All Forum Posts by: Jacob Dawson

@Moises R Cosme thanks!!

@Matthew Paul in that case what appliances would you recommend I get? Any particular brand? Anything to watch out for?

Thanks!

Hello!  I am actively looking to buy my first 2-4 unit investment property! I have found a good cash flowing 3 unit deal, but it has no appliances (Dishwasher, stove, oven microwave, washer, dryer, and fridge/freezer.) 

Does anyone know a good company for used (stainless steel or stainless steel looking) appliances? I am based out of Chicago btw 

Thank you in advance! 

I think refinancing your dad's property is a 100% must do. Interest rates are at historical lows. Now is the time to refinance if you were ever going to. I have seen people get as low as 2.9% interest on a 30 year fixed! Talk with a company like rate.com; they get paid by the bank to find you the best and cheapest refi rate or loan rate in the USA. 

Lets first talk about that 40k. Assuming you can qualify for a loan, I would strongly recommend you buy a 2 unit - 4 unit building and self manage it to learn how multifamily works. You learn best when you are thrown into the middle of it. There are 100's of videos and threads about the subject of 2-4 unit investing. I am only recommending a strategy to use for your big picture plan. Additionally, you could qualify for a 3.5% down payment on a four-plex if you live in one unit for your first year of ownership. 

Okay, let's talk about that refinanced money from your dad's building. First of all, you will only get 75-80% of the equity back (the bank needs the equity to be 20-25%). You will get roughly $450,000 from your dad's building. You could buy a retail NNN asset. Let me explain a NNN or STNL (single tenant triple net) building is a Starbucks or a wendy's or a chick fil a or even a whole food. The benefit of buying an asset like this is the money is 100% passive for the next 15-20 years. (lease terms are 15-20 years). https://www.crexi.com/properties/201293/kentucky-corporate-arbys I found this deal as an example. Putting down $475,000 would be 25% down. After factoring a mortgage at 3.5% and a 25 year amortization, you will cashflow ~62,000 a year for the next 15 years passively. 

The benefit of going passive with the REFI money is you can teach yourself how to manage and operate multifamily deals gaining great experience along the way. With the added benefit of getting ~$62,000 a year passively to reinvest in multi-family

There was a lot to go over. Good luck

@J.R. Crady III

Thank you for the feedback!

@Tomasz Kaminski

Do you have any advice on how to screen tenants? Do I hire someone for that. What are your thoughts?

Thanks!

@John Warren

Thank you for the feed back! Typically when you underwrite a turn key 2-4 unit what are the “other” maintenance expenses you see. I underwrite my turn key deals with a 5% maintenance cost per year. What are your thoughts?



Hey guys, a little background before my question: 

I am 21 years old, and I live in the Chicago suburbs. I am currently a commercial real estate broker specializing in retail, and so far, I have made roughly $25,000. I am looking to invest some or all of that money into an investment property in the Chicago suburbs. I am looking to buy in the western suburbs where I grew up. I am looking at a few towns such as Oakbrook, Clarendon Hills, La Grange, and LaGrange Park. But I'm open to other cities. I decided that I am going with a 3.5% or 5% FHA loan and owner occupy one unit for a year. I plan to look at a turnkey, and slight value add deals.

When it comes to multi-family, I am a little less knowledgeable about what is a "good or great deal." or what you should account for when it comes to expenses.

My question is, where do I start when looking for a "good or great deal" and what are the signs that a deal is right. All of that is subjective and based on my own risk and reward balance. But in a general sense, what should I stay away from?

Thanks!

@Nicole Pinedo yeah no problem! With a 15 year term, you should be golden!

One question though, why go through that entire process when you could just sell the property. If you sold the property after the build-out was complete, you could still gain the same amount of money from the deal (1.8m - expenses) with much less risk. Plus, you could take the proceeds and use them as a down payment for a 1031 exchange deal(s)

@Nicole Pinedo

To start, I think it's good that they did a corporate-backed lease. 

I have a few questions, though. 

1.  Was the price for the property 235,000, or was that the down payment? 

2. How long is the lease for? 

3. As the landlord, what are you responsible for? I.E., Roof and structure, etc

I ask these things because, with STNL properties (single tenant net lease), things get a bit tricky when you go for a refinance/ to sell. Let's say they signed a ten-year lease. The building is producing money, and everything is okay. But after five years of good cashflows, you refinance. The bank will look at a single tenant net lease property with five years left (not the best sign) because the bank does not know if the tenant will renew the lease. A way around this is to write in the lease that the store must provide monthly sales figures. If the store sales are good, then you will have a much easier time selling the asset or refinancing it. You have a good deal here I would recommend refinancing as soon as you can and try to get the tenant to report their sales.

Overall I would say you did a great job on this deal!! Just try to get the sales figures written in the lease. If you have any more questions, I would be happy to help.