All Forum Posts by: Austin Fruechting

 When I say there's a lot I mean there is way too much to be able to write out and sufficiently explain all sides/thoughts that went in to it. And no two negotiations are the same anyways. Your position, the property/properties involved, the market they're in, the sellers, their position and motivation, etc etc... it will never be the same. So even if I tried to line everything out in a 10-page document, the odds of it being of great help to anyone are low because every scenario and the psychology needed is going to be different. That's why I posted what has been the best negotiating book I've read. That will be of much more help than me trying to describe this entire negotiation.

Heck yeah Matt! We need another cigar meeting regardless! 

 I'm guessing you were dealing with a big bank vs a portfolio lender? This is the 5th package deal of multiple properties I've done under a single mortgage. 

 A full range of nothing needed from very minimal work to some units that complete guts and rebuilds (to studs, electrical, etc). Most of them are quick turnarounds and the bulk of that $200k is going into 4 units that are guts. From $0 - $35k and everywhere in between. 

 As stated: some of them were listed MLS. I wasn't interested at first, but after they set idle for a while I decided to dig in further. I did a tax search on one of the addresses of them to find the owner (which was an LLC). Then did a tax search of the owner to find all they owned. So then I searched the state database to find who owned the LLC and reached out directly to them about putting together a package deal.

Hey Greg, some of them were listed MLS. I wasn't interested at first, but after they set idle for a while I decided to dig in further. I did a tax search on one of the addresses of them to find the owner (which was an LLC). Then did a tax search of the owner to find all they owned. So then I searched the state database to find who owned the LLC and reached out directly to them about putting together a package deal.

I would go typically go with two beds. A young professional or young couple will often prefer having the ability to have an office space or guest bedroom so that would be of value, so it's not just families that would be looking for a two bed. It's all market dependent though. Look around your area at rental rates for both. If it only costs an additional $5k, but rents for $100 more that's a 24% annual return on that. 

LIFE INSURANCE: Another thing to think about for the self managers: I would absolutely look into getting a larger life insurance policy that pays off the debt of your investments. What happens if you die? If the success of your investments is based on your work and efforts, do you want to saddle your family with that same work load? Would they have the skills to continue it? If you have life insurance to cover those debts they could either sell and make that lump sum or afford to hire 3rd party management and still make good money.  

I've used lines of credit, credit card advances, credit cards for materials, personal loans, big seller credits, and combinations thereof.... and equity partners when the deals were too big for the other methods. I started with smaller properties. When I got to larger package deals I had to bring in equity partners because it was too much cash for me to get from my short term sources.  

I've used the same portfolio lender since the beginning. So long as the DSCR was above the threshold they consider it self sustaining. They didn't ask questions of where the money was coming from because everything always went as planned (or close enough). I always had the money needed, always did what I said I was going to do, got everything done and everyone paid.

I handed off the work when I sold the property management business at year 2.5 of 7.5. I still had my day job then, which I left at year 5. Then at year 7 my wife put in her notice. 

Honestly most days I don't do anything related to my real estate business. I have some contacts and automatic alerts that send me potential deals. When I get those I'll take a quick look at them and if they're of interest, I'll dig in further. The mathematical analysis doesn't take much time at all now. I know what expense ratios to apply based on the asset. I'll spend time looking up the owners, see if they own other stuff and if a larger package deal is available and try to strategize a way to make that happen. 

For an example I just got a 22-unit portfolio that made me 1/2 million on signing. It took a lot of time in strategizing negotiations, strategizing financing, and some other complications to get that to the finish line. That post is titled "$474,725.00 Wealthier Today..." but it won't let me link it