All Forum Posts by: Matthew Yrungaray

Ted-Welcome to the area! We would live to hear about your goals, experience and how we can help you.

Congrats David! Welcome to the site-the wealth of knowledge here is amazing. Tell us about you first rental deal.

That's a great question Brandon! I'll be very interested to hear what other have to say. I'm in a similar situation.

Welcome Bill,

As a former Riverside native, I wish you the best. I have some contacts out that way if you need partners. Cheers!

John,

I think another advantage for the cash offer is eliminating a condition on the purchase contract, however without a motivated seller it has little value. Good luck!

Thanks Matt D for the insight on cap rates in cap rate declining markets.

Thanks Jeff, this deal is looking down, but better to learn now then regret it later.

Thanks for the response Troy, I did make a typo. My NOI is $163,830. Cap is 6.8%. You do bring up a concern over low expenses though. They look legit but I need to have reserves just in case.

Thanks Ryan, There are 2 buildings with 15 units per building. Units in the area are going for between 80-90k according to agents. So these units are on the lower end of the range.

I also forgot to mention that I have a closing credit of 3%

Hi Jimmy, Here are the numbers. I have 2 years of tax returns and I have some proforma numbers from a third party as well. I have also lived in the apartment complex and know a great deal about it as I helped with property management for 2 years while I was in college. I have averaged the actual numbers (they are very similar from yr. to yr.)

Potential Income $244,200(30 units, 2bed/1 bath, 2% vacancy, laundry income & moveout income)

NOI: $80,370 (tenants pay separate utilities)

Mortgage payment $151,129 ($1.8M @5%, $600k @ 6%)

Owner to carry the 2nd mortgage-$600k @ 6%(I was thinking about asking for zero interest rate in the first year or using reserves to fund shortfall)

Funded Reserves - $6k

CFBT($1,291)

I was also thinking about bringing in a partner to cover the shortfall and to cover the closing costs of the loan.

Total return ($32k principle paydown, property appreciation @ 2.5%=60k and tax savings ?k)

Total Return =92k

Cash Flow: zero to negative

cap rate 6.8%

There are some opportunities to decrease or eliminate the shortfall, I have a mentioned a few in a previous post. I can also bring on other partners to eliminate the 2nd mortgage

-How much should I expect for closing costs?

-Should I bring on partners sooner than later to have more reserves for expenses?

-If I needed $200k for this deal, how much ownership should I give to that partner?

Thanks Brad for the reply. I'm not sure exactly how much cash Ill put into the deal, maybe $10k? My COC return might be 100% per year then for the first few years and then grow from there.

Chris-The opportunity is very unique. I see this as a long term hold. While the cash flow is little in a best case scenario, I also see some tax benefits, property appreciation and equity thru mortgage payment principal paydown.

Another reason that the cash flow is tight on this deal is because the cap rates in my area are in the 6.5% range, for most investors this is out of the "good deal" range. I know most folks might pass on this but Im leaning toward making it happen. Can I pass on a deal that requires little cash and provides substantial equity over time?