All Forum Posts by: Luke Robinson

How much time is typically needed to do a turn clean on a 1 bed / 1 bath? 

I'm getting charged for appx 15-20hrs for cleaning alone (no paint/repairs).  I'm new to out of state investing and really like my PM. But that seems like a lot of time, and I'm trying to gauge what's normal.

I was very much in your position and can absolutely relate.  I offered to make a trade with my wife--I would read one book of her choosing if she would read one book of my choosing.  I obviously chose Rich Dad Poor Dad, and she chose one about emotional health (which, admittedly, was a necessary growth area for me at the time and still today).  We both read the books, engaged in some really neat dialogue on our nightly walks, and better understood each other's perspectives in those areas.

After reading both books, I asked for her permission to start slowly pursuing financial independence through real estate investing by using the RDPD principles, and she happily jumped into it with me.  This was about a year ago, and we have since bought two, out of state, six-unit MFH. 

Best of luck to you! 
 

On January 1, I set a 90 day goal to buy my first out-of-state rental. Using the Intention Journal and taking small steps each day, I brought 12 units under contract by the end of March and closed in May. So stoked and grateful to the BP Community!  

That's an interesting questions, @Luis Vaca. At that point, I had already committed about $5k in hard costs to the property (mostly inspection and appraisal), but would have been entitled to receive my earnest money back through the financing contingency. So I could have backed out, but decided to problem solve instead. In terms of other options, I explored hard money loans and piecing it together by sharing equity with friends and family, but if I hadn't found a replacement for the traditional lender, then I probably would just walked away and licked my wounds before getting back after it with another property. 

Thanks, @Kat He. That's great that you're planning to make the jump from SFH to MFH. Truth be told, my primary resources were my mentors, some BP podcasts, and various online forums/resources. It's intimidating at first, but if you have a good process in place for SFH, then the same skills are largely transferable. I've heard the Best Ever Apartment Syndication Book and Crushing It in Apartments and Commercial Real Estate are really good, though. I want to read those before my next deal, hopefully using OPM. Feel free to DM me along the way if you need a sounding board! Would be great to learn together!

Thanks, @Kevin Hart! I'd highly recommend my agent @Zachary Elliott if you're looking in Covington and the surrounding areas. He's already helped me and one of my buddies find good MFH properties in NKY. The deals are out there, but I think the biggest key for me transitioning to MFH was lining up a reliable lender. I ended up working with US Bank, so you may want to start there if you don't already have someone. Wishing you luck!

Great question, @Andrew Kasabian.  I definitely learned that lending takes longer to close and more issues arise on the commercial side, so I would start out with a longer due diligence period instead of being forced to ask for extensions.  I'd also like to become more efficient in managing the local team. Truth be told, I often felt like a pest following up instead of trusting that they were doing their jobs without my involvement, and I need to be more effective in my delegating.  Thanks for the question! 

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $740,000
Cash invested: $148,000

Two side-by-side multifamily buildings, each containing six units (twelve total) with one bed and one bath. Section 8 eligible, but no mandatory minimum.

What made you interested in investing in this type of deal?

I was struggling to find good deals on SFHs, duplexes, tris, and quads because I was competing against a wider group of investors (homeowners, house hackers flippers, BRRRRers, and flippers) who were either shopping all cash or had owner occupancy financing. Couldn't compete with those terms and still achieve my minimum requirements. So I decided to jump the hurdle and took some time to learn the commercial financing component so that I could move into larger multifamily properties.

How did you find this deal and how did you negotiate it?

This property was initially listed on the MLS, and I saw it on the first day, but it sat for almost a month before the seller withdrew the listing. Right after the seller withdrew, I asked my agent to send over a soft offer at 25% below list. We exchanged 5+ counters before ultimately landing on a middle ground appx 15% below list price. I explained some of my minimum requirements (10% COC, 8% cap rate, etc) and provided multiple BP reports to the seller along the way to justify our offers.

How did you finance this deal?

I was working very closely with a regional bank who pre-approved me as an out of state investor prior to writing any offers, but they backed out due to an "internal policy change" two weeks after getting the property under contract. I scrambled to find a national bank to act as a backup lender and asked the seller for an extension, which they graciously provided. Ultimately got better terms with the national lender than the regional bank with a 5yr note on a 25yr amortization schedule.

What was the outcome?

Purchased the property 15% below list price and expecting solid returns, especially after splitting out utilities and raising rents to market rates.

Lessons learned? Challenges?

Ton of challenges, but each lesson worth the hassle. First, adjusting strategies to move from one-to-fours to larger multifamily was a great decision to eliminate some competition. Second, commercial lending isn't as complicated as it seems and in many ways easier than conventional because less regulation. Third, working collaboratively with the seller proved to develop a stronger relationship than had we been competitive/combative, which helped us navigate big maintenance and vacancy issues.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with a local real estate agent (Zac Elliott with Root Venture Realty), who really helped find the right property and then navigate the entire due diligence process. I also really like my property manager (Jeremiah HInes with Flow Property Management). Met them both in person when I flew in for the inspection, and would highly recommend both.