All Forum Posts by: Austin Fruechting

With my current portfolio I am on track to pay property managers just over $64,000 this year, and that doesn't include the deal I'm closing on next month.  That will take it to over $70k for 2017 and over $80k for all years following.  

I see those numbers and smile. I think about how great it is that that is all is costs me for them to deal with 139 units worth of showings, work orders, and rent collection of over $1mil per year.  All this while I'm sitting outside, sipping my morning coffee, and deciding what I want to do for the day. 

I self-managed in the beginning, but there will come a point where you won't have enough time for your day job, self managing, and still be finding/making new deals.  Of those I chose to let the management go first because it definitely wasn't anywhere near a full salary. Plus I had done it enough to know I did not want to be doing that for the rest of my life!  

At some point everyone will have to make that decision anyways. If they're having lots of issues, often times the answer is to hire a PM a little earlier than waiting on another few properties before making that leap. 

Flip side of that coin is three units (even if multiple single units) is when one is vacant you still have 67% occupancy. 

I would take the equity and buy more. An extra $175 per month, plus you'd own 3 units instead of 1 that tenants are paying mortgages on so even if it were a wash as far as cash flow you are building more wealth.  

Absolutely. I did just that back in December.  I am closing next month on 32 units across 8 properties with one loan.  Last year I did two package loans, one of them had 28 units across 20 properties all under one loan. 

Due Diligence period ends today.  We're having to extend only because their property manager hasn't got us the physical leases yet.  Inspections and appraisals are done.  Everything else has checked out.

• Original Asking Price: $1,195,609
• Negotiated Purchase Price: $1,062,000
• Appraised Value: $1,390,000
• Immediate Equity: $ 328,000

Loan Amount: $956,000

We're starting with $120k and roughly $106k for closing, remainder for beginning operating account.

Current rents are $16,740.  Over the next couple years, we will add value and increase all the rents.  Total work needed that maximizes our return; $180,000. If we spend 3-3.5 years we could pretty much do it all from the cash flow.  

We were pleasantly surprised with the size of many of the units.  Gross market rents after work is done are projected at $24,400 per month, with an all in of $1,242,000 (1.062+180k)

• Post renovation value: $1,750,000 (conservatively)
• 70% refinance: $1,225,000
• Loan Balance at year 3: $865,000
• Cash Out: $360,000 - $120,000 initial investment = +$240,000 CASH
• Post Refinance Cash Flow: $50,000-60,000 per year

I've worked with smaller community banks/portfolio lenders, so as soon as the work was done and I have leases they would refinance. I've been able to refinance within a few months of purchasing. That's not the case with the big banks. Typically I was doing small multi family deals 2-6 units and price range has varied a lot. What you can do will vary based on the market, what rents you can achieve, and what it will appraise for after it's done and rented out. 

@Gabriel Benavidez - yes, I "BRRRR'd" most of my investments. That really helped the speed at which I could move. Recently I've been buying portfolios with a few equity partners that are not BRRRR. All said and told I only have $150k of my own money left in properties (107 units across 49 properties).

I bought my first investment at age 25 and I owned a home we bought when I was 23.  We sold it to free up cash to buy more rentals and rented an apartment for 4 years (from ages 26-30).  I believe in owning real estate, but I never cared if I owned the one that I lived in and I'm fully financially free at 32.  

House-hacking can can be done with a family.  It certainly makes it a lot tougher and I'm not discounting that, and I'm not saying you should house hack.  I'm just pointing out the importance of realizing that in everything you are making a choice, and owning that choice.  If you choose to stay in your house vs the inconvenience of house hacking with a family that is perfectly fine.  Just realize that means you are choosing your comfort over getting started sooner in real estate.  Or you could sell your car and buy a very cheap, but reliable one with no payment. Or any number of things.  

This is not a judgment or advice in anything other than fully owning 100% of your decisions as well as owning all the consequences of those decisions.  In all things you are the one choosing that exact thing over the other options. Owning that in all decisions is a key to contentedness... such as if you look at everything, and decide the comfort of your family is more important than starting your investment journey right now, you will be much more content waiting another year or two.  If you decide to do everything you can to get started right now, you will be much more content giving up the comforts. 

@Jonathan Johnson - It looks/feels just like a new tub.