All Forum Posts by: Lynn Dee Murrow

We have vendors across the nation and someone to help you find the local help you need. Her name is Natalie Pilkinton and you can reach her at [email protected] she can give you the information you need. The online program is growing every day!

Hi Brad,

I am a Mentor at Lifestyles Unlimited. Jon is correct, we use this strategy to purchase distressed property that will not qualify for conventional financing. This is just one of many strategies used depending on the nature of the deal. When you do a side by side comparison of the same deal that needs rehab you will see that when you use hard money, even with the additional costs, your cash out of pocket is less and your cash-on-cash return is higher. It is a method that helps you leverage the investment funds that you have. Hope this helps!!

I agree with Andy Collins. The LLC creates a false sense of security. I meet few investors who run their business in a way that the LLC would actually protect them. Buy that umbrella policy. It is more important than the LLC.

You want to make sure that they understand that each of them is individually responsible for the entire rent. If 2 pay and one does not, the 2 that paid cannot say they paid their share and just evict the guy who did not pay. You only accept 1 payment of the full amount. It is the same with the security deposit. If someone moves out early the security deposit is not refunded or accounted for until the last person moves out. It is important that they understand this especially if they are young and have only lived in dorms where they were only responsible for their portion of the rent.

Financing for multifamily has been plentiful in the past couple of years. Right after the crash we were getting partnerships together and buying cash. Now you can buy a small one on your own or you can buy a large one with partners. I agree with Bryce - your profit or your cash-on-cash return do not necessarily go up with the number of units. Each deal is unique and bigger is not always better, you really need to get good at the numbers and doing your due diligence before the purchase. Putting together a solid team helps a lot. One critical team member is your property manager if you will not be managing it yourself. Good property managers can make your life wonderful.

Bridge financing is available for distressed properties, allowing you to buy at great prices and increase the value as you rehab and get well screened tenants into the property. Once you have stabilized the property at 90% occupied or higher then you can refinance and often pull most if not all of your original investment capital out of the deal and still have a cash flowing asset.

If you are having trouble finding financing for either single family or multifamily get together with investors in your area and you will get plugged into a great network of lenders you have probably never heard of before. At Lifestyles Unlimited we do have a National Vendor list. If you live in an area where we do not already have a team of vendors to help you, we will help you find your team.

I also agree with Ben that someone brand new to the business is not ready to jump into multifamily. You need some education first and a great team. It helps to learn from others who have experience. Either way though, single family or multifamily, the important thing is to do something to create passive income, and real estate is the best way to do it.

When real estate investors work together to help each other, like everyone does here at Bigger Pockets, we all learn and get better at what we do.

Lifestyles Unlimited does not recommend them because:

- They are appraised like single family, through comparative sales. For the same out of pocket if you buy 5+ units you have the advantage of the valuation being based on Net Operating Income instead of comps, then your excellent management skills can make an impressive improvement in the NOI thus increasing the value of the property.

- They are harder to line up and sell on a 1031 exchange to move into multifamily because there is a much smaller number of people looking to buy these properties then a single family homes.

- You have the draw backs of multifamily, mostly tenant dynamics, without the advantages - see #1.

We do not disagree that for a long term hold of single family these properties can cash flow well, our model just happens to be multi-family because of the leverage valuation based on NOI provides...

You will get a lot of information about investing in duplexes, triplexes and fourplexes here - every type of real estate investor is represented here in the Bigger Pockets Community - enjoy!!

Hope that helps!

Lynn Andris
Investor - Mentor - Radio Host
Lifestyles Unlimited, Inc.

I would start with the county recorder since all transactions are public record in Georgia. Then research comps and determine ARV. If you can see in windows etc...use local rules of thumb for $/sq ft for cosmetic rehab plus any major costs for HVAC, roof, foundation, landscaping/fencing etc...to determine rehab ballpark. Record all this info in a file and send owner standard letter offering to buy house. Make it personal

...I just buy a few investment properties in this area...if you are interested in selling or know someone who is please call me. I will offer you a fair price or refer you to other resources who are better able to help you with your specific situation. Either way you will be treated with respect...

prepare a list of questions to ask when they call,and ask for an appointment. Be prepared to go out to meet them within 24 hours of their call...don't let your leads go cold.

I Agree with Elizabeth, moving does not automatically mean you need to sell, and ALWAYS get a licensed home inspection...

Real Estate investing does not have to signal a lack of commitment. I invest so I can do work I love and am passionate about doing without worrying about the money. That makes me more committed to what I am doing...just food for thought...how people respond to this information depends on how YOU frame it.

Real Estate values are local. Invest some time in finding local resources to help you evaluate deals until you learn to do it yourself. It may be worth involving a local realtor who works with investors in your area. Track deals you look at. Record your estimated ARV and rental rate. Then follow up and see what the advertised rental rate is and if it is flipped what the selling price is. You will learn your target areas well by tracking properties over time. Hope this helps!

even though you knocked it down it will grow right back. I had Bamboo on a property in California. Only way I found to get rid of it was to dig the roots out of the ground. Mine was about 50 feet by 5 feet...can't imagine half and acre. What is your plan after you knock down what is there?

investors need to value property the way banks, appraisers and potential investors do. For multifamily that is Net Operating Income and Cap Rates.

This consistency allows banks to make lending decisions and investors to quickly determine if your deal fits their investment model. I agree with Joel Owens that it is important to focus on the investment numbers not the speculative upside.

I am a multifamily owner. Here are my thoughts.

Focus on your investment strategy and make sure the deal fits your strategy - value play or yield play. Sounds stupid but I can't tell you the number of investors I have talked to who fell in love with a property and got into a deal that did not match their basic strategy. Determine your criteria and stick to it...c or b apartments with pitched roofs, brick construction, on a main road with good marketing opportunities, close to relatively good schools for the market, on a bus route, with a mix of studio 1 and 2 bedroom apartments might be a start for example....

You need an accurate picture of where the property is at now. Current rents, actual rental income, loss to lease, expenses for the property...all the numbers. What is the current NOI?

Then you need a solid inspection and rehab numbers. This includes inside of units, grounds, exterior, laundry rooms, common areas, current and potential amenities.

Next shop the closest competition for your market. Compare c apartments to c's and b's to b's etc... Be realistic about your market and your end product.

Now look at the cap rates for the area and your market level (a,b,c,d). What are investors paying for income streams? What return does that generate? 8,9,10,11,12.... That is your cap rate.

The art of the deal comes In accurately projecting what you with your knowledge and experience can actually do with the property. As Joel said, be conservative in your projections. Offer the best product at the best price and in almost any market you should be able to stabilize at over 90%. Look at ways to cut utility costs. Look at significantly raising maintenance costs over the current levels...deferred maintenance will take you down every time. What additional sources of revenue can you create? Laundry, Covered Parking, power contracts, TV & Internet Contracts...don't scrimp on salaries, good property managers, leasing agents and maintenance supervisors are worth paying well. Now, project your NOI based on realistic changes over a realistic timeframe and this informs your pro forma...

Hope this helps...sorry for the long post :-)