All Forum Posts by: Joshua Christensen

Hey there @Llamier Guzman you have a good idea as a foundation.

1. House Hacking using the VA loan to live on one side while renting the other is great.

2. BRRRR all comes down to finding the right distressed properties at the right price, then identifying the right long term financing. Typically, the initial upfront for the rehab is either cash or a high interest loan (hard money or private). You really need to know your numbers well and build in some good cushion.

Tools I use to evaluate rentals and loans.  

1. Find a couple of lenders who lend in the area you are looking at.  Credit Union, Brokers, Banks (all have different advantage & disadvantages).  Ask them a lot of questions about their loan programs and the costs associated.

2. RE Brokers in the area are a key team member as they should know the area, good rental areas, and they will be a good resource for rentals (possibly, if they deal in rentals). Note:  Not all brokers are equal, so you really have to interview several to find who you're looking for to partner with.

3. Karl's Mortgage Calculator - This is a downloadable app for your phone.  It is invaluable to quickly calculate a mortgage payment.

3. Zillow has a lot of valuable information, but keep in mind that it's algorythms don't work in every market.  States that are non-disclosure don't have as much public information and Zillow doesn't have access to non-public info for their analytics.  Their system will kick out info, so be careful and verify what you see on there.  You can get an ok idea of what houses you're considering might be renting for (at least from a 'listed' price point) to guage how much you may be able to lease yours for.

4. Find a good property manager that you can bend their ear.  You'll need one when you move so identify one early to tell you how strong an area is for rentals.  They can be a very valuable resource when deciding if a property is a good investment or not.  

Real estate investing requires a good deal of research, so build your arsenal and over time you'll be an old pro.  Best wishes to you.

Hey there @Account Closed!  It sounds like you are off to a great start for 2025 and have a good plan.

Finding good deals is often the most difficult part of the process.  @Matthew Drouin and many others have good success with direct mail.  You need a solid proven system to find the deals.  

I've found deals in local online groups on Facebook, simply asking people for what I want.  I've built relationships with property managers who have distressed properties in their portfolios that can communicate directly to owners.  Many pm's are owners of a lot of properties.  

When looking at discounting properties to find a deal, I tend to lean into what the seller is looking for when I know I'm holding.  If I'm flipping, my discount needs to be deep to create a spread.  For a long term hold, time and my value add will create my spread.  Sugar wins a lot more deals than vinegar.  

Happy New Year and best wishes to you.

@Matthew C. this is definitely a dilema and I'm sorry to hear you're having these challenges.  the good news is that you're in the middle of a "masters" level education at this point.

@Patti Robertson had some great points.  Winter is tough in a lot of areas.  

As I read your post, the reoccurring theme that came up was a screening problem.  Lowering your standards invites expensive evictions and repairs.  That's not the answer.  

Section 8 provides consistent pay and the tenants have to uphold the standard put forth by SECTION 8 to maintain their voucher.  In our area, the housing authority does annual inspections to (mostly making sure the landlord is keeping up the units) review the tenant and the landlord.  It provides an opportunity to see what's happening in the units.

You still have the ability to evict for lease violations, but your less likely to face non-payment issues.  Most of these folks don't want to lose their voucher.

Additional issue, when rent is too high, it slows down leasing.  When rent is too low it speeds up the leasing.   You cannot change the area or the demographics of the area, so you have to pull the levers that community "needs" / "wants".  Spending on expensive upgrades is not the answer to improve your tenant base in this type of area.

Keep the homes habitable, clean, and safe.  Don't spend a lot on improvements as they tend to get damaged with every tenant.  

Have you heard of Exchangers?  They are a national organization that promotes all kinds of creative real estate deals.  You may see if you have one in your area that you could trade your property into something nicer.  Sounds crazy, but these things do happen.  

Happy New Year!

Hey Greg,

Mentorship is a slippery slope indeed.  I've paid my dues in multiple different programs through the years and I've had some amazing experiences as a result and some not so good ones.  I've learned something in every one of them.  I don't recommend throwing the baby out with the bath water, and definitely make sure you understand the nature of the Mentor you choose.

BP is a great resource to meet some amazing people.  There are a lot of articles, books, etc. There are a lot of very knowledgeable people here willing to help.  

The biggest 'danger' I've experienced in the coaching space was coaches who took the cash and wanted me to follow 'their' program rather than coaching me where I am to get where I wanted to go.  The coaches I've had who worked with me where I was were the best and I still have unpaid relationships with several.  

In online forums, the danger I've experienced is the "national" effect.  A generic question is asked and then answers start flying in from all around the country.  Unfortunately, every state and every locality has different laws and what works in one location doesn't always work in others, so you have to be very careful about the 'free' advice that is given in online forums.  The intention is good and there can be some solid advice.  There can also be a lot of bad advice, so be sure you know your local laws before blindly accepting this type of advice.

After 30 years of being in this industry, a lot has happened.  The internet as wonderful as it is has also created a 'wild west' effect that is often unbridled.  

Happy New Year!

You mentioned that you've been paying water / sewer for all 4 units.  Are all 4 units metered for gas and electric separately or on master meter?  If they are separate, permits would have been pulled and the city will have records of those permits.  

I'd definitely consult an RE attorney who is versed with dealing with these.  Gather as much imperical evidence as possible.  The meters, bills, old permits (should be available through the city planning), the appraisals, etc.

Most appraisers check with the city on permits and non-conforming use while doing their research.  They uncover a lot of problems with these properties.

It sounds like you have enough to work with to appeal their process.

Everyone has shared some valuable insights, so I won't rehash that.

I'm curious though if you want to make payments monthly to build your nest?  How long can you do that to achieve your results?

With a current $550 per month rate, that's only $4400 monthly revenue at 100% occupancy.  I didn't see where you factored in a $3000 mortgage payment (principal & interest only) in today's higher rate environment.  There's nothing left to cover expenses so you better have deep pockets to cover maintenance, admin, turns, etc.

If you think you can quickly improve rents to a point that covers your expenses and pads your pocket a bit, then maybe, IF it hits your return threshold.

If you're buying cash, then the mortgage is not a factor.  If you're financing with 25% down, you may need to search the pits of your investor soul to determine if this is solid.  Consider all your risk (much is listd in other posts).  

@Jerry Zhang, Gino's suggestion is a strong one.

Why guess?  Ask him what makes him feel more secure in the deal?

Banks ask for larger down payments to shift risk to the buyer/borrower in default.  Is there a type of mortgage insurance or bond you can get for owner financing that secures his position?  Can you put some reserves into a "lock box" type account that is your money but locked at escrow for up to a period of time.  If you default, he gets it.  If you perform, you keep it after that period?

Get creative.  Main thing is to find out where his perceived risk is and what HE thinks will reduce his risk.  If you're not speaking to His need, you'll miss the mark every time.

Good morning @Chris Kittle,

This is an important question and good on you for asking.  things missing in your list (everyone manages differently, so take it with a grain of salt)

Vacancy rate

Turn over

bad debt 

legal fees (evictions as needed)

accounting fees for professional tax prep

maintenance

Property Taxes

Sales Tax on PM fees (In NM, this is charged, not sure about where you are)

Reserves for replacement CAPEX - furnace, water heaters, ac, roof, parking lot, etc.

Admin, software, advertising, etc.

Cost segregation study for accelerated depreciation capture

As for your loan.  Even though rates are high right now, there is an allure to variable rates every time rates are in a down cycle.  That is something to consider.  On commercial loans, it is not uncommon to see 25 year terms or balloons in 5-10 years.  

Look for loans with lower prepayment fees if you refinance or sell early.

On an 8plex, a local / regional bank or credit union may have favorable terms with rates, term and fees.  

Best wishes to you.

There is no such thing as a "guarantee" only the perception of.

if it's a concern in your offer, find out what it would cost to carry a bond or insurance product for the seller.  Otherwise, shorten their term and get them paid out  in 12-24 months to "reduce" their risk.

it sounds like you are trying to make an offer with this scenario.  Personally, I would not create a conversation around this "risk" as that is a sure fire way to increase the sellers anxiety.  I' had confidence in my ability to perform.

the seller needs Confidence in Your performance to reduce their risk.  Show them how you will perform.  Then DO IT.

IF they ask for other assurances, then provide what you can in other means.  Risk is relative to every seller and you'll need to answer accordingly.

This is a difficult question to answer.  If we look back to 2004, 20 years ago, we had just survived the dotcom crash and we're starting into the early years of the Housing bubble.

in 20 years, gen x will be well into retirement hitting their own Silver Psunami, if you will.  Millennials will be planning retirement and they are a larger generation than the Boomers.

the US economy will have hit at least 2 new major economic crisis.  The dollar will be valued less than today.  Inflation will more than likely out pace income growth. Subsidized HOUSING WILL MORE THAN LIKELY GROW, yet the government will go into deeper debt to pay for it.

I suspect new bonds will be created to pay for subsidies in housing.  I expect that we will experience another period of extremely low interest rates due to Govt intervention in economic crisis to prop rates.  Another period of QE will drop rates to the 3% range for a period.

Ultimately, history has shown real estate values to double every 15 years.  Rent will be just over double what it is today due to inflationary conditions.  Our population will continue to grow in urban centers, but we will experience greater suburban sprawl leading to increased inventory.  

We are in a period of low inventory that estimates say will take 5-6 years to fill.  At the current pace of  construction and costs, development is not keeping up with demand.  I anticipate that we will continue to experience housing shortages in 20 years due to population growth.

Ultimately, anyone who buys multifamily today and holds on will experience a great deal of generational wealth.  It may be a difficult game to get into in 20 years, yet many will find a way and the cycle will continue, so long as the US is still standing.

Ultimately, none of us has a crystal ball, we can only look at history.

Conversations like these have been going on since the dawn of man and will continue.  The best time to buy real estate was 20 years ago.  The second best time is today.  Timing economic condutions has proven futile whether stocks, futures, or real estate.

enjoy the ride friends.  Relax, everything's gonna be alright.