All Forum Posts by: Lucas Machado

Welcome @Joel Velasquez! Hope to see you around at a local event. Feel free to reach out directly if you think there's anything I can do to help. Best of luck in your journey.

@Kevin Kohler - I'll try to answer some of your questions:

What is a good cap rate in south florida? - I think this depends on the area and the investor...Every investor has their own goals/criteria. Some foreign investors are just trying to park their money in the US, and would be ok with low caps like 5%...Others want at least 10%...Etc. Also, I think it depends on the area. For example, I wouldn't want to own property in Liberty City at < 12% cap...On the flipside, I think it'd be quite challenging to get a rental property in South Beach at a 12% cap. 

Should I care about cap rate? - Again, I think this depends on the investor...Again a foreign investor who just wants to park their money in the US may not care what return they are getting. Another investor who would just have the money sitting in a savings account earning a fraction of a % would be happy with just a 3% return as well...Or, maybe an investor is going for an appreciation play - they might not care about cap rate either. Only you can really decide whether or not you should care about it.

how much should I put aside for occupancy gaps or repair contingency? - I'm not a landlord, but if I were I would include 10% for maintenance and 5% for vacancy...A lot of my landlord buyers do the same.

How much should I pay for property mgmt for multifamily? - Not sure as I'm not a landlord...I factor in 10% when analyzing properties for my landlord buyers...But @Account Closed can probably give a better, more accurate answer.

Welcome to BP @Jared Giammona! I spent about 6 years in the SF Bay Area working in tech from 2007-13, and then moved to South Florida a little over 2 years ago to invest in real estate. Feel free to reach out directly if there's anything I can do to help! Best of luck in your journey!

@Brent Coombs raises an important point - all the seller can do is try to work out a short sale with the lender - they will have 0 control over the final price...An agent will have to list the property, they will have to take offers, the seller will sign one, then it will go to the bank for approval. The lender will get broker opinions on what it's worth, the lender will decide on a short sale price to approve, and then they will wait til they get that price, or until the BPO expires at which point the process will restart all over again. The seller can decide which offers to sign/not sign, but that won't have much impact on the approved price.

Another thing I don't think anyone has mentioned...The buyer & seller will most likely have to sign a HAFA Affidavit in which they confirm that they are "unrelated and unaffiliated by family, marriage..." If you were planning on not being the buyer for this exact reason, and you were planning to partner with another investor to step in as buyer and cut you a % of the profit, note also that the HAFA Affidavit says that if there are any "agreements, understandings, contracts, or offers relating to the current sale or subsequent sale" that they need to be disclosed to the lender. It's possible that disclosing that stuff won't blow up the deal, but who knows - it's up to the lender.

I'm not a lawyer, nor do I play one on TV, just speaking on my past experience buying short sales...

Welcome @Jorge Alzate! Good luck with your first purchase, and on the rest of your journey! I'm not a landlord and I've never applied for conventional financing so I'm not sure that I can be much help, but if you think there's something else I might be able to help with don't hesitate to reach out to me directly! Happy holidays!

@Paulino Aspuru - Definitely, I'll send you a PM.

@Johnny Walker - Plenty of turnkey opportunities in South Florida, in particular because there are lots of folks from out of state/out of country looking to park their money in South Florida investment properties with little to no work involved (since they aren't local). Lots of investors like to fix up distressed properties, put tenants in them, then resell to these investors. Most get listed on MLS, since that's where the buyers of them look/have their agents looking.

@Johnny Walker - As a HML myself, who charges points up front and double digit percentage interest rate starting the first of the next month, I have to respectfully disagree...For one, if what you really have is a good/great deal, then there should be more than enough room in the spread to account for the hard money. Second, if the points and interest payment are not doable/suffocating, then the borrower doesn't have enough cash reserves, and the HML shouldn't be risking their money anyway. You might say "well you mitigate your risk by having a solid LTV and valuation," and that's correct, but that's in the event of having to foreclose with is our absolute last resort in a worst case scenario situation. We want to lend money, get paid, lend money, get paid, etc etc...We don't WANT to have to foreclose and become the owners - we just have to account for that possibility.

IMO, all of my requirements have a good, sound reason behind them, they aren't just there to extract as much return as possible. They exist for the benefit of myself AND the borrower (even if they might not realize that). 

Edit: Also, we the HML's don't really decide what the going rate for hard money is...The market decides that...There's plenty of people out there willing to pay the rates that you think are absurd, so the market clearly thinks it's a fine rate. This also means there are plenty of borrowers out there who are more qualified/a safer bet, than those who can't afford it.

If you can't afford hard money, just work other angles to build up enough capital so that you can afford it...And if you can afford it, there's no point in complaining about something you can't control :)

Best of luck to you.

Welcome @Fernando Pina! Most of what you'll need to learn can be found around here somewhere on BP...And if you can't find it, just ask! Good luck on your real estate journey!

Welcome @Richard Recuset! BP is a great resource. See you around!