All Forum Posts by: Brian Garrett

If you're looking to add rooms to an existing home (turn a 2bd into a 3bd) look for large square footage.

If you're looking to build extra units or an ADU/mother-in-law suite then you should look for large lot size.

Keep in mind you have to check with your zoning and building department to make sure it's permitted and legal.

The true value of a 5 unit building is determined by the NOI and market cap rate.

You can also look and see what other 5 unit buildings have sold for on a price per door basis.

The BRRRR method does not typically work well in high-cost markets as the rents don't justify the prices.

There's not many people doing BRRRR in South Florida right now because the numbers simply don't work due to the extremely skewed price to rent ratios. Unless you're investing in rough areas (D-Class) it will be very tough to find deals that cash flow and pencil out for BRRRR. Wholesale deals are very tight margins as majority of them are investors themselves and they cherry pick the good deals to keep and they send out the junk to their email lists. You really gotta market directly to sellers and find your own off-market deal in order to have a chance at it.

Since this is a 6 unit its value is based on the NOI and cap rate.

You need to know the market cap rate for similar properties in order to determine what it's worth.

You also need to make sure you know all of the expenses you will be responsible for as the landlord and additionally you must factor in OpEx like vacancy, repairs & maintenance, CapEx and property management.

If your goal is to rehab the units and increase the value of the property then you need to know the rehab budget to turnover each unit and what the new rents and expenses will be once renovated.

The benefit to a HELOC especially on a primary is you can typically get a higher LTV and it also acts as a revolving line of credit where you only pay interest when you actually use it similar to a credit card. With the cash-out refinance you are paying interest from day one so it really only makes sense if you have another deal ready to go where you need the liquidity right then and there.

@Cherie Orellana What type of loans are you referring to that you can bridge as a HML that only take a few days? Typical HML's around my area are up to 12 months. Unless you're referring to transactional lending? For example a wholesaler just needs the funds for a double close? I ask because I'm considering starting to lend some capital.

You have your numbers wrong that's where the confusion is. In Joe's example he is buying the $100k properties for $75k therefore recouping that money on the cash-out assuming 75% LTV. He's not buying the $100k property for $100k and then refinancing out $75k like your example demonstrates.

Cap rate is determined by the market and asset class not the property itself.

You need to see what the going cap rate is for the area and type of property.

For the 4plex you would use comps to determine value just like a single family.

Consider being the bank and doing some HML.

You can get 8-12% rather easily plus points on the loan.

It's also collateralized by the property so you're protected.