All Forum Posts by: Paul Choi

@Quang Tran Hi Quang!  Wow, my post is from 6 months ago...how much has changed LOL!

Well we had 3 properties in Stockton totaling about 50 units. We did value-add work (rehab and professional management) and exited 2 of them (31 units) and made killer profits. About 47%+ IRR for our investors over a span of 16 month hold. We still have one in Stockton and not quite done with rehab yet.

We moved our capital to Sacramento and picked up 2 properties (25 units) and under contract for a 45 unit.  All off-market. Got a bunch of Sacramento 20-60 unit MF deals in the pipeline, some we have offers in.  We still love Stockton but cap rates on larger MF properties have compressed quite a bit...harder to find deals on 20-100 unit assets.  But if something good comes across our desk in the Stockton market, we will pounce on it. Sacramento has a good amount of inventory stock that has not been turned yet and old owners are selling to value-add investors like us.  Of course lack of inventory, population growth, etc all play a part in it too.

DM me if you are interested.  We have a webinar scheduled with @Willie Marquez group in a few weeks about our latest deal...join his group!

A duplex is residential, no matter what the listing says.  Residential is 1-4 units.  Commercial is 5+ multifamily units.

Like others have said, residential, non-owner occupied, you can probably get around 75% LTC depending on the deal.  Maybe better, again depending on location and quality of the deal.

Commercial is the same, 70-75% LTC depending on the financials of the property and how it's underwritten.  Can go private debt and push that up to 80% LTC.

Yes, I actually am a GP and operator and run syndications.  I can DM you to chat.

sure, will DM you.

As @Brian Garlington has said, real estate is alot of work, and house hacking is right up there in terms of workload.  There is travel involved, construction, alot of nights and weekends, finding properties, etc.  you will probably have to look through tens, if not hundreds of listings to find the right one that you get under contract.  If you want it to be successful, you will have to come to terms with the amount of work that is needed and commit.

Not familiar with OOS turnkey residential investments but heard good and bad stories.

I mostly do commercial and multifamily in Stockton and Sacramento currently.  Maybe participating in a syndication is best for you?

@Michael Tucker

Welcome to BP! There is a wealth of info here. Your post caught my attention because I'm from the Bay Area, got a commercial retail property in Hayward and we have around 70 multifamily units in Sacramento and looking to grow some more there in 2020. Let's connect and chat REI.

Based on all the comments, and your comments that you don't have much time for REI and want to focus on your business - I would invest in a multifamily syndication. Less risk and higher returns if you pick a good operator in a good market.

Funny...Just found this article on the Wall Street Journal.  Clipped the first few paragraphs.

Fannie Mae and Freddie Mac Curb Some Loans as Regulator Reins In Risk

Updated Dec. 10, 2019 5:58 am ET

Fannie Mae FNMA +1.97% and Freddie Mac FMCC +2.17% are pulling back on some mortgages meant to make homeownership more affordable, their latest effort to rein in risk at the behest of their regulator.

The two companies are cutting back on the proportion of loans they back to borrowers with small down payments, for example, and mortgages to deeply indebted borrowers.

The regulator, the Federal Housing Finance Agency, says it wants Fannie and Freddie to be prepared for a possible economic downturn. Tamping down risk could limit their defaults and produce bigger profits, which in turn could help them appeal to potential investors. The FHFA has made it a priority to get Fannie and Freddie out from under government control, but doing so will likely require the firms to raise billions of dollars from investors.

“Some of this really is a reflection of the increased emphasis and focus on: let’s do what we need to do to get out of conservatorship,” FHFA director Mark Calabria said in an interview.

Fannie and Freddie undergird the U.S. mortgage market. Their recent pullback in some affordability-oriented programs feeds into a broader debate about the extent to which they should shoulder risk to make homeownership possible for modest-income borrowers.

I would refi at current low rates and pull out cash at a safe LTV and hold on to the cash unless a great deal comes along. When a downturn occurs, you will have cash to act and make acquisitions. The downturn will be nothing like the last one but I remember back then, credit market and lending pretty much froze. So unless you had cash and good relationships, folks had a hard time getting loans for commercial deals. Refi'ing at a downturn is also harder with tighter credit restrictions and rates are higher. Just my thoughts :)

Like others have said, don't waste your time and bandwidth on the LLC structure. That will be a good problem to have later in your REI career if you start having 50, 100, 500 units. You would be wasting precious time and capital that you could have put towards finding deals and lenders. My first house I flipped was in my personal name. Fast forward a few years and with more brain cells later, I set up LLC's for multifamily acquisitions throughout California because it's just easier, smarter, safer and needed as I brought investors onboard.

Don't create a problem when it isn't one. Keep it simple. And after some experience and profits and you see that you still want to be in the REI world, then you can hire attorneys, etc to do all that for you. With 70 MF units+ in California and growing, I never want to learn how to do everything. Learn how each element works but hire it out as you grow...contractors, property managers, attorney, accounting, etc. Focus your time on what grows your business and portfolio - deals, market research, capital, etc.

Oh, try not to invest value-add OOS deals unless you have trusted boots on the ground looking after your investment.  Or invest in a syndication if you want the hands-off but learning approach.