All Forum Posts by: Daniel Rutherford

@Candace Goud In the big picture, yes.  I haven't reached that step yet, but there are a few local investors I plan to contact if I determine this to be a good deal.  Always open to options, though.

I wanted to get the opinion of some experienced small-multifamily investors to see if this looks reasonable.  This deal would be for a total of six duplex (12 doors total) with each unit having 2 beds, 1 bath, 1 "office" in the basement (aka bed with non-compliant egress).  I believe it's reasonable to get $700/mo rent for each of the 12 units.

I don't have a ton of experience with the calculators yet, so I want to make sure I'm on the right track.  A lot of the numbers were added together to treat the entire deal like a single property.  If you want to know where I got a number feel free to ask.  Mostly I want to make sure I didn't leave anything out or underestimate it.  For things like property taxes and insurance I took it from either the county website or a mortgage calculator.

It is also worth noting that this would be for a commercial loan (e.g. 5-year balloon loan), but the amortization would likely be 30 years. 

All 12 units are identical layouts.  Please let me know what you think!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

@Dmitriy Fomichenko Thank you for your reply.  I've been dabbling with features of the site in the time since I've joined, but I know there's a lot to get involved with.

@Jonathan R. I would agree we have different approaches to risk, and I think there are pros and cons to both.  I've been conservative with decision making since childhood; it's a blessing and a curse I suppose.  Luckily I went on to be an engineer, so it aligns with the way I'm wired.

I do embrace acting when the numbers say the deal is right. I'm in the process of analyzing several deals to see if any of them have a good upside. A couple of months ago I actually thought I had a great deal for well under market value house to BRRRR, but the more investigation I did it turned out to be fairly break even deal after the Refinance step. Since then I've turned my attention to more turnkey small-MFR properties that may need some lipstick, but I still want to BRRRR at some point in the future.

That stars aligning is ideal, but like you said it's an unreasonable expectation.  I'm working to avoid analysis paralysis, but I know it'll get better after my first deal is done.  A lot of it for me is considering tax implications and making sure I can set myself up for a 1031 exchange down the line.  I don't want to overlook anything that will put my cash flow in the red.

If you ever want to meet up for a round somewhere, I'd be interested in hearing about your successes and challenges so far!

Thank you both.  I was curious if seasoning was an option but figured that may prove difficult with 6-figure down payments.  Commercial seems to be the path of least resistance.

@Kon Zel I should have mentioned that the deal I had in mind would involve way more of the investor's capital than my own.  My thinking with that is my negotiating position would be pretty terrible if the investor was providing money AND risk.  My involvement would become worthless.

If the investor stays off the note but gets 6% + 50/50 of the remaining profits than it would be fair.  I'm not sure I want the investor as an equity partner.  I believe that's where it gets complicated.

Hello BP!

Like the title says, I am a novice (soon-to-be) investor in the Wichita, KS market.  I am a "measure 50,000 times, cut once" kind of guy, so I consider myself still into the fact-finding stage of my journey.  The worst thing for me would be to jump into something half-cocked.  Hopefully I'll see most of you around the forum as I ask hopefully-not-so-dumb questions.  I will do my best to search out old forum threads to avoid re-asking already-answered questions.

I'm an engineer by trade and am mostly looking for investment opportunities.  I don't need a huge passive income currently, but I do hope to build up my portfolio in the years to come to increase my net worth and maybe have supplemental income down the road.  I enjoy my 9-5 and plan to keep grinding in my career, so my goal is not to quit my job.  As Brandon Turner often says, I'm in the hunt for eventual financial freedom.

My main investment option will be buy and hold properties with the immediate target being turnkey properties or units with minimal rehab costs.  There seems to be a good amount of property options in my market, so hopefully I can get my feet wet in the next year.

I willing to chat with anyone who's interested in welcoming another newbie to the fold.

I've researched this topic in vain so far but am sure the experienced minds at BP have dealt with this before. With conventional loans, the sourcing of down payments seems to be very restricted. This seems to put a kink in plans for a partner that contribute to the down payment. I'm looking at conventional loans because of the preferable amortization schedule and lower interest rates, but maybe I'm simply barking up the wrong tree. This would be for a small MFR which qualifies for conventional.

What is the appropriate way to utilize partnership money in a conventional loan?  It can't be considered a gift since that partner would need a vested stake in the property.  I know Freddie/Fannie do not permit lending to an entity, so it would have to be pretty creative either way.

If I somehow figured out how to merge my contribution with a partner's contribution to the down payment, how would I get around the DTI restrictions? I would not be able to carry the investment solely with my own finances (hence the partner), so it seems the bank would refuse to lend to me on that basis.

Are partnership investments simply limited to commercial loans only?  That's obviously not ideal, but I want to make sure my assumptions are correct when analyzing the deal.

Honestly the Fix and Flip calculator in the Tools section would be perfect for what you need. It presents everything a lender wants to see, especially ROI. It provides a nice PDF output that looks better than any spreadsheet that you could put together in a timely manner.

It depends how much it would take to satisfy your lender.  As long as you can show there is enough profit for you to pay the loan back and/or provide them with a cut of the return you should be good to go.

The flip budget is the biggest thing to tackle because if you are off more than a little it can quickly take you from the black to the red. Also make sure your ARV estimate is accurate. Get a real estate agent to help you with that part.

I've dealt mostly with credit unions, but they've all been willing to lend to an LLC. You will be required to sign a personal guarantee, so you'll be on the hook for the loan. Your mileage may vary with bigger banks.