All Forum Posts by: John Gunderson

So the question was/is any recommendations on how to go about finding that partner/investor?

I’m working with a investor/developer to create a pitch book for a 96 (8-12unit buildings)in Michigan’s upper peninsula.

It’s a really nice development project on lake front property. The development team is open to selling it off as individual condos or by building.

Rather than just building the pitch book I’d like to be part of the deal, but it’s much bigger than I can do alone. What I’d love to do is bring the deal to a partner that has experience on the QOZ side and would be open to working with a smaller real estate investor(My portfolio is small stuff, biggest building is 5-unit) looking to get experience in large complex investing.

Thanks,

John

@Rogers Rogers

The super short answer is yes, that’s a pretty straight forward question.

The process is market research, some land development / construction cost estimating and some math.

At the present time finding an existing facility for lease is likely to be more cost effective and much quicker... if you have very unique requirements building may be the solution.

PM me if you want to talk specifics, I can point you to some resources.

OP

I have done a handful of house hacks and 15+ BRRR deals. I love the idea. I was never able to pull off a 100% OPM BRRR, perhaps I lacked the creativity. A few potential snags I see you'll want to have a plan for:

1. Rehab Cost - It can be very difficult to hit rehab budgets on the first one... you get better at it over time but with 100% leverage there isn't a lot of room for error. There is a chance you have to pay cash to get the refi done even if you're right about the ARV.

2. Seasoning - bank policies can differ on this but beware of the equity being trapped for up to a year. This has happened to me. Sometimes the lender agrees only to learn more about the details of their own bank underwriting policy later and offer far less than you need. Or require invoice back-up for capex. Can’t stress enough how important it is to line this piece up and make sure the lender understands the plan.

3. Timeline - time between when you close and when you collect rent is a variable you need to have OCD around in your scenario. As you cost out this deal be realistic of the soft costs created by time.

I would recommend having some contingency $ stashed even if you coordinate this all with OPM.

The cool part is that as long as you get it done and you’re reasonably close on your projections you’ll end up with a rental property!

I wanted to update this thread and THANK those that provided advice. Thank you. From 11 units... now at 30 units. The actions I took since my original post: 1. Found the right lending partner. Getting my second portfolio loan now. This was a Bigger Pockets referral connected to the repost. 2. Moved from SFRs to Multifamily, we just picked up a Mixed-Use deal on a seller financed mortgage. 3. Started leveraging private money and seller financing in general. My next move on the road to 50+ is to dialing in our business systems, figuring out how to 1031 our SFRs and small multifamily into bigger deals, and getting professional management in place to support further growth. Im also looking forward to refinancing the mixed use building and working through the commercial loan valuation and loan process.

Classical valuation is very simple, the quality of the underlying asset is important to some extent, but the real issue is the value of the cash flow. To the extent an investor is really just acquiring streams of cash flow, I would recommend focusing on scrubbing your proforma numbers down to expected cash flow for any level of investment. If you think substantial capex will be required for the cash flow to be reliable include it in your proforma. Most of the time I find people that don't like smaller investments are mostly taking issue with the amount of time they are spending on administration for the volume of profit. I think the best way to bake this into the analysis is putting an honest number in for the value of your time. Going about it this way will build in a "hurdle" the small projects have a harder time making.

Hello, I'm looking for a Wisconsin attorney referral, preferably in the West Milwaukee suburbs for a SFR transaction. Thanks in advance for suggestions. John

Thanks Josh, and I sent a colleague request. I checked out your business. Looks like there may be an opportunity to work together. I'm interested in learning more about your PM services.

Hello, I'm looking to connect with lenders willing to do small mortgages in Northern Kentucky (greater Cincinnati area) beyond 10. Or lend working capital against a free and clear portfolio. Our portfolio is free and clear, 5 houses(MV ranging from $45-$75k), 1 duplex (MV $80k, and finishing 1 quad(ARV ~$140k.) I have called around to many lenders, we've been hung up on minimum loan amounts. I'd like to build a relationship with a portfolio lender or bank that can support growth beyond 10 loans and will consider my properties. We want to keep growing and need to unlock some equity. Please reply or PM if you have a product or connection that may make sense. Thanks, John

Hello, We're a growing real estate investment company on the KY side of Cincinnati. I'm posting my strategy thinking the community may have some advice. A BPpodcast junkie I know there are some creative folks out there. We have bought 5 SFR, 1 Duplex, and 1 4unit. 11 units total. Paid cash for purchase and rehabs on all. Great cash flow, enough for 1 partner to go full time. Basically the BRR....R with the last R being the sticking point. Our goal is to get to 50 units, and can average about 1 door per month ready for rent when we are in full swing. I'd like to put some debt on the portfolio and keep growing. I've talked to a handful of different lenders and I have run in to two specific problems: 1. Refi's want to lend minimum $70k at 80%LTV. Most of ours we buy less than $25k/ door + $5-10k rehab for ARV $50k-$75k. So we get hung up their. 2. I had a commercial portfolio loan setup and during underwriting the game changed from 80% LTV on market value to 80% of at risk equity(purchase price+documented repairs). We put the breaks on that because it undermines the value add strategy we're executing. So that brings me to the aspect of the strategy I'm working on. How to unlock the equity in our current bldgs. We are setup with a community bank for a few mortgages for $100k plus type deals going forward. But we like the speed and efficiency of working from cash, and the profitability of the smaller deals. We'll keep doing them if we can make them work. I suspect the deals under $75k are so profitable because they are such a pain to get financed... once you get in the deal access to the equity seems limited. So it's a problem I didn't expect, great credit and a good job, real estate exp. Struggling to find a loan product that fits the strategy. I've been trying to find a portfolio lender I could build a relationship with and grow with a LOC based on our current portfolio. Use the LOC as working capital. The $50k-$75k house valuations have been the hang-up. At this point it seems like the obvious strategy is to move to higher value deals, and sell off the lower value deals to unlock the equity....but I'd like to keep them. Any suggestions or critique of our strategy would be appreciated! Also, feel free to message me with ideas or product suggestions. Thanks, John