All Forum Posts by: Duc Ong

We will be in The Social Room at Symphony.

BYOB - bring drinks/snacks to share

Agenda:
6-6:30PM Open networking
6:30-7:00PM - Give/Ask Format: Share something of value that you have learned about multifamily, investing, or business in general with the group. Ask the group for help with something you are working on.
7:00-8:00PM Small group networking Round 1
8:00-9:00PM Small Group networking Round 2

I think what you're doing is viable, as in the live-in flip. Maybe repeat that again and build more equity in another value-add deal? 

Thanks Lane!

@Account Closed Self-managing a vacation rental would be a big time commitment. Live-in flip is what I'm doing. It doesn't have to be a big rehab.

@Joel Florian I think it depends on your ability to increase NOI. NOI divided by a smaller cap rate leads to a bigger value. However, you would need to weigh this against the opportunity cost of investing in a higher cap rate market. I think the bigger players in this space are looking for capital preservation over growth, and can afford the lower cap rates in exchange for safety.

@Account Closed Hawaii is more of an appreciation market, but there are still a few strategies that can cashflow: legal short term rentals and multiple units. Both require a decent amount for the down payment, which means higher barrier to entry. Another strategy is pre-construction new builds. This is more speculative, but have done historically well for some investors who have the liquidity to park in these projects. I think the play is more long term here, but the gains can be significant if done properly. Most normal rentals will be negative cash flow, however, so it's a matter of will the appreciation outweigh the expense of the negative cash flow. 

Going to the mainland markets don't necessarily mean more work on your part, and a Hawaii property can be more work if you're doing it yourself. For example, syndication deals allow you to invest passively, vs having to manage the manager in the conventional model. Let me know if you want to chat more about it.

@Sophia Cao That's awesome! I definitely prefer multifamily over single family. 

@Joseph Firmin because the $50K at 11% turns out to be equivalent to $100K at 0%. It's the same to us and them, but different in the bank's eyes.

@Constance Kawa-Small Yes, Natrona Heights. They were mostly rented, but we turned them and got some of them up to market. It didn't take long to lease up, since my partner does an excellent job of the PM and marketing. It's all about the execution and the people, in this business.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Pittsburgh.

Purchase price: $250,000
Cash invested: $40,000

Contributors:
Anthony Angotti

This 10 unit is located about 30 minutes outside of Pittsburgh.

What made you interested in investing in this type of deal?

The deal was off market, and came through a relationship that my partner had with a former co-worker.

How did you find this deal and how did you negotiate it?

This was a JV partnership with a local investor/realtor in the Pittsburgh area. We initially had the deal under contract at $300,000, with $100,000 in seller financing at 0% APR. The lender wanted a better Debt Service Coverage Ratio for their underwriting, so we negotiated the price down to $250,000, with $50,000 seller financing at 11% APR.

How did you finance this deal?

Seller Financing and local bank.

How did you add value to the deal?

Renovated units as they turned, and increased rents to market rates, from about $450/unit to $750/unit.

What was the outcome?

We are almost finished with turning all of the units and getting market rents.

Lessons learned? Challenges?

This was our first commercial deal, greater than 5 units. Because we came into the deal with very little reserves, we had to bootstrap to fund the turns, from cash flows. If we were more prepared, I would have preferred having the capital to do the turns, without tapping into the cash flows.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Tony Angotti

@Jillian Ez Short term rentals can be great, but with the new laws, you would want to stick to legal resort zoned areas, like Waikiki. The ROI will be dependent on how you manage it, since property managers charge a lot more for short term compared to long term. If you have the time to self-manage, that could be a good way to save money.