All Forum Posts by: Jeff Roth

Hi Brian-

Great question!

One place to start is a site called LoopNet.com. These will be listed properties.

To source off-market multifamily properties join Facebook groups in the areas you are interested that focus on off market opportunities.

Also, contact property managers in the area you are interested and let them know you are looking to buy if any of their owners are looking to sell. Follow up with them.

Join the local Apartment Association in the area you are interested which is a group of landlords and property managers who will not only advocate for housing and landlords but allow you to meet people that can help you find off market deals.

Finally, drive the area you are interested in investing. Write down the names of the apartment complexes that look interesting to you and go home and search the corporation database for that state for that apartment name and the address of the owner or registered agent should come up so you can send them direct mail about your interest in buying or try to search a number to call for that address or registered agent.

To your success!

Hi Kevin-

Great question and congratulations on getting started on syndication investing.

As you asked, I think finding an experienced mentor is a must and some great suggestions were given from this community.

That being said, I also recommend that you inform yourself so that as you are talking with your mentor and evaluating opportunities you personally can ask informed questions and know what good responses look like.

Some things to consider:

1. Understanding terms commonly used (Cap rate, Net Operating Income)

2. Sources and Uses and Profit and Loss Statements

3. Proforma and Operating Projections

4. Carried Interest/Waterfall/Compensation Models

5. Fees-are they common and in typical range?

6. Legal-is it convoluted? 

7. How to evaluate a Sponsor

8. How to evaluate the pro forma or projections, fees and company and operating agreements

I guess, in short, find a respected mentor but inform yourself so you are evaluating the information from what know to be reasonable as well in your own due diligence process.

To your success!

Hi Stephani-

Great question.

Personally, from my experience, it is better to be licensed because you can run comparables without feeling like you are pestering another agent to get them, you know about deals in your office if they know what you are looking for and you take a commission on all listed properties you buy and if you sell.

To your success!

Hi Caitlin-

Great question. 

If you have a good interest rate on your primary FHA loan, I would use the HELOC option to get the capital you need for the STR.

Look for a HELOC lender that will allow you to fix the rate on the HELOC into a home equity loan so the rate does not keep going up on you unless you are comfortable with that and have enough cash flow from the STR to cover it.

To Your Success!

Hi Andrea-

Congratulations on your first investment property purchase.

I too have a goal of $400 positive cashflow after all expenses and property management each month.

It is possible to do this in the Midwest as I am just up the road in Ann Arbor, MI.

Now, here are my concerns:

1. The renovation costs are more than you project. Common.

2. The rent is less than you project. Common and more rental units are becoming available this year nationally in the multifamily space with new construction to compete with your rental.

3. The After Repair Value is less than you project. This is also common and in a housing market with elevated rates and buyers and sellers taking a wait and see approach I would hesitate to be so confident on that number.

Any one of the three could cause an issue.

Personally, I would not think about flipping as you will owe taxes if not done in a 1031 exchange and in addition to taxes you will have the transaction costs even if you sell the property yourself.

You can do a cash-out-refinance to get your money out tax free or get a Home Equity Line of Credit if you want to keep part of your debt with the existing fixed rate mortgage.

I guess, in short, I feel it is less risky for a new investor to rent and refinance than to flip into a shifting market. I personally to the BRRRR method as best I can as well to reduce risk and build up positive cashflow and equity over multiple properties.

To your success!

Hi Andre-

Fractional investing is where you can invest a small amount of money or a large amount passively in a real estate project or a fund of various real estate projects. It is separate from wholesaling. 

Try fundraise.com to learn more if interested.

There are various fractional investing services. Another is Here.co for fractional investing in short term rentals if you are interested in that segment.

Other use blockchain technology to fractionalize the investment.

To your success!

Hi Andre-

Congratulations in showing an interest in real estate investing and I see you are in Lansing, MI (one of my favorite places to invest).

I am right down the road in Ann Arbor.

Anyway, if you are interested in getting your feet wet in real estate investing, there are fractional real estate investing options for non-accredited investors.

I would start your search there and it would give you practice evaluating locations and different real estate opportunities.

To your success!

Hi Rami-

Congratulations on deciding to invest in real estate.

I like that you are investing near where you live. I think it is wise for most investors to at least start there if they can.

As far as mentors, I would try to find someone that knows the area you want to invest.

One suggestion is to start with property management companies in your area that are well reviewed or recommended and see if they know of any properties for sale or a Realtor that is also a real estate investor. It is good to have both of these on your team and if they are competent they will help you find deals and manage the deals successfully.

To your success!

Hi Bradley-

This is a great question!

There are duplexes in Ann Arbor but they are pricey.

A couple are on the market right now and others that could be approached to sell off market. The issue, of course, is cashflow and the amount needed to put in to the duplex to have positive cashflow especially with new construction costs and Ann Arbor non-homestead taxes unless you live in one side of the duplex.

I personally own a duplex in Waterford and use a property manager there as it is a distance from Ann Arbor where I also live.

The other area I particularly like is Lansing. Same distance from Ann Arbor as Waterford and I also use a property manager there but it is much easier to have positive cashflow in Lansing with duplexes--even using a property manager. I bought the duplex in Waterford off market very well but those deals come around less frequently.

My primary house is downtown and I have thought about turning the basement, that could have a separate entrance, into an apartment and if I ever moved it could become a duplex essentially. Just another thought. House hacking your way into duplexes. :)

Happy to help!

Hi Matt-

Great question!

In general, it is best to put down as little as possible and to use leverage.

If the property still cashflows nicely putting as little down as possible with the higher rates, I wouldn't lose sleep at night.

If it doesn't cashflow, putting more down is an option but there is an opportunity cost for that money if you could put it someplace else.

Honestly, right now, I am not sure what is a better option than real estate to put your money.

Just think about if you want to tie up more of your money if you don't have to because it may be in the property for a while.

Happy to help!