All Forum Posts by: Jack B.

 This is one thing that worries me about selling my fancy houses in Seattle and exchanging them for apartments is the fact I'd be losing this fantastic appreciation. Alas, I will have to do it eventually as you say. I want to preserve my capital from residential real estate cycles at some point.

Isn't GA one of the best cash flow states? I think you may be better off focusing on cash flowing MFH than SFH. GA isn't known for appreciation so much as cash flow. And Commercial buildings like MFH (5+) are valued based on their net operating income, not cycles. SFH are valued on cycles. MFH is largely immune from cycles as you can force value by raising rents and lowering expenses.

 Well said. That said, if the OP was in an equity market like Seattle instead of Spokane, it would be easy to buy a house, sit on it for two years, sell and use the proceeds to buy two houses, then four, eight, etc. Right now I'm loving watching each of my houses go up 50K in value a year. A paper tiger some say. Maybe if you don't take a profit once in a while. I should take a profit actually...

@Mark Allen

Do you prefer discussing your fees in the thread or via PM? I'd be curious to see what your fees are and some of the 1031 deals you've done, especially from SFH to MFH of 20-100 units.

Any prepayment penalties, etc.? His fees just from the purchase of new properties seems really high. If I buy a 4 million dollar apartment complex, it would have been cheaper to list on the MLS myself for a flat fee and negotiate the buyers agent fee down to 2%.

The formula he gave me for how the REIT would value the SFH's was NOI/Cap rate. I sent him some of the financials such as the leases, books, etc. Basically based on what my NOI and cap rates are for each property, they would sell for the same as retail, assuming the REIT buys all of them. Half are expensive properties, the others, middle of the road or starter. You make sense in that opening up to the general market will allow me to get a higher sale price. I figure if I list well below market I can avoid it lingering on the MLS because it's overpriced and get it into a multiple offer highest and best offer situation as you said. Man I like your thinking... That was my plan that I learned from @Phil Pustejovsky, until I had talked to the guy who found me on Reddit finance forums...

Some of his other advice seems legit though. It makes sense to buy one larger complex as opposed to several smaller ones. The amount of work, not to mention the closing costs...

That's one thing I've hated about SFH. The closing costs eat a tremendous amount of money, transaction costs buying or selling are a huge drain. I think I will have paid almost 200K in fees when all is said and done. Ridiculous...

My first was off the MLS. All have been off the MLS/Zillow to date. As I'm considering getting into fix and flips, which I would ideally buy from buyers directly to cut out the middle men.

Offering to save me on real estate commissions by selling to a REIT. Email below. What do you think, good deal or no? Also, is it typical to get a 30 year loan for MF like SFH or are they shorter, 5-10 year loans? This guy is offering to sell for a "flat fee" plus a 1% loan origination fee when I 1031 into new properties. I suppose it depends on what the flat fee actually is...Assuming I buy a 2 million dollar complex I'm looking at paying him 20K just for that. Depending on the flat fee amount, it might be cheaper to list myself on the MLS and negotiate the buyer agent commission.

-----------------------Couple suggestions:

1. One larger multi-family building is better than a few of similar quality. The primary advantage of multi-family is economy of scale. A single property is going to decrease your operating costs and make the property more profitable.

The other reason, is that closing costs are going to start adding up with more properties. They can be significant.

2. I would recommend selling your portfolio through a residential broker that specializes in Chinese investors trying to get special visas OR sell them together to a real estate investment trust (REIT) that specializes in single-family housing.

I know Seattle is hot right now, but doing them one by one is going to be a time and energy suck, but I am not an expert on Chinese single-family investors.

I can help with a portfolio sale to REITs, which is going to be faster than selling piecemeal and you bypass paying a real estate agent's commission. REITs have the longest investment time horizon and deepest pockets. That would be a flat fee on my end for the financial modeling, pitchbook/prospectus, and communication with their acquisitions divisions.

So, my pitch would be that I can get you through this transformation from Seattle single-family to your Tampa/Orlando multi-family properties in a total of 2-3 months, instead of definitely 8+ months for selling 1-by-1, and bypass paying commissions. In exchange, I would take a flat fee, a fraction of a commission, for the REIT work and a 1% loan origination fee paid by the eventual lender on the new property/properties.

Netting you a few percentage points on the whole transaction and significant time saved. 

Any display of irresponsible behavior during the showing (where I'm assessing their attitude and level of sophistication) is automatic grounds for rejection. Is he going to fall asleep with a cigarette in his mouth while stoned out of his mind and burn my house down?

I've worked with a few brokers. They all sucked. Each one had a HS diploma and that's it, it's a low barrier to entry "profession" with an archaic 6% commission. They basically just unlocked the door and filled out a cookie cutter contract. I did the finding, assessing, due diligence, etc. I found them next to useless other than opening the door for me, the only part I really needed them for. Their walk through inspection (Ryan Karns group) for my final purchase left me with all kinds of garbage left on the property by a neighbor, not all they keys to the house and a wide open door his assistant realtor somehow missed when she did the closing walk through. . 

I've had maybe 10 tenants give or take. My best tenant had a credit score of 800, never a problem, left the unit better than I rented it to him, paid early, cooperative.

Everyone in the 500 range has been an abject loser, trashed the place, didn't pay on time, fought everything, always throwing a fit. 

600 has been decent. I'd prefer 700 score minimum, but if they had that then they'd be owners not renters...