All Forum Posts by: Austin Fruechting

I never buy at less than 1.5%.  The 32-unit portfolio (8 properties mostly B to B-) I am under contract on I am purchasing at 1.6% and everything is rented under market.  With no work and just bringing them to market rates I'll be at 1.9%.   

It's pretty close.  3X is 36 times rent on annual basis.  They are saying 40.  That's just 72k vs 80k annual for the same $2k unit.

@Chris Martin - LOL.  My attorney has actually done precisely what we're talking about, but on a large scale for clients (talking millions at a time). The problem for us would be that we would be doing small deals. Finding a situation where the lender is small enough where we could actually get through would be the issue.  

That email is for Dru, a loan officer there  druw @mutualmail.com  

My (very impressive) real estate attorney had a brilliant idea (caveat: he has the expertise/specialty and the resources to find the right stuff) was to find properties that were about to be foreclosed on. We would go and purchase the loan from the bank (preferably at a discount) and then go through the foreclosure process ourselves and take over the property. So if the loan balance was $100k on a $200k ARV property we would try to buy the loan from the bank at $90k to keep them from having the hassle of a foreclosure. Then foreclose ourselves and take over. We have not done this yet, but it is an intriguing idea.

Do you want cash flow, appreciation, or a combination?  Dallas is an appreciation market right now.

If you're just investing just for cash-flow and are ok with flat appreciation then yes. Last year I bought 80 units at a 1.9%, and I have a 32 unit under contract at 1.6%, but is way under market rents.  Without doing any improvements market rents on the 32 unit should be 1.8%.  And on average I would call the 32 unit in the B to B- range. 

Pro-formas (wether they be on a turnkey or a multi family on loopnet) are almost always junk.  Everyone should run their own numbers on any investment. Pro-forma is Latin for "for the form" and of course that the numbers you put "for the form" is going to make it look as good as possible. Another definition to use for pro-forma is "as-if".  As-if everything went as perfectly as possible these will be your numbers!

A) the bank probably won't ever notice or care if they keep getting their payment.  Just use a title company to transfer title. 

B) if they do care and call it due, pay it off then go cash out refinance somewhere else. You may have to sign personal guarantee on the loan but it will be in the LLC. You do have asset segregation and the legal protection for a worst case scenario, but still will personally responsible for mortgage balance.

C) yes, I believe once owner's distributions are done that cash is no longer assets of the LLC.

You can contact durw @mutuailmail.com - Mutual Savings in Leavenworth KS.  They may be able to help out as long as you have skin in the game too. 

@Gary Dale McKee - I like @David Faulkner 's advice. He always great input. Similar strategy has worked for me when I managed properties as well as when I had a retail business.