All Forum Posts by: Frank Luongo

Thank you @William Collins  and @Jason Arcurifor your comments and advice.

I would prefer a triplex or quad-plex, but I understand those units will be more difficult to find in some of my target markets, while duplexes will probably be more readily available and have better appreciation that the 3 or 4 unit buildings. 

I am a big proponent of more units per property.  My initially goals to are acquire 3 multi-family units in the next 5 years, but if I can get my units to produce the $1000+ monthly cash flows that Jason is targeting then I should be able to accelerate the rate as which I can acquire additional multi-family units.  Ultimately, my longer term goal, I would like to either 1031 Tax-Deferred Exchange into a larger commercial unit, again the more units per building the better, or if I can generate enough cash flow from my investments in the residential multi-families I can use the savings to put 25% down on a commercial unit.

Side question - would it be better to put additional cash flow from the multi-family investment into paying down the mortgage, to potential use a HELOC or refinance out of in the future, or just save that money for a down payment on the next property purchase? My thought process is it seems generally better to pay down the mortgage and reduce overall interest paid over time, but then the forecast of a looming interest rate hike makes me think I should just save that money in savings account until I can use it toward a down payment on the next property?

Would anyone be able to recommend good Property Management Companies in the Central CT area?  I do not intend to use one for my first live-in multifamily, but I would like to begin fostering a that relationship so when I am ready to acquire the 2nd unit I will have that team member in place.

Also I would be open to recommendations for residential realtors who work well with first-time investors and are familiar with multi-family units versus the typical SFR agent.

Thank you both again for you comments!  

Hi Everyone,  I am looking to employ the same buy & hold strategy as @Jay Hassey in the following target markets in Central CT (in order of desirability):

1. Cromwell

2. Newington

3. Rocky Hill

4. Plainville

5. Middletown

6. Manchester

I am using data I have collected from Neighborhood Scout.com on target markets within a 30 minute commute of Hartford, CT.  My market analysis focuses primarily on 3 criteria: Median Rentals / Median Home Values (assessing the highest rents for my buck ratio), Vacancy Rates, and Property Taxes (using mill rates x median home values).  I have also noted the percentage of the market population below the Poverty Level, the Crime Index Value, and percentage of College Graduates in the area (as social-economic indicators that help me determine where I would want to live and invest).  

So far my analysis has only covered 16 markets (towns and cities in the Central CT area).

Only three (3) out of the 16 market analyzed, Cromwell, Manchester, and New Britain, had Rent to Home Value Ratios above 0.6%, which I am using a indicator of best value for multifamily investing (the higher the % the better the value of the investment). 

My ranking above is a combination of investment and personal criteria.  For example, I like Manchester as an investment market, but I am not a fan of commuting over the river to work in Hartford.  I have decided not to invest in New Britain at the moment due to the combination of higher vacancy rates (10.8% - the highest of the 16 markets I analyzed), % of the population below the poverty level (22% - also highest of the 16 analyzed), and property taxes (Mill Rate = 49).  I was born and raised in New Britain and do believe this market could make a turnaround (especially with the current mayor in office), but I will need to see the data improve before I am willing invest.

Personally, my next challenge will be finding a 3 to 4 unit multifamily residential property that I can finance with a first-time home buyer CHFA (CT Housing Finance Authority) or FHA loan. Since I am not in rush to move, like @Jay Hassey, I would also consider a 203K in additional to the property loan.  

Do any of the local investors have concerns with the market criteria I am using to evaluate target markets for multi-family buy & hold properties? 

Also, if any of the investors have any recommendations/ referrals for banks/ mortgage broker/ loan officers who have experience with the CHFA and/or FHA loan process that would be willing to work with a first home-buyer & investor like myself I would greatly appreciate the help.

Another question I wanted to ask if anyone knows how to figure out the typical/ expected CAP rates for markets in Central Connecticut. It would be great if I could find those by market (town/ city). I have tried looking at larger commercial listing on LoopNet and other commercial brokerages but was not sure if this was most effective way to find this information.

Thank you all for you insights and advice in advance!

Bill Exeter thank you for you response, you just saved me capital gains tax on $50K!

Hi, I would like to know if the following scenario, which is related to this forum post, would qualify for 1031 Exchange? If I sold a 4 bed, 3 bath, 2,637 Sq. Ft. home (located in an H.O.A.) and attempted to purchase 2-4 smaller condominium units (1-1's, 2-1', and or 2-2's) of 1000 Sq. Ft. or less, would this transaction qualify for a single 1031 tax-deferred exchange? I am having trouble defining the "like-kind" qualification as part of the 1031 exchange.

Hi, does any one know a good real estate agent in the Sarasota, Florida area? Specifically an agent who understands the vacation rental market? I already have an agent ready to sell my home located north of Tampa, FL and am looking to invest the proceeds into 2-4 smaller condominium units (1-1's,2-1's, and/or 2-2's) in the Sarasota area to rent out to long term and short-term vacation tenants. I would like to line up prospective properties to purchase in Sarasota before committing to sell my home located north of Tampa, FL.