All Forum Posts by: Eduardo Zepeda

I'm sure that you've already received a lot of valuable insight and opinions on the matter. I tend be somewhere in the middle, with the preference given to cash flow over appreciation. With that said, my investments are in the Bay Area because, even though they are cash flow positive, I do see the upside in rent growth and thus the appreciation. The key reason I first look for cashflow potential to qualify my properties is because I'm buying levered and plan on continuing to do so as long as the money stays cheap and / or until I can accumulate enough capital paired with equity to make some all cash moves, if ever. When levered, I find it critical to be able to enter into an investment cash flow positive and underwrite it conservatively. I stress test the property AND myself. Meaning that if property values decline, and rents decline, that I can still service the debt. Also, and probably more importantly, that in the event that rents decline, and I also no longer have my own earned income apart from the property, that the debt can still be serviced whether or not I'm employed and have income. After all, if we go through another crash like in 08, I may or may not have that job and I want to know that my investment is able to essentially pay for itself without my need to earn income. If on the other hand, you are buying assets cash unlevered, then it could make perfect sense to buy for appreciation over the short or long term without exposure to adverse market conditions.

@Thomas S. I think you're onto something here. If you take an overly simplistic view, the reality is that virtually anyone CAN do it, but almost everyone will not, statistically speaking. It really just comes down to a mindset matter like several touched on earlier in this thread. Will you be part of the few that have what the few have, or will you be part of the everyone else that has what everyone has? With the endless amount of information available on sources like BP, there is really no reason that someone cannot make it happen. It's just a matter of choosing to do it.

This is what I love about real estate investing. What was once a deteriorating, neglected, under-utilized property serving very few if any is now providing safe, clean housing for its residents and benefiting the community. You, as the operator, are able to provide a great return for your investors, and also put yourself and your family in a great financial position for the future. Win, win, win. Congrats.

Congrats, @Sam Rust, on the impressive execution of your goal in such a short amount of time relative to that monster deal size. I'm also learning the syndication business myself via several sources, including the accounts of others. Would you be so kind to share the following, if you have time (I apologize if you already answered these in the thread somewhere and I missed them)? How did you meet your partners, and did any of them have prior experience with being a sponsor or operator of MF? How many LP's / investors did you end up having? Was there a minimum investment amount you were asking, and did you structure an investment unit size? When you initially presented the offer to the seller, did they ask for proof of funds? Prior to raising money, how much liquid did you need to have upon acceptance of your offer for the EMD, and then for transactional items like the syndication attorney, inspections, etc?

Thank you!

Happy to be teaming up with @Brenda Chen on this one! Pinging a few others that have attended previously or some others in the area that could have interest in attending. @Bruce Santos @Brandon Fox @Brad Henson @David Weintraub @Robin J. @Michael Koenig @Al M. @Lesley Ray @Drew Y.@Evan Turner @Katrina Razavi @Abe Ajlouny @Angeline Kung @Frank Wong @Puran Zach Grewal @Ariel Smith 

To echo what's already been said by some, your cash flow potential will be a function of your debt service, if any. Of course, if you buy a property all cash with no financing, you will almost certainly "cash flow" assuming that your operating expenses aren't greater than your effective gross income, or in other words, that your NOI is positive and your cap rate is greater than 0%. So to standardize what it may mean to "cash flow", for me, in my target market(s) in the greater Bay Area I seek out deals that produce me at least a ~5-7% cash on cash levered return if/when stabilized. This assumes a 75% LTV. It all depends on the deal, though. I find that cap rates can be very deceiving because these depend on how the seller either operates the property, or what their "proforma" says (usually a very blue sky), and if you're dealing in the 1-4 unit space, this can be all over the map with some less sophisticated sellers leaving out basic opex items like property taxes (I've seen it!). Thus, I often look at the current gross income to calculate my internal "acquisition cap rate" because I know how I would operate the property and roughly what my expenses will be, especially if I have experience in that particular submarket.

You CAN cash flow in California. I've bought two properties in the last 18 months in the Bay Area. They are both cash flow positive. They were not, however, easy to "get" and required skillful negotiation. I'm zealously looking for my third, regardless of what happens with prop 10. I believe that when you buy right, you can invest profitably in any market, at any point in a cycle, with any pending legislation.

Hi @Sid Naik,

Just to expound on what @Jeffrey Isenberg and @Account Closed said about increasing rents, It's also about increasing the income overall that may come in other forms such as laundry, pet rent, parking fees, storage fees, etc. These are the "value add" opportunities many investors look for in commercial multi-family properties that allow them to boost the NOI and force appreciation.

Hi Angeline,

I live in San Francisco but currently hold two small multi family properties in the east bay, Richmond to be specific. I have my thoughts as to why Richmond has strong fundamentals and economics and is poised for steady rent growth. Happy to share my insights some time.

Best,

Ed

This is happening in San Francisco?