All Forum Posts by: Matthew Drouin

@Lesley Resnick marry the property, date the rates. If you find a deal, like an actual deal, I am ambivalent about rising or falling rates. I do take it into consideration on my financial modeling though. Just depends on how far out your horizon is. I usually buy for 20-30 years so an investor like me is going to be less sensitive.

@Amir Navabpour what areas of Rochester? Some property management companies are better equipped on certain areas and clientele.

For instance, on my work force housing, I sub out management to third party. On those I use Gallagher Property Management and ROC On Property Management.

For my higher income properties I created my own management company to service those because those tenants demand more white glove service that I have not been able to find in third party space. Hope that helps.

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LEARN TO SCALE YOUR REAL ESTATE INVESTING BUSINESS

Why Go Big?

When we bought our first rental property, we used every dollar we had to do it. The experience of buying our first property was invaluable but it didn't financially change our life in a significant way and it certainly didn't make a dent in achieving the dream of financial freedom.

Many bootcamps and real estate workshops are geared towards teaching an investor on how to buy their FIRST rental property. But what about those investors who want to buy their second, third and hundredth rental property? We created a curriculum that is focused on teaching investors on how to do just that... GO BIG!

The Go Big Team

Go Big co-hosts Matt McGuckin and Marty Grizzanti of Upstate Home Buyer have been buying rental properties and flipping houses for 8 years each. Matt Drouin of OakGrove Development has been buying and developing residential and commercial real estate for over 15 years. The Matts and Marty got started with one small property when they first started. That one property's cash flow of $300 a month wasn't enough to help them earn financial freedom. It was only after investing in their education, taking massive action, and aligning themselves with the right strategy and the right people that they were able to quit their jobs and focus full time on their passion for real estate. At the Go Big bootcamp, we want to teach you what we would have wished we had known when we first started. Learn from our mistakes that cost us time, money and our own sanity!

What you'll learn at Go Big

What type of property should I buy? At this event, we will dive into the different real estate asset classes, go over the pros and cons of each to help uncover what you'll want your focus to be. At a surface level, we will be reviewing Short Term Rentals (AirBNB), Apartments, Single Family, Commercial (office, retail, industrial), Mobile Home Parks, Student Rentals and self storage just to name a few. You won't leave being an expert on any single one of these asset classes but you'll learn enough to know which asset class you might want to learn more about.

How to find off market real estate opportunities. Let's face it. Regardless of market cycles, finding great opportunities is always going to be a challenge for the professional real estate investor. Competition is always fierce for great opportunity. Learn what marketing and business development strategies actually work; systematize your deal flow so you have consistent and qualified leads so abundant that you won't have to "force fit" bad deals into good ones.

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How to evaluate and analyze real estate opportunities. If you don't know how to "run the numbers", you won't know what a great opportunity is, even if it smacked you in the face. At the Go Big bootcamp, you will learn not only how to analyze deals, and how to present them to your lenders and investors confidently, but you will also learn how to find hidden value in real estate opportunities that no one else sees.

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How to build a rock star real estate team. If you truly want your real estate investment to be as passive as possible, you need a team. Learn how to find rock star real estate agents, lenders, contractors, insurance agents, accountants, attorneys, etc. Even if you don't have a ton of experience in real estate, you can leverage the decades of experience of others to reduce your learning curve dramatically. The right team is essential. At Go Big, you will learn not only how to build your team but also how to manage those relationships so that everyone is winning and growing!

@Moses Carrillo I would buy the biggest real estate deal possible 5+ unit. It’s way easier to force the appreciation on deals like that and then refinance after completing your plan for that property and recycle that capital over and over again. When I started focusing on larger deals I was able to earn my financial freedom within 3 years, and I didn’t have to be a deal junkie running a hamster wheel in the process

@James B. Remember seller financing is advantageous to the seller. Since this deal is owned free and clear there is probably a fair amount of capital gains and depreciation recapture the seller has exposure to.

So, the less you put down the less capital gains tax, seller has day one. They incur capital gains on whatever payments you are making them towards the price of the house. The longer the amortization the further they push out capital gains tax paid on principal payments.

In terms of interest rate, I usually get a couple of term sheets from some bank lenders I work with and show them to the seller and offer them either the same rate or maybe a point higher if they insist on it. Right now even junk bonds are only paying 4% on average, so where is the seller going to get better yield elsewhere on a fixed income instrument that is collateralized by an asset they know and understand with an operator (you) that they know, like and trust?

The further out the term, the further they can kick the can down the road on their capital gains liability.

This is just an assumption that the property is in a great location. If it’s not, keep walking. I’ve talked myself into seller financed deals even though it was a bad location. Big, incurable mistake!

@Bryce Shipley I've been in your shoes.  The challenge of the typical real estate investor is that you are always running out of money.  Asset rich, but cash poor to grow your real estate business.

A couple of options for you here:

1.)  You can cash out refinance and hold the cash out proceeds on your books until you find a larger deal you want to purchase.  Yes, you are paying interest on utilized cash but it's good to have dry powder when you're ready to pull the trigger on something.  If you don't do this... I always say "opportunity never comes at a convenient time."  I guarantee you, when you find your perfect larger multifamily or commercial deal, you are going to be scrambling to refinance your three properties, and the opportunity will slip through your fingers.

2.)  Find a deal with a seller who will allow you to put their property under contract contingent upon you selling your property or properties and doing a 1031 Exchange.  Problem with this, is that not all sellers will be comfortable with this type of contingency or a contingency like this will render you uncompetitive.

3.)  Do a cash out refi with a hard money lender, and use the cash out proceeds as a down payment on your larger deal.  This would enable you the flexibility of getting your down payment money quickly but cost you in terms of higher interest rates.  Most hard money lenders will charge between 8-16% interest effectively; much higher than the banks.  Then refinance the hard money mortgage with conventional permanent financing with a bank.  Or if the larger deal you are buying has enough meat on the bone from a value add standpoint, you can force the apprecation by stabilizing expenses, pushing rents after performing improvements, and then refinance your new deal and pay off the hard money loans on your condos.  This scenario would require you to walk the knife a bit and add a lot of moving parts or variables which you might not be comfortable with.

If I were you, I would go with option 1.  With rates as low as they are right now, you are essentially shorting the dollar.  If you needed a place for the cash for a year or so, perhaps you could be a hard money lender yourself and make some money on the spread until you are ready to purchase something larger.

I hope this helps!  Congrats on being a stay at home parent.  Being a good and present family person was my top reason for earning my financial freedom.  I was able to accomplish that by scaling into larger deals.

I have been investing in and developing real estate for 15 years.  I own 23 properties that are comprised of 120 units of residential and commercial.  I have a fair amount of equity in this portfolio, about $2.6 million.  I really need to find a credit facility that allows me to leverage this equity to buy larger deals.  In the past I have had to raise capital from hard money lenders, friends and family.  This process is very inefficient, especially when you need larger sums of capital between $1 million and $2 million.  This would be my ideal scenario:

1.)  Leverage that $2.6 million in equity into loan or line of credit to purchase property.

2.)  5 year term.

3.)  8% interest.

I have a great track record, excellent credit and own high quality, well located assets.  So I'm assuming that there would be a lender out there somewhere who offers products like this.

Please help!

@Seth Foltz thank you for sharing.  We are participating in this for tenants that we actually want to keep.  However the tenants that are acting crazy and dealing drugs out of their apartment, we are stuck with unpaid balance and cannot wait to get them out.  They are terrorizing other tenants in the building and we cannot get them out.

@George C. Same thing happened to me on a refi on a apartment building I rehabbed. The frustrating part was the existing mortgage was with this local bank as well.

Kept asking for more documentation stating “we just need this one thing and we will issue commitment letter, tomorrow.”

They strung me along for 4 months until they finally said “they weren’t comfortable doing the loan.”

Thankfully the new lender I placed it with was agreeable to accepting the appraisal I had already paid for.

Refi closed with much better terms in the end. But it was very stressful.

Bottom line. The writings on the wall. Dump them!