All Forum Posts by: Matt Gibson

Lots of us are new and relatively new. Definitely start getting to know people by attending meetups and reaching out to people, such as those here on BP. I have found meetup.com to be helpful. Definitely put effort into your education by reading (https://www.biggerpockets.com/renewsblog/2013/04/1...), hopping on the forums, and watching the webinars, etc. The forums tend to be fairly practical, so you can pick up some real world info pretty quickly. You may want to set it up to get notifications on certain keywords (e.g., "Georgia."). 

Something else that I have found helpful is to just start running numbers on properties. I'll do some searches on realtor.com, Zillow, etc. and then pick something that looks interesting and run the numbers. I have even started driving by places and taking a look. Most are not good deals, of course, but it's helping me to get a better sense of how to look at deals. 

@Jeff Helm Just want to be clear--what is your role? Are you looking for a partner to bring the capital (~$130k) to close the deal? Or are you wholesaling it?

Where have you looked for a loan? Banks? Private lenders? How many of each have you spoken to? Are you planning to flip it? Or rent it out? If you are looking for a partner (or a loan, etc.) have shared the numbers to estimate a return? Have you looked at any other options, like a HELOC on your own home or anything like that?

I took a closer look at the report. It looks like the expenses do include your P&I, so the the cash flow and the cash on cash % on the report are technically good in that sense. However, you are putting more money into the units than they are worth (by $40k), so it seems to me that would really make it difficult for you to exit. I'm not sure how I would include that in calculations, but it seems that despite having cash flow, you wouldn't have an actual return on your money until you bridged that gap. Maybe someone else has more experience in analyzing that type of situation. Do you have an eventual exit approach? 

Hey @Ricardo Kendrick,  unlike @Alex Olmo, I'm not an expert in this area, so I'm just offering a few thoughts and observations.

First, it looks like your free cash is $783 a month or about $9k a year. I'm not as familiar with the calculator, so I don't know if that includes debt / P&I payments. If the $9k is your actual free cash, that's still not a lot, particularly for any future issues. I recognize that you are putting a lot ($50k) into reno and repair immediately, so that should buy you some time. If the $783 does not include P&I, then it gets cut almost in half to 440...now things become quite tight and risky. 

Do you have to put the entire $50k in immediately?

Also, it does seem that converting it back to a 4-plex could be a good idea.

Are the units currently occupied?

Finally, are their other units close by that may be possible for you to pursue in the near future? Just thinking about whether you might gain some efficiencies of management. A duplex or 4-plex doesn't give you much efficiency yet. 

@Ricardo Kendrick

Given that everyone has already hammered home the point that #3 isn't feasible without a greater timeline and a lot of "if's," #2 does seem like a great option. However, I would add that it depends on other factors, such as how you manage risk. Some people strongly prefer to pay off their mortgage even though it doesn't make mathematical sense given that the loan rate (probably 2.75-5%) is much lower than what you should get in return on a good investment. Nonetheless, for reasons of security, paying off a home can be a great option and many of the wealthiest people I know chose to pay off their house before putting any real money anywhere else. 

Regarding whether you invest in a multifamily versus several single-family properties, you are likely to have an easier time managing the multifamily property. You also should try to look at your return rates, such as your cash-on-cash return (I realize there are different views on this...so I don't mean to send us off on a new tangent). In other words, look at the potential net operating income (income after all expenses) minus debt and divide that by how much money you put into the deal. 

Very interesting scenario to think through. Thanks @Mary Jay!

@Eric Adobo Can you share more about your recommendation against a land contract? Or perhaps point us in a good direction to learn more? It's not something I know much about. The only land contract I have ever seen is between two family members when one was helping the buyer out because the buyer didn't qualify for financing elsewhere. 

@Jon Q. Great idea! Have you used that strategy to pick markets in your region?

@James Park Did you create that chart yourself or did it come from an article or something? That is incredibly helpful and insightful!

Hi @Jaimee Hart ! Welcome to the BP forums! I'm new here too and, frankly, just starting my REI journey. I find myself reading a lot of the forum posts and learning a lot, which is what I need right now as I try to get oriented and get involved in BP and REI. Looks like you have made some amazing progress! I would love to learn more. I'm based in Dexter, MI, but I'm familiar with Kalamazoo as it's pretty close and we go through there pretty regularly.