All Forum Posts by: Kushaal Malde

Think about relative likelihoods. How likely is the 16 cap to perform without side effects -- what was the vacancy, is there any deferred maintenance or is it fully stabilized and sustainably year after year a 16 cap? In most cases you would find in any market, the higher cap rates come with the lower quality assets. Markets find equilibrium. If you have a 75% economic occupancy on a 16 cap property, it really is more similar to a 12% yield. Economic vacancy is physical vacancy and delinquencies. Are you in the business of collecting rent or passive income? A higher class property generally has much higher occupancy rates. 

Also, cap rates are more relevant for larger buildings, where that building's income and cash flow uniquely determines its own value. One to four unit properties don't reveal a whole lot by their cap rates. They are residential and priced on comparables. 

Why not? Depends on each deal - who is the seller and is there a lender and will that lender approve? Can the seller finance?

Most traditional lenders will want to see track record or balance sheet. In fact, track record holds so much weight, some times you need not bring any of your money into a deal. 

I think for a first time buyer with your profile, looking for a stabilized property is more appropriate than looking for a value add property. My assumption here is that your time is better spent at your salaried job and you're looking for extra cash flow (stable) instead of another job. Please correct me if I am wrong

I've got a cute 3/1.5 in 44118 that would be great candidate for house-hacking rooms for registered or traveling nurses. Did a gut renovation, now putting in finishing touches with furnishing for 2-4 week stays. would be interested to run an idea by you @Omar Radwan 

Would love to chat @Marc S. just shoot me a PM!

If the landlord would otherwise be having multiple contracts with multiple parties, you could offer to be "master tenant" and give one rent check to the landlord while you sublease and collect rent from your sublets. That way the landlord is collecting one check and managing one tenant (you) while you manage the sublets and collect rent from them (keeping the difference/taking that risk of covering any loss).

Try to figure out the landlord's pain points, if any, regarding the property. Does the landlord prefer not to travel to the property often? How can you ease some of their responsibilities? I did this at a duplex a few blocks away from college for 4 years. The first year I was a regular tenant with housemates in the bottom unit while I built my relationship with the landlord. The next year I became master tenant for the bottom unit and then the following year I became master tenant for the upstairs unit as well. 

Congrats on the acquisition @Deepak Arora. Ask for landlord references and call them to check what kind of history they have had with the tenant and their pet(s). A prospective tenant will always tell you their pet is well trained :-), why are they moving?

Connect with local property managers in areas you want to invest in, ask questions about rental performance what they're seeing for repairs and maintenance, and vacancy or concessions, start underwriting properties and try and spot the patterns or look for anomalies. Treat everything like a data point and it will inform you where others see nothing. 

I would also recommend combing through Commercial Real Estate Investing for Dummies, you can find it free online. Breaks down the anatomy and life cycle of a deal for you to understand the sum of its parts. 

Visit your market and connect with local investors, ask to walk their properties. If you're buy and hold investor, you'll want to choose a solid location with long term potential. These exercises should give you a good starting point to start putting in offers and building your portfolio. 

Let us know how it goes. When choosing your market, don't forget to consider macro things like diversified economies, population density, landlord/biz friendly etc. @Doug McVinua offers great insights!

Feel free to PM me if you would like to explore that first option. Happy to run numbers with you and share my thoughts. 

There is a tendency to want to buy the rate down in a high interest rate environment but borrowers should be looking at the pay-back period to break even. Often, it will calculate to needing to hold the loan for 3+ years. When the average life of a loan is constantly shrinking, from 5-7 years to more recently 18-36 months even, lenders are charging more points up front at the closing table to collect those fees that they would be missing if their loan is sold or refinanced within 18-36 months. 

Realizing this, it is seldom the case a borrower should pay points for that lower interest rate especially if they are not planning to be holding the loan beyond the break even point. So, calculate your break even points!

Look at the trend from Freddie mac on purchases since 1971. Pts are going up as the rates over time are trending down (we're in a blip) 

I did this in a duplex while I was in university. Got consent from the LL and ended up running a mini hostel. Learned so many things and helped me save towards my first investment property. 

There was a lot of learning and fine tuning of my system/process along the way: make your listing as accurate and transparent as possible - are bathrooms shared, is it noisy at night, what is unique/peculiar about your place, what is provided for guests, what is kitchen policy, how many nights is an ideal stay, how will you be interacting with guests etc. 

Run the numbers conservatively. You'll have to gauge what your expected occupancy will be and what you can charge per stay. You will have to figure out cleaning/laundry between guests. Best to start with a lower price so you can build up your review count and then slowly up the price (there is no price history on airbnb). Your listing will stand out if you make it detailed, transparent and have a ton of reviews. 

The reason I emphasize being transparent is because you want to attract guests who match the vibe of your house. Ultimately it's a hospitality business and you will otherwise attract guests who will not enjoy the stay because of X, Y or Z which if you had outlined in your listing would have deterred them on the front end. 

Good luck!