All Forum Posts by: Greg Kasmer

Daniel - I invest in the suburbs of Philadelphia. Let me know if you have some time to talk. It would be good to see what types of projects you are interested in. Thanks!

Jeremy - I would suggest you further detail out your expenses beyond PITI to understand whether 1) A bank would consider this a good project for a loan as well as 2) To see if this is a "good deal". I would suggest you consider assumptions around the following expenses:

- Vacancy Factor (Taken as a deduction to gross rents)

- Taxes (Assume higher takes in the future)

- Maintenance/Repairs - I would suggest 7% of gross rents as a starting point

- Management Fees - Depends on your local area and what managers charge.

- "Releasing/Unit Turn" Fee - The cost to "turn" a unit including repairs as well as re-leasing.

Once you add in all those expenses beyond your PITI you'll have a better idea of the Net Operating Income (NOI) and what would be available to pay off your monthly debt service.

Reach out to me if you want to discuss further. Good Luck!

Robert - In PA I've used Sun Federal Credit Union for cash out refinances and the last time I spoke to them they do lend in some (not all counties) in New Jersey. I would suggest giving them a call and inquiring. If you want to talk further, just send me a message and we'll connect!

Russell - I took a look at both deals and the biggest question I have would the the type of loan you would have at refinance. Is that a 75% or 80% LTV loan? Assuming it's a 75% LTV loan you'll have the following:

1013 - $142k equity in the deal providing $1,200 per year in cash flow. Not much cash for that type of equity.

2545 - $137k equity in the deal providing $600 per month in cash flow. About a 5% ROE. Not bad, but I've seen better.

I would double check your repairs and maintenance numbers on both as they seem low. Of the two deals I think 1013 works better as a "flip" (because high equity with low cash flow) and 2545 works better as a BRRRR given the cash flow relative to your equity in the deal.

Overall, if you can pull out all/most of your money in the cash out refinance your overall returns are "infinity" because you don't have any of your own cash in the deal, just the equity. 

Hope this helps! 
Greg

Russell - Happy to take a look at the deals with you and provide my perspective. Sometimes certain properties just don't work as BRRRRs.

I agree with Eliott. Draft a promissory note with each lien holders and the attorney will advise on how to record the information with the county. Good Luck!

Jason - An "oldie but goodie" in multifamily is "MultiFamily Millions" by Dave Lindahl. I agree that Joe's book is excellent, but if you're looking for another read I would check out Multifamily Millions.

Brandon - Some of my suggestions include:

- On your application, make sure you have a question that asks if they have ever had a judgement against them for real estate and/or an eviction in real estate. Up to you whether you eliminate them that say "yes". Sometimes there are specific situations, but I would definitely eliminate anybody that left that part blank, but then had an eviction show up in a background check. 

- Be very specific with your applicants for deadlines. For example, I will stop collecting "first round" applicants on Friday and begin to run background checks on Saturday/Sunday. That way, you're being fair to everyone, but also telling them you have a deadline in which to apply to be a part of the initial group. (FYI - I typically like to wait for a few applicants in order to get the best applicant and not accept the first one that meets your baseline criteria)

- I typically have a list of "baseline criteria" listed when people come to the open house. (Income level, credit level if wanted, no eviction history, etc..) That way, you're treating everyone equally, which is important. Also state if you're willing to accept any voucher/support programs. It's up to you whether to accept or not, but if you accept those programs you'll likely have to go through their inspection and documentation process.

Hopefully this helps. Good Luck!

Cindy - I would say Deal #1 is the priority if you're looking to recycle your money as soon as possible as that (to me) has the greatest opportunity to drive value in the short term by increasing the NOI of the property. However, since it's out of your area do you know the local cap rate in the area so you know you're not overpaying? Also, do you have a contractor in the area to execute the plan? I agree with Justin that controlling the renovation will be an important aspect to that project. Perhaps you can partner up with someone locally to help manage the project? Just a thought... Good Luck!

Chucka - Are you staying you can't change the "loan amount" above the purchase price? I would add the rehab into the loan amount if you can. If not, I would increase the purchase price to include the purchase and renovation amount and then set your loan amount to that new number. Also, on your post refinance I would be sure to include: maintenance/repairs, vacancy, and management fees (if your'e using a 3rd party management company) to make sure you have the most accurate expenses. Lastly, I would adjust your interest rate on the loan, 4% looks very low to me - probably closer to 7% on the refinance loan interest rate. Good Luck!