it possible to roll up any rehab costs into the mortgage loan amount when buying a property?

If so..

-Do they typically allow you to finance 100% of the rehab costs?

I'm aware of the FHA 203(k) loan but that's quite convoluted and requires a lot of attention to execute properly. I'm hoping this is commonly practiced but couldn't find much online on the matter.

I'm looking at a rental in Los Angeles with a PP of $1.1M and needs about $100k in rehab work. I've run the numbers and it's a good deal as long as I don't have to come out of pocket $200k for the down payment and another $100k for the rehab (not to mention the carrying costs). 

Any guidance would be greatly appreciated!

Regards,

Derrick

@Sameer A. Tough question as you'll get a bunch of different responses based on investor preferences. What you'll learn is of course there are quite a few options for you to achieve what you're looking to achieve. 

In Summary:

-The Easiest Route (minimal effort required on your end) is to go with a syndicate fund. Leverage an existing investor you TRUST and put your money with them.. You can find some veterans that will give you an 8% Preferred return (paying out monthly) with an upside in the low teens after annual profits are calculated.

-The Cash Flow Route (higher risk degree) is out of state investing. If you're looking to increase your monthly cash flow for your current lifestyle then investing outside of California would be a good idea (although you can cash flow in Los Angeles if done correctly).

-The Maximum IRR Route (lower risk degree) is local California investing. If you want to maximize the internal rate of return on your investment there's a reason you keep reading location, location, location when dealing with real estate. There are 4 main drivers that determine your true return on investment (Appreciation, Cash Flow, Tax Benefits, Amortization). 

Then there's the question of what you're looking to accomplish, are you trying to have your money work for you with minimal effort (passively) or are you looking to build some serious wealth (which will always require more direct effort). It's hard to give solid advise without knowing more but hope this helps.

@Thomas Hartin - I would suggest learning about multifamily investing 5units and greater. It's important to understand how commercial multifamily apartments are valued as it's much different then the way homes that have 4 units or less are valued and sold. 

I agree with Keith - the hardest part about giving advise or direction on BP is that everyone has different goals with what they want to accomplish out of real estate investing so it's hard to say what you SHOULD do. 

Puja,

If your goal is to build more long wealth from real estate then yes you should consider selling or cash out refinancing and buying another property to expand. 

If your goal is to simply put as much cash in your pocket TODAY then it's hard to say and it would require much further analysis. Keep in mind a lot of people are simply suggesting you can get a better investment property; but what most of them are looking at is just the cash flow vs purchase price when there's a LOT more to consider with real estate. 

Such As:

- Higher rent to purchase price (aka GRM or the Bigger Pockets 1% rule) typically means more risk

- Risk from underdeveloped, lower class, not in high demand neighborhoods

- less home appreciation affecting overall IRR returns

- and more..

Also - look into 1031 exchanges instead of selling and buying something new if this is the route you choose. 

@Kelley Jorgensen - this is VERY interesting and I'm not the person to have any answers but please let me know what you find out. Leveraging EB5 investments would be a great idea (at first glance)

@Jenni Villane late reply here but I just found one online https://www.pdffiller.com/jsfiller-desk17/?projectId=448155404#f6a9f813d1d18f24b6f0c0d8ff73394b

@Vanessa Zamarripa I would just google a few different roofers in the area and reach out to all of them asking for a quote. 

If the original roofer already gave you an SOW of what needed to be done you can share that info so you don’t have to have all the roofers come inspect the house. Will give you a rough idea of where pricing is (and should be).