All Forum Posts by: Michael Albaum

What kind of terms would you want as a lender? I would look to WOW them and overwhelm them with value. If you can get on their good side, they will likely work with you again, and I doubt that 1 deal will make or break your entire investing career. Put yourself in their shoes. Best of luck!

I would talk to a few commercial agents in the area. They will be the best ones to tell you what the local cap rates are doing. Best of luck!

Make sure to set expectations on the front end. You can be nice, but at the end of the day you're running a business and expect to be treated as such. If these tenants think they are your friend, they will have no problem paying rent late and calling you at all hours of the night because that's what friends do. You should also look to get these tenants onto your own lease. Best of luck!

Hey @Michael C., firstly, I'm not sure I understand this sentence:

"I was approved for the low 500's but I would like to stay below that to maintain cashflow.( townhouse or small SFR)"

If you're purchasing a primary residence and will not be renting out rooms in it, then why would you cash flow at all?

Secondly, most finance advice would tell you to analyze the overall cost of owning a home, (PITI, maintenance, upgrades, furniture, art, etc) and compare that to the cost of renting. One should make wildly more sense than the other, and I think you and I both know which one that is, especially in LA. If i were you, I'd refi the ATL homes, continue renting, take the down payment money you were going to use for the LA home and invest in some awesome rentals. Then in a few years, when you have built up enough cash from the rental properties, you can look to buy something for yourself. Think how long it will take you to purchase rental property if you buy the LA property and have a huge mortgage looming over your head on a property that doesn't throw off usable cash flow. Best of luck!

My best advice is to talk to a local property manager and see what the market is demanding and then assess what upgrades you could do. Keep in mind, that in order to force appreciation, you don't actually have to spend dollars (often times you do). If you can simply bring the rents up to market rate, you've increased your NOI which in turn adds value to the building. A super easy one I've used is a utility bill back to tenants. On an 8-plex with a $35 monthly utility bill back in a 7.5% cap area, that's an extra $44,800 in value I've generated ($35/unit x 8 units x 12 months = $3,360 extra annual NOI). Also upgrading fixtures/appliances is always a reasonable way to get rental increases. You can also simply ask your tenants what they'd be willing to pay more for. Good luck!

Find out what the current rents are. Then find out what the market rents are. Find out why the seller is selling to see what kind of financing they may be looking for. Have you ever purchased a commercial building before? It's a totally different animal with entirely different leases and terms.

Hey Jonathan, why is there no down payment? Is this to be seller financed? Also, I don't see a management section in there. If you plan to self manage, that's cool, but if you ever decide to stop self managing, you've just purchased yourself a job and the property may no longer cash flow. I also didn't see any vacancy factor built in. Let me know if you have any questions about that. Cheers and good luck!

Hey Jonathan, I invest heavily in Covington, there are some pretty awesome things happening there at the moment. Shoot me a PM and we can discuss more. Cheers!

Investment Info:

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

Purchase price: $295,000
Cash invested: $1

This is a 7-unit building in an amazing downtown location. The current rents are well below market and some rehab has already been done to 4 out of the 7 units. The purchase price was a bit under market, due to the below market rents. This will be a long term hold and we will slowly be increasing rents as leases come due and I will be slowly be turning units as they become available. When the building is stabilized, the monthly cash flow should be in the ballpark of $700-800.

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

It was a nice sized multifamily property in the heart of downtown Covington with great proximity to a lot of big positive changes in the area.

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

I found it online on Realtor.com

How did you finance this deal?

Private money

How did you add value to the deal?

I will be slowly raising rents to be at market rate and will also be rehabbing the units that still need work.

What was the outcome?

So far, the property has had numerous small repair issues, but this is quite common for a building of this size in this condition. It will likely take 8-12 months to work out all the kinks and sort through the less than ideal tenant base and make the needed repairs upon unit turns.

Lessons learned? Challenges?

This was a bit tricky as the seller was not open to negotiating independent of the inspection. He was firm on his price and would not allow for any retrades. While this was less than ideal, the deal still had plenty of meat on the bones. I may have tried a slightly different tactic with regard to asking the owner to pay for my closing costs instead of for a discount on the property. This would have effectively accomplished the same goal I was after.

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

I work with an amazing agent in the area as well as a rock star PM.

Investment Info:

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

Purchase price: $295,000
Cash invested: $1

This is a 7-unit building in an amazing downtown location. The current rents are well below market and some rehab has already been done to 4 out of the 7 units. The purchase price was a bit under market, due to the below market rents. This will be a long term hold and we will slowly be increasing rents as leases come due and I will be slowly be turning units as they become available. When the building is stabilized, the monthly cash flow should be in the ballpark of $700-800. I was able to find a private lender to finance the entire purchase price because of the obvious upside potential and day 1 equity in the property upon purchase.

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

It was a nice sized multifamily property in the heart of downtown Covington with great proximity to a lot of big positive changes in the area.

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

I found it online on Realtor.com

How did you finance this deal?

Private money

How did you add value to the deal?

I will be slowly raising rents to be at market rate and will also be rehabbing the units that still need work.

What was the outcome?

So far, the property has had numerous small repair issues, but this is quite common for a building of this size in this condition. It will likely take 8-12 months to work out all the kinks and sort through the less than ideal tenant base and make the needed repairs upon unit turns.

Lessons learned? Challenges?

This was a bit tricky as the seller was not open to negotiating independent of the inspection. He was firm on his price and would not allow for any retrades. While this was less than ideal, the deal still had plenty of meat on the bones. I may have tried a slightly different tactic with regard to asking the owner to pay for my closing costs instead of for a discount on the property. This would have effectively accomplished the same goal I was after.

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

I work with an amazing agent in the area as well as a rock star PM.