All Forum Posts by: Jim Kittridge

Charlotte and Raleigh are both very strong markets and equally as competitive. 

Yes, Charlotte has a lot of high end, class A supply coming to market, but most of it is concentrated Uptown and in South End. In my opinion, that is mainly a short-term concern for areas they are building them. Long term, Charlotte still needs an additional 72k units by 2030. We had ~135k units in May of this year.

The greater Charlotte metro has opportunities where there is are strong economic trends, a significant discount to replacement cost and therefore, well insulated from new supply. 

Also, I wouldn't conflate thin syndication deals with a market being strong or weak. There are more people going after fewer value add opportunities in strong markets which. Any syndicator can go to a risky market with higher cap rates and have a "great deal" on paper.

I wouldn't typically recommend this strategy unless there is a significant investment coming from public/private groups in the area, but if the root cause of the neighborhood sliding back is the convenient store and you know that the owner is going to do something to significantly change space, it is probably worth pursuing some improvements in conjunction. 

I think you nailed the potential improvements. I would recommend talking with your friend and seeing what he is doing so you can do something complimentary.

I'd typically start with the exterior and rebranding. 

Yeah that’s a lot for a rental. We can do a full rehab for $62k.

Can you get away with doing less of a rehab since it’s a rental? For example, keep plumbing and electrical in the same place and replace flooring, cabinets, countertops, fixtures and appliances?

I’m not in LA but you can typically do basic replacements without needing a permit unless you start removing a wall or moving electrical or plumbing. 

All of the secondary markets to Mecklenburg 

Congrats on jumping in! I did all of the same things as you. Read books, listened to tons of podcasts, watched too much youtube, and looked at a lot of deals.

My best advice is to not get stuck in analysis-paralysis and try to get to your first deal. Analyze as many deals as possible and make no-brainer offers on as many properties as you can, even if they seem extremely low to you. The more you do it, the less you'll be afraid.

As a point of reference, I bought 20 properties in the last 12 months and am UC on another 8. Before buying anything, I analyzed 200-300 deals. I think that is a good thing and you should probably do the same. Having said that, a lot of investors get stuck at this point and can spend years going to REIAs and conferences. You're looking for the perfect deal and you aren't quite sure what that looks like.

I found what looked like an amazing opportunity and brought an experienced investor along to look at it. He immediately loved it and wanted to do it together. If I hadn't have brought him into the deal, I would have found 9 reasons why the deal might not work and I would probably still be analyzing properties. Out of all the deals I've done, that first deal is okay but has been the worst performer in my portfolio BUT it was the most important deal I could do because it got me in. 

I’d highly recommend spending the extra $.50/ sq ft and getting commercial grade LVP. It will have a wear layer of 20-30 mm vs the stuff you get at Lowe’s or Hd that has a 4-12 mm wear layer.

It’ll run $2-2.50/ sqft and come with a large warranty.

Also, buying scraps or clearance can be a pain down the road. I like having the same flooring in every rental. One less decision and easy repairs/replacements.

If you’re trying to save money, I’d recommend glue down LVP instead floating for rentals. If a tenant ruins a piece or two it’s easy to remove and replace. I know it has a bad rep, but it’s come a long way.

@Adolfo Lopez

Welcome to the forum and great job in building a strong foundation to build your REI career out from.

I’d second what others have said and recommend a quadplex you can buy as an owner occupant where you can add value.

I would also consider researching syndicators in different markets to consider investing a small amount with so you can learn from them, what works well and what doesn’t. You’ll learn a lot in the process and have a better feel for your own investments.

As always, read a lot and listen to podcasts. Tons of amazing information out there for free.

Cheers

Jim

If a commercial lender isn’t willing to issue a release of collateral so you can sell any property in the portfolio with an agreed up principal, you should walk and find another bank.

I’d recommend having this conversation within the first 5 minutes of talking shop with a lender.

Here are a few bullet points of things I use to clarify with new commercial lenders.

1. Rates and closing costs

2. Timeline to close

3. Term and Amortization schedule

4. Allocation of construction/rehab funds

5. Release of collateral

6. Prepayment penalties for sale and refi

7. Their underwriting box

@David Kerner

This is normal in the commercial loan market. Welcome to the 10+ club!

They do it to reduce their risk on changing interest rates. It also gives them an opportunity to refi you.

It’s added risk for you, but most banks want to refi it at the end of your term and keep your business.

Imo, start shopping for refi options at year 3.

@Shareef Hood Metrolina REIA is the best local Reia with active meetups.

Scott Paterson does a great meetup that is once as month in Charlotte.

Pm your email and I’ll send a calendar of most meetups.