All Forum Posts by: Nick L.

Yes GRMs are a quick way to get a rough valuation. If you know you could rent a unit for $1k a month/$12k a year and similar units in the area sell for $120k, you have a simple benchmark for valuing price. 

A GRM does not take into account differences in property condition or different operating expenses. It's just a rough tool.

@Stephen E. You made the right decision. Not because of the curry smell, but because of the resistance to screening. 

@Jeremy Cohen I like the approach of price to income ratio. Can you share more data behind your list? Maybe a spreadsheet?

@Michael Noto This particular one is a 20 unit. But you could do it with any kind of income property at all. In SFRs it's sometimes called a sandwich lease option - same concept with a diferent name.

@Andrew Kazakoff Basically you pay a fixed amount of rent each month to the owner, who retains title. You keep the difference between what you pay and your net income from the property. After some time you have the option to close and take title.

As an investor, your goal is to raise the NOI to generate equity so you can close with little or no cash in the deal.

The seller's goal is to get a steady income stream and depreciation benefits for a whle, and then sell to a quality buyer for a known price.

@Brian C. I wouldn't say these are common and you need a specific set of circumstances to make them work. I'm negotiating one now but it involves educating everyone, including the listing agent, and overcoming people's reluctance to move away from a regular sale.

You could try a master lease with option.

For portfolio residential there are lots of good Milwaukee area lenders. The first two I would call are Associated Bank and Landmark CU.

If you need to go commercial, the most actively lending right now are probably AnchorBank and Pyramax. 

This might actually be a good fit for US Bank on the commercial side. They have a great small-loan program which is very streamlined with desktop appraisals. 

@Don Jackson Retail is very mixed in that area. Recent article: http://www.jsonline.com/business/midtown-center-faces-uncertain-future-with-walmart-closing-b99653803z1-365927861.html

You just create a written agreement between the entities that LLC A will borrow $x from LLC B, at no interest and to be returned by a certain time. That prevents piercing the veil.

If you are the sole owner of both LLCs there are no tax implications as the IRS will disregard the entities for taxation anyhow.

@Randall Brooks

Yes that is an excellent idea and I wish I had done something like that.

Watch out for a couple of places that people typically slip up:

- Make sure you account for all costs, not just PITI. That means putting money aside for vacancies/non-payers, maintenance and repairs, and utilities. An emergency fund would be a big help in case of sudden disaster.

- Make sure you use formal, written leases and not just "Hey you can move in and chip in for the rent" casual agreements. Stick to the lease!

- Make sure your tenants pay a good deposit and have a credit-worthy parent as a co-signer. That way you can get your money back if they flake out.