All Forum Posts by: Charles Kao

@Caleb Clay

Are you only looking to invest passively for the future and beyond or will you want to be a general partner in the future? For me personally I have seen alot of syndications with very long interest only periods which helps on cash on cash return but personally perceive to be an unnecessary risk to boost cash on cash return while lowering internal rate of return because of principal paydown. It would be very important for me to invest in someone with a similar philosophy although I will say my answer now compared to just two years ago would be different. With that being said I think there are many good options for asset preservation and with 100k you likely could invest 50k in two deals. If asset preservation really is your biggest goal look at the terms of the deal of the syndicator. I took on a partner on a joint venture recently and while we could have done a 25 year with interest only period to boost our cash on cash return we choose to do a 20 year fully amortized loan on a 6 year ballon to maximize internal rate of return. Lastly I think IRR is a confusing measure when factoring discount rate and net present value and prefer using return on investment. It's much more clear how it is calculated and less assumptions in place plus you can clearly see how principal paydown will affect your return on investment upon exit.

@Kevin Andringa Yes you should buy. If you buy in a good area that has value you can weather a recession. Grand Rapids has super strong fundamentals so won't be hit as hard by a market correction and is still very affordable. For a city that size you can easily buy at 100-120 sq foot. When you look at other markets the rent to price ratio is nowhere even as close. With that being said you have to be patient. Its a very competitive market and the prices and rents keep skyrocketing.

@Tereak Sims Like Michael said Michigan is a tax deed not tax lien state. This strategy is very difficult to implement because wholesalers are sending the owners mailers to buy their home well before this happens now.

@Wesley E Harwood Underestimating expenses. Demonstrate the ability to execute then think about raising money.

@Courtney Glass 40 a sq ft for a facility in that bad of shape and also not even fully developed does not sound anywhere close to a good deal unless it is a high class A facility with gated access and cameras. I would not even worry about a paid feasibility study as much as shopping around to see potential and doing your own study. In a rural area like that I can't see you adding much more than 5 dollars a sq ft value so finishing the conversion puts you underwater in an area that already seems to have high sq footage per person.

@Joshua Huggett

If somebody can't afford to invest 1000

bucks should they really be investing? 50 bucks does not seem like it'd be worth your time.

@Tom Kaz She probably is not bringing it up because may not have an appetite for storage. I had a bank that loves lending on multi but would not touch storage. Loan officer said they would do 80/20 but they eventually came back and said special use were all 70/30. Try calling hyperlocal lenders and fill out one personal financial statement and send to all of them. Once there is a final commitment order the appraisal and environmental but keep the next one or two best lenders in the loop in case your first choice cannot close and make sure they accept appraisals from appraiser that is chosen. I made my lender who could not do the 504 pay for the appraisal because they screwed up so bad so it was a good savings of 2500.

@Tom Kaz Your lender doesn't know what they are doing. They are probably not preferred just using a preferred underwriter and your lender may have done it but not your loan officer. You can learn from my mistakes or learn on your own but I would start shopping lenders. If it failed 504 its going to be hard to go 7A because its still SBA so I'd just go conventional and show them the SBA writeup.

@Wade Stahle

Yes they can but you have to followup that they get code to unlock Davinci if you do not have a gating system. My guest the software will cost around 50 bucks a month and 100-250 for call center depending on what service you fonwith.

@Jake Toth

My parents sold off all their real estate in Bay City in last 5 years, most of which was at a loss from what they bought it for in 90s. That area has nothing to turn it around and I would avoid like plague. I had a chance to buy quite a bit of real estate right on bay but population and job trends are just so bad. I would invest in Midland and maybe Saginaw but not Bay City.