All Forum Posts by: Franklin Marte

I’m 19 graduating college soon and I want to buy a commercial property next year how would I do that. I heard people saying you wont get approved for loans because I need experience. I have none but I’m going in on a deal with a friend same age as me. We plan on saving up at least $45,000 but where can we get approval and funds in this situation. I was planning to hire a property management company. thank you for the suggestions

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I’m 19 graduating college in 3 months I plan to work all summer and with my job I can come up with about $10,000-$15,000 in the summer and I want to get a commercial property that I believe generates about $5,000 net income. I want to get a commercial loan but I haven’t worked for 2 years and I’m not sure what else they look at. I was told that if you’re in college and after graduating if you work in the same field you studied then school counts as “work history” What do I need to get a commercial loan. I feel like I did the numbers correctly, I got the cap rate from the website online. It’s a building C type and has 9 units for about $550,000 with a cap rate of 11.37% I know what market I want to go in.

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Originally posted by @Chris Babcock:

@Franklin Marte

I don't think you're ready to buy any property yet. Questions abound like:

- Why Florida?

- Why at least a 6 unit?

- What market in Florida?

- Why don't you know your estimated utilities?

- Have you reached out to property management companies to find out what is standard for the area?

I don't mean to be critical about this but it doesn't seem like you've done any homework or research on where to start. Based on what you've described about your financial situation so far I would say you're not ready to take the risk of getting into real estate. Get your credit score up, save your money, maybe get a better paying w2 and start researching properties. Identify a market, Identify a property, have a reason to invest there. All of that can be done without spending a dime or needing a partner. It also might be wise to start with a smaller property than a 6+ unit so that you might get an understanding of the basics first.

Good luck.

Thanks for the reply all your feedback is helpful and No you're absolutely right I'm not ready, I plan to go for it at the end of the year if possible and Florida because My friend and I are planning to move out there but, there are mostly SFH and if we're going in on something together it wouldn't benefit us to go for something small. Bigger is better since the cheaper rent out there for the tenants that way we can both get a piece and We we're planning to live in one of the units. We don't know what market and I'm still learning how to put in all the expenses I'm not sure exactly how to do or what goes into it. What are good things to look for in a market?

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Originally posted by @Chris Babcock:

Aside from the very legitimate legal complications to work out. Ask yourself if you want to mix $$ and your friendship and then refer to the adage: "Friends and Money: Oil and Water". I know of several friendships that were ruined by mixing business interests into the equation.

I know but how else would I be able to do this without risking it with someone else who I don’t know much about

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Can you get an FHA loan if you plan on buying an apartment building if you also plan on living there? it has 6+ units I've seen a couple different ones that I was interested in 9+ units etc.

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Originally posted by @Jason D.:

@Franklin Marte the quickest and easiest way to increase value is to increase NOI.

And to do that do you just make it more efficient? With better equipment as lights, HVAC systems? Or is it something else

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Originally posted by @Dan Weber:

You increase value in a building of 5+ units by creating more annual cash flow. You create more value in a 2-4 unit building by improving things like kitchens and baths to create value against the comparable properties. In order to accurately answer this question, you need to provide more info.

Doesn’t adding value to a property increase your equity in the property? I’m looking at apartment buildings 6+ units I’m planning to split it with a friend, but I want to use the equity gained to place a downpayment on another property. Maybe another apartment building or multifamily of 4 units

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Originally posted by @Jaysen Medhurst:

@Franklin Marte, we need some details.

What size building? Number of units?

Are you trying to increase equity or value? They're not necessarily the same thing or strategy.

What's your ultimate goal?

Thanks for your reply, Its 5,562 SQFT

9 units

I was trying to gain equity To then take it out for a downpayment on a second building or smaller multi family. I thought the value and equity was the same thing.

The goal is to buy a property that cash flows positively, do fixes on it and gain equity for another home or building and repeat.

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Originally posted by @Jeff Bousquet:

I bought my first C class 4-unit in October. I was hesitant due to the conditions and the existing tenets. I bought it for 105k. The existing tenets left. I did light updates. Paint, flooring, new few new appliances. 3 of the four units are rented. The last has a bunch of showings. Gross rents are $2775. There is more tenets management involved, and thinks do break. Overall I've had a good experience thus far.

On the other side. I knew a guy with a C class 6-unit and was in housing court every other week.

Experience may vary.

Can you tell me more of how you went about doing that. I’m finishing up my last semester in college this may and I’m working full time. I expect to make at least $20,000 set aside by the end of the year for investment. I want to go into commercial but with a friend I feel like We’d have a better chance combining income and resources since he wants to invest as well. I just don’t know everything exactly that goes into it.

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Originally posted by @Tamiel Kenney:

@Franklin Marte

Hi Franklin, How did you calculate the cap rate for this property?

This is an area where people use incorrect information to calculate the cap rate. For example, some people just take the T12 (this is the Profit & Loss) and the Net Operating Income (NOI) and the selling price and calculate the cap rate. Using the T12 to get the cap rate is typically not a good idea because you are using information from the seller and that doesn't mean you will run the property the same way and your costs could be drastically different. For example, what if your property taxes will go up...this should be accounted for when you calculate the cap rate. What if your payroll will be higher or lower. You need to consider this when you are calculating the cap rate.

Also, have you bought a commercial property before? Have you talked to a mortgage broker yet to see what you might get for financing?

Have you driven by the property yet to see what rehab budget you can plug into your analysis? {Roof, foundation, windows, balconies (if any), driveways, building structure, landscaping, signage...are all things to consider for repairs in this early stage - to decide if you want to move forward with a full tour of the property).

Hope this helps... Good luck!

Thanks for your reply it was bery informative, I got the CAP rate from the website I saw it was posted on LoopNet.com

I’m still in college I do plan on working in the next 6 months to make $20,000 at least on my part. I don’t know how much I would be approved for yet. I haven’t bought a commercial property yet?

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All Forum Posts by: Franklin Marte

Franklin Marte has started 12 posts and replied 37 times.

Post: I want to buy a commercial property, need help on how to do that

Post: I’m 19 I have established credit I want to get a commercial loan

Post: Is it better buying a real estate property with a friend?

Post: Is it better buying a real estate property with a friend?

Post: Can you get an FHA loan on a commercial property?

Post: What is the best way to gain equity in a multi-family/Building?

Post: What is the best way to gain equity in a multi-family/Building?

Post: What is the best way to gain equity in a multi-family/Building?

Post: Is it worth it to buy a cheap Class “C” building and renovate?

Post: Is it worth it to buy a cheap Class “C” building and renovate?