All Forum Posts by: Fan Bi

@David Sisson Really great perspective, thanks for sharing. We have a few legal-2-family that are three floors, i.e. second unit is two-floors, which seems quite common in Providence. They are all on comparable lots to neighboring 3-family properties and I assume might have been a legal-3-family at some point in the last 100 years. Would you be able to share what the gross budget would be for such a conversion?

@Sean Doherty As a fellow out-of-state investor in RI, you just want to be really mindful of your edge. If you're @Anthony Thompson or @Brandon Ingegneri you have scale economics to do direct marketing and have proprietary access to local contractors. IMO, in mid-2018, most of the opportunity has been taken out, largely by fellow out-of-state investors. After some aggressive buying the last few years, we're sitting on the sidelines.

Just be careful. Like a lot of newbies who try to BRRRR/ value-add, the biggest mistake we've made is that even the deals that look favorable in excel end up costing WAY more in poor economic vacancy and tenant/ unit turnover. Thankfully for us, the market has been going up so we have some paper gains and done some refis but if the market went down and cash flows were being sucked up by repositioning properties, we'd be a world of hurt.

I have four six-families, i.e. 24 units in total, that are each held under a separate commercial note, all approximately 18 months old. The notes have a pre-payment penalty within the first five years. All properties have been rehabbed and are worth considerably more, and at a 75% LTV, should be able to access $250,000 in a cash-out refinance. But the bank said it's not comfortable lending more at this point and would need to wait at least another year to season.

Does anyone know of a lender that will lend in the second position, even at a slightly lower LTV, e.g. 65%, and even at a higher rate, so I can access some of this equity?

@Anthony Thompson @Jason Li

Thanks for the comments. I plotted the chart myself based on the data from RI Association of Realtors, should've said that in the original post. It is not inflation-adjusted.

As you've both stated, a lot of it is based on timing, e.g. if you buy in Providence (and most places) in 2009, you're a genius. Same if you buy in 1995 and sell in 2006. I was just surprised to see specifically, non-inflation adjusted, that through the 90s it was so flat and that it still hasn't surpassed the 2006 peak.

* Data from: http://www.riliving.com/PressReleases/SalesStatsArchive.asp

If you bought a multi-family in 1988, you were flat if you sold in 2013. You'd really hope you'd seen some good rental income in the meantime!

Would love to hear from folks as to why the next 25 years might be similar or different to the past 25.

Also based in Boston, have been finding multis in pockets of Providence and Pawtucket over the last 18 months, going for 8-10% caps (after property management). Not home runs but better than I was able to find anywhere else an hour outside of Boston. Happy to share notes if it's useful. 

@Robert Chen Do you mind me asking what part of town this was in?

@Luqman Shah I use @Jimmy Murray and can definitely recommend him. Did you end up moving forward with the fourplex?

@Cecilia Arnulphi I agree with @Jeffrey Bibby that Pawtucket is a hot market with prices up 30-50% from three years ago. There's a lot of speculative excitement about the downtown redevelopment, new Pawsox stadium and train station, how much of that will actually happen is still up in the air. Happy to share any details of our units if it's of interest. 

@Jerry Batista I own on one multi on Harrison and another on Hollis, working on closing another in the area. Anything I can do to help?