All Forum Posts by: Matt Faircloth

@Tom Austin welcome to Bigger Pockets and to real estate investing.  I am the subgroup leader for SJREIA which has meetings all over NJ.  They also have a main meeting in Cherry Hill, next month it's on the 21st of October.  I will be at that one to speak on a panel discussing apartment buildings.  I hope to see you there!

Hey Mark,

We do tons of business in Trenton. Our offices are here in the city also.  Send me a note on BP and I will get you more info, and we can talk more about Holly Nance as I see you posted about them in another thread.

 @Justin Fraser you are correct, there are good neighborhoods and bad ones.  There are also some big redevelopment projects in the pipeline that will change the landscape of the city in the next 5 years.

Matt

Welcome Keita!  We do most of our work in Central NJ.  Trenton has lots of great deals also, around what you would see in Allentown.  You just need local management for any deal of that type (Allentown, Trenton, or even Newark to keep it closer to home for you).

Best of Luck!

@Brock Y. - sounds like you are doing turnkeys out of state, managed by others... If that's the case I think your best bet is to bring in a partner with good credit and some cash. You have some experience with the deals you have under your belt which is what you bring to the table, and maybe some cash of your own. You can structure a partnership that will take care of both of you with a solid LLC Operating Agreement.

Take care,

Matt Faircloth

Hey Brock,

What are you looking to do with the houses?  Fix and flip or buy and hold?  If you can find deals that need some work you can use a private lender or hard money short term.  If it's a flip you should be able to move the project along fast enough to sell and still make a nice profit.  If it's a rental, look to add some value to the property by repairing it and leasing it out. Then you would want to build a portfolio of a few rental houses (2 to 4) and go for a refinance of the entire portfolio.  That way a bank will not be looking so much at your credit, more at the equity and cash flow in the deal.  If you did smart rehab work and got good rents, you will be able to refinance out the short term money no problem.

Good luck!

Matt Faircloth

Hey Adam,

Baltimore is my home town, how is the market down there?

I have looked at a product that you would install yourself but it's fairly simple.  They also do electric, heat, and gas sub-metering devices.  It might make sense for your project depending on how hands on you want to be.

Here is my contact:

Piper Foster | [email protected] | 970 300 1344 | 

You can tell her that you got her info from Matt Faircloth at The DeRosa Group.

Good luck!!

Matt

My first multi family deal was in 2006 - we bought (2) 4 unit apartment buildings with 3% down each plus a seller's assist.  Those were the days! 

@Mike Hoefling , it really goes back to a question of your long term goals.  Do you want to keep a day job and grow slowly, do it full time and grow quickly to supplement income...  Either of these will dictate what type of funding you need to look at.  For the slow and steady approach there are some good comments here on working around your bank's requirements, just be prepared to do this every time you look to buy a new property.

I am doing it full time and can tell you that you will need to (sooner or later) look towards a more complex strategy.  Here's the one we use...

1.  Buy Multi Families in distress - either financial or mechanical, the building you buy should need some type of improvement so you can increase it's value.  This could be as simple as raising rents, filling some vacancies, or making physical improvements.

2.  Use short term private lenders or equity - We buy the buildings either with private lenders willing to fund the purchase and some rehab costs, or we give some ownership to a private equity partner (it depends on the deal).  Either way we look to get the bulk of the funding required to stabilize the building from one of these people.

3.  Once the building is stable, go for a long term refinance from a bank.  They will still require around 25% equity but that now depends on the appraisal, not cash out of your pocket.  If you can add enough value during your improvements you will be able to get the financing to completely take out the short term money.  You just need to find a bank that will not require a certain amount of "seasoning" of the property. These banks are out there, you just need to shop.

I hope that helps!!

Matt Faircloth

Hey Tom,

I am a multi family investor also.  I looked over your deal and had some thoughts.

Your overall ROI looks good - you are over 10% in year 1 which is a good start.

1.  I didn't see a line item for capital expenditures - setting money aside each month for things like roof replacements, new furnaces, major renovations, etc...  AKA things you would claim as a capital expense on your taxes and write off over years versus a line item expense in one year.  I typically write in around $400 per unit per year for Cap Ex.

2.  Your maintenance seems like a good number.  Did you plan on having a superintendent in the building, and if so is that included?

3.  I didn't see a leasing commission, unless you are planning on doing that yourself.

4.  The taxes are really low, I am jealous as we are in New Jersey and pay around $4000 per unit here!!  :-)

5.  I think you can get a better interest rate than 5.5% on a 20 year fixed.  We just got 4.18% over 30 years on an 18 unit.  I normally go to small community banks as you can usually meet directly with the decision maker and they have more favorable and negotiable terms.

Those are my thoughts after a brief overview of your numbers, I hope that helps.  Good luck with the deal!!

Matt Faircloth