All Forum Posts by: Austin Fruechting

I'm cool with buying smaller properties. I own a 24 unit (2x12 buildings). But overall I have 154 units across 73 properties, so mostly single family and duplexes. Most of them have come from buying a package deals of someones portfolio. @Adam D.

My latest deal, 22 units (12 homes, 5 duplexes). Purchased $790k, as-is appraisal $1,265,000. Since I got such a deal on it my bank (local portfolio lender) let me buy with just 10% down. 

Edit to add: my last few deals have all been 10% down. 3 other deals combined 3.64mm purchase, 4.68mm appraised. 112 units, 45 properties. I'd say that scaled just fine!

25% of the rent is for the utilities, so the rent is actually much less than that. So the rents are effectively in the $400's... expenses as a percentage are going to be very high on rents that low. 

@Wendy Carpenter - I don't look for an "investor friendly realtor" or a realtor that invests. I only care about my own analysis. I just find a trustworthy, competent realtor, tell them what I'm looking for and have them set me up with automatic alerts when a match hits. I get an email when any multifamily property hits my market, and I check zillow for any new single family houses to see if there's anything there that could be a good value add rental. Without automatic alerts (I don't know if it's the case), but I would worry that if they're investors they would just cherry pick the great deals and I would never see them. Or that they don't know enough and may miss something that could be a real deal. I want to see everything that hits and be the one deciding what's worth it to look at, not them.

Even if she's not representing them, I'm sure she'd get a commission representing you, so she's still vested. 

That's not a deal. $2875 in rent BUT with utilities included it's really only $2142 in rents. 

Never trust someone's analysis who isn't an experienced investor AND/OR has vested interest in selling the property. 

BRRRR-ing is how you can get there the quickest. LOCs can help fund the BRRRR process as well. After you build up a little track record, you can start using investors for the capital. I talk about these quite a bit in my podcast (link in signature). I started at 25 without much cash. Retired at 32 this year. Currently at 156 total units, my ownership equates to 101.

I've only done of these (and it was this year) but 1031 exchanges can help scale up at an accelerated rate as well. 

YES! 

LOL JD!  That's actually has a point though. 

Although not quite spies and cheat methods... In negotiations, if you can gain inside information of the opposition it can put you in a great tactical advantage... assuming you've studied negotiations enough to know how to exploit it. 

That was the biggest reason of how I was able to get a package deal closed at $790,000 that appraised as is at $1,265,000.  And the deal before that at $1,062,000 that appraised at $1,390,000. And two big packages from the same seller last year for $2,579,000 that appraised for $3,286,400... getting those were all about gaining some inside information and then knowing ways to exploit it. 

Interesting your profile says you are "thinking about flipping and maybe new construction."  But that's neither here nor there. Just because it's not the right long term answer for you, and might not be the right short term answer for you either, especially with 60+ rental houses (well done by the way!!!), it doesn't mean it's not the right thing to do for someone else. IF they understand the pros and cons, the why they should and shouldn't, etc.

The whole point is to understand why. Yes flipping vs buy and hold was one question I put there that apparently you zeroed in on possibly because you were recently kicking the idea around. But that was just to illustrate the point. The next paragraph gets into just a handful of other questions I see. People are looking for hand holding at all points, without trying to know why. That's how you end up seeing people trying to use the same expense ratios for a $500 a month rental and a $3000 a month rental. Or whatever it may be. 

So "buy and hold" is your version of the "obvious play"... but even then there are so many variables to consider that it becomes not so obvious. Residential or commercial? What market? What size? Value add or turnkey? What expense ratios for analyzing?... and we haven't touched on their personal variables and circumstances... 

As to flipping houses; maybe the answer for some people is to flip. Maybe part time in order to generate additional capital to invest in buy and hold. Maybe full time so they can make their living doing something they enjoy more than their other job and still invest in buy and hold for the long term. 

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(btw; I know you're experienced enough to understand that, just using this to further illustrate the analogy for other readers)

Absolutely! That's the first WHY. You have to start at the end. 

“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where–” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.

-Lewis Carroll from Alice in Wonderland

or here's another good along those lines:

If one does not know to which port one is sailing, no wind is favorable. - Seneca