All Forum Posts by: Greg Kasmer

Bryce - Looks fairly solid, but I have a few questions.... 1) Are you confident in the lending terms? (6.5% at 30 years?) 2) You may want to get a quote from Hemlane (insurance broker) to see what the insurance is on the house as they should be able to give you an exact quote as an investment property, 3) I would also run your numbers with some property management (6-10%) included in case you eventually hire 3rd party property management. The other numbers I see look solid. Good Luck!

Michael - When you say "loan" - what are you meaning? A loan from yourself to your newly established LLC? I would ask your CPA for the benefits of providing a loan to an LLC. If you're a single member LLC I'm not sure it makes much difference as it will likely flow through your own tax return anyway as a disregarded entity. However, if you're setting up the LLC to file as a business with a separate tax return there might be some advantages to a loan. As for your question on the hard money lenders - I don't think it matters how you source the equity for a deal, but it's more important how much equity/downpayment you can put down on a deal - i.e. 10%, 20%, 30%, etc... I don't think it matters to them if the money can from your LLC as cash or cash from a loan that you provided to your own LLC. Good Luck!

@Sharma Parth - I agree with Jake on the networking with MeetUps within the Philadelphia area. The largest residential REIA group in the area is DIG (Diversified Real Estate Investor Group | Real Estate Education in Bucks County, PA (digonline.org)) - I would go there to investigate the meeting schedules and locations as they have many opportunities to network and connect. From my perspective, when BRRRR'ing the most important aspect is the quantity of deals you can secure at values below the ARV in a given area. For example, if 3/1 in an area typically sell for $200k per home are their any listed at $150k or below because they need work/rehab? Knowing the price per square foot in a zip code helps and knowing when you can spot "value" is very important. When you talk about path of progress that is important to upside/appreciation, but I place a higher focus on finding "value" from the start. I invest in the Philly suburbs and would be happy to chat. Good Luck!

George - I think that the owners most likely to seller finance a portion of the sale are those that have owned their property for a LONG time (potentially looking for residual income) and owners than own their property either "free and clear" (without a mortgage/debt) as they have more flexibility. Both of those criteria should be searchable to some extent via software/apps like Propstream. I think relationships with the owners are very important as well - the more you can developed a relationship with current owners the more likely they are to "help" a newer investor as they feel (in part) like they are paying it forward. Good Luck!

Quote from @Anthony Blanco:

Hello BiggerPockets community,

I've been searching the internet lately, sifting through a multitude of deal analysis tools, Excel templates, proformas, and DCFs, all aimed at deciphering the viability of multifamily properties. Yet, amidst all the resources, I find myself overwhelmed and uncertain of where to start.

My objective is simple: I want to master the art of underwriting multifamily deals. I aim to utilize other people's money to invest wisely in buy-and-hold multifamily properties. I understand the significance of key metrics such as IRR and CoC in evaluating the potential of a deal, but the abundance of information out there is making it challenging to find a straightforward, user-friendly solution.

What I seek is a singular, comprehensive tool—a master template, if you will—that I can consistently rely on from deal to deal. Something that cuts through the noise and provides me with the essential metrics necessary to assess the quality of a potential investment quickly and efficiently.

I'm open to suggestions and advice from those who have navigated similar paths. What tools or templates have you found most useful in your multifamily investing journey? How do you streamline your deal analysis process while ensuring thorough evaluation?

Thank you in advance for your insights.

Anthony - Everyone has their own perspective with a tool/analyzer for multifamily properties and there are many out there including Syndicated Deal Analyzer by Michael Blank, Joe Fairless excel model, Robert Beardsley's excel model, and a host of others including some "make your own" models via courses in YouTube. To me, you'll have to try 2-3 months and run through an underwriting exercise of a building/properties about 10 times on each one to understand the true pros/cons of each model. Then, you'll have a better educated estimate of what model/template you prefer. Then, to truly understand the model I would suggest underwriting about 100 more buildings/properties. Ultimately, I think it's less about what model you choose and more about how many times your practice with the model you wind up going with. Also, two of my favorite books on the subject are the "Hands Off Investor" by Brian Burke, and "The Definitive Guide to Underwriting" by Robert Beardsley. Good Luck! 

Quote from @Anthony Dre:

Hi all,

im new to this but im looking into this property and want to see what you guys think as an investment......would this be a good deal?

Aking Price : $2.3 million

Property TypeMultifamily

SubtypeApartment Building

Net Rentable (sq ft)13,400

Cap Rate6.11%

Pro-Forma Cap Rate 6.70%

NOI $140,615

Units17

Year Built1928

13 1Bed/1Bath And 4 2Bed/1Bath Units

in New Jersey

appreciate you thoughts

thanks 

 Anthony - I agree with others that there is not enough information to understand if this is a "good deal". Rather than go into all the specifics I would suggest you read some underwriting books to understand how to analyze these larger deals.

A few that come to mind are:

- Multifamily Millionaire Vol 1&2 (Bigger Pockets) Multifamily Millionaire Book Bundle – BiggerPockets Bookstore

- Hands Off Investor by Brian Burke

-  Definitive Guide to Underwriting Multfamily by Robert Beardsley

There are many others out there, but I would suggest starting with those. Good Luck!

Quote from @Roberto Rodas:

Good afternoon Everyone, 

I've been interested in RE investing for awhile now, specifically multifamily.  What are some factors to really  consider when analyzing mulitfamily properties. I am really just looking at duplexes but considering properties with more units. TIA

 Roberto - There are many underwriting books and educational content that you can review to provide great information. As Gino has stated, duplexes are not underwritten as "true multifamily" because of how they are valued. For your particular situation, I would recommend reading the "Multifamily Millionaire, Vol 1" by Bigger Pockets followed by Vol 2 if you want to scale up to larger deals. Multifamily Millionaire Book Bundle – BiggerPockets Bookstore

I think by reading those you'll get a better sense of where you want to focus on multifamily and from there you can continue your focus on what type of analytics/underwriting makes sense. Good Luck!

Olu - Assuming the geography and style/type of building fits your criteria (others have made comments that you should consider) the other part of this discussion on whether this is a "good deal" is the ability to increase the NOI of the property over time. It sounds like you were given a T12 for the building... Did you check the revenue and expenses provided to ensure they are realistic? In particular, I've found some T12 leave off expenses such as property management fees (on smaller buildings), turn over expenses (to re-rent to new residents), and realistic maintenance expenses per unit - just to name a few. Therefore, I would ensure that the current NOI is accurate based on YOUR assumptions, then you can think about how you can increase the NOI by increase revenues or decreasing costs over the coming years IF you were the owner. To me, if you can only increase NOI 10-15% over the next 3-4 years it may not be a "good deal", but if you can increase NOI 30-50% over that same time frame you may have a "good deal" on your hands. Develop the current P&L and then conduct the pro forma estimates in order to truly analyze the property! Good Luck!

Uendy - Thanks for providing some details and information! Before I answer, can you confirm that your costs include holding costs (all utilities), transfer costs on purchase and sale, as well as the cost of the funding for the deal? (especially if you're borrowing money for the deal). One of the biggest factors to consider is timeline as well. Do you anticipate a 3-4 month rehab period prior to listing? If so, how long is your assumption until closing? Maybe another 3-6 months? My initial reaction is that if you total costs are $283k and the length of the project is ~9 months or so, you annualized return is about 14% - which I would classify is "good, but not great". I would suggest you target a 20-30% annualized return on a flip considering the timing, funds invested, and return. Everyone has their own criteria, but that is generally my rule of thumb. Good Luck!

Dee - As a newer investor, some of the options using "Agency Debt" (aka Fannie and Freddie financing) may not be available to you as they require 2+ years experience in multifamily space. I would suggest researching 10-15 banks and credit unions in your area (just google "multifamily lending in X area" and see who pops up) and talk to them. They'll need information on the deal (revenues, expenses, income, etc..), but they should be able to give you an idea of general terms (interest rate, amortization, fixed period, etc..) with some basic information. After you speak to 3-4 lenders, the remaining 10-12 should be easier as you'll know the language more specifically. You can also do this same exercise with DSCR lenders and mortgage brokers on Bigger Pockets. This is one spot where picking up the phone and calling people works very well. FYI - I would also keep track of all their answers on a spreadsheet for future use. Good Luck!