All Forum Posts by: Fran Arti

I would refer to my article on out-of-state investing, which would apply to out-of-country investing, just even more so (i.e. be even more cautious and vet the manager more): https://www.biggerpockets.com/blog/2014-12-23-investing-out-of-state-essential-items-to-vet

I hope that helps!

Thanks so much!!

Out of state is tough enough, I would be even more nervous to so abroad, especially if the country isn't one of the most stable (i.e. Europe or East Asia). I would consider Latin America if seemed like a great deal and was a relatively small investment (given the size of my portfolio). Overall, I would be very careful and concerned about such an investment.

Thanks for the input, @Andrew Syrios. I think I have to implement a system that allows me to, first off, start in the business and gain knowledge and experience, know how to run the business by myself and then, expand it and let other people to run it (I will supervise them). I will looking for more opportunities. Otherwise, I cant build a business that depend on me at all times. I think its time to learn how to attract and hire great employees and delegate and manage people. Will tell you guys how its going. Thanks so much.

Any tips that might be of help will be so much appreciated.

@Fran Arti

What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures by Frank Gallinelli is the best $20 I’ve ever invested into my RE education. It will take you through some analysis and introduce you to the various calculations that will help you determine your exit strategy.

Then the next thing to do is connect with a commercial loan broker, preferably one that lends in your target market and can talk to you about loan options to purchase and exit options.

Finally, I recommend getting into an RE training program which will give you an understanding of the overall process and details of what needs to be done and how, in order to close a deal. These can get pretty expensive (thousands of dollars, some more than that) but usually worth it.

@Fran Arti, taxes are different by county so you'll need to contact the county tax assessor office to find out when they assess your property taxes and how exactly they are calculated so you can add them into your analysis. 

The 10% additional in liquid funds is a reserve account. The bank will hold these funds as a precaution. At some point, they will give the money back to you. 

IO - interest only

It is possible to qualify for a loan if you are not a US citizen but you need to contact a commercial loan broker ASAP and talk to them about your options. Also, expect to pay higher interest rates and get a smaller loan amount from the lender.

@Fran Arti, I'd be careful about banking on a 30 year AM. You should consider what the numbers look like on a 25 year AM and a 20 year AM as depending on what kind of loan you get, the lender might offer one of these scenarios and you'll need to be prepared for it.

As for cash flow not supporting the price, the analysis you're showing here will help you negotiate the price down to a reasonable number...maybe. Important thing is for you to understand when you see this and stick to your numbers, don't reach.

Also, I know you're just practicing with underwriting so you're grabbing the first thing off loopnet to crunch some numbers but when you start filtering down to your target market, you're going to want to know how the taxes will work and what the mill rate will be so you can calculate accurate tax figures. Do you have (or know any resource), where I can find a detailed excel spreadsheet used for these tasks?

You'll likely also need 10% of loan amount in liquid funds post closing so factor that into how much money you need to bring to the table, in addition to the down payment. What for are that 10%? Can you explain, please?

If you plan on syndicating, definitely need to practice calculating IRR and CoC based off different splits and prefs/no prefs. Your closing costs (and hard costs prior to closing) will also vary quite a bit depending on if you're syndicating or not. No syndication but its good to know. 

Finally, you'll want to practice calculating your exit strategies as you probably know, commercial loans are usually somewhere in the 5-12 year term even if the AM is 20, 25 or 30 years and numbers will change depends on how many years of IO you get, if any. What will a refi vs a sale do to your numbers and how many years after purchase? refi will run you 2%, sale will hit you for 7 points on average. First off, what IO? I plan to refinance after 7-10 years mostly. I will be doing buy and hold. Thanks for the input with the 2 or 7%

Hope that helps. Sure!