All Forum Posts by: Percy N.

Yes, the first deal (or two) will typically be the hardest until you can establish a record that the selling broker, lender and your investors will want to see (whether they tell you that or not).

The best advice would be to partner with an experienced sponsor who has their own network and team already established and play a smaller role. Once you get some success under your belt as a co-sponsor, then you can step into the role of a lead sponsor.

If you think you can raise $5mm on your first deal (based on soft commitments), plan on getting about $1mm when it comes time to get the funds.

@Evan Dyer a bit (or a lot) more information may help in providing guidance.

What are the specifics on the property, business plan, projected returns, capital stack, etc?

You may need to post it in the marketplace area to follow BP rules. 

@Nic Gueye, how large of a MF property are you looking for?

You could look into an agency small balance loan which does bet $1mm - $5mm. Not sure what LTV they provide these days.

@Andrew Michaud, the ones you mention will over very basic functionality which may be good for 2-20 units.

What do you think of Tenantcloud (its been a while since I looked at it)?

Once you go to 50-100+, you may want to look at Resman, Bildium, Realpage, Yardi, etc. These are much more sophisticated and along with that comes the need to manage the data appropriately.

@Lucas Miles, if you really want to try to fight this, start with a conversation with the utility dept.

If you don't get anywhere, try a township hall meeting.

Still does not work, try the local press.

All else fails, raise your rents.

@James Robert, you need to have some savings/income before investing in real estate, otherwise, unforeseen costs can pose a great risk.

I would follow the 1/3rd rule - don't buy a house for more than 1/3rd of your income in debt/mortgage payments.

If capital is an issue, see if you can find a partner who can help fund part of this or another investment where you do the legwork or heavy lifting and they provide most of the capital.

Join your local REIA and network.

@John Rankin, there are several "hacks" to furnish a rental.

You can also rent or lease the furniture which if you go to the right place is not that expensive and may make sense, especially if the premium for furnished units is significant.

You can also change the furniture every 3-6 months and most places have delivery and pickup included in their prices.

If the primary reason for the conversion is to make the tenants responsible for the cost, have you looked into RUBS (Ratio Utility Bill-back System)? Essentially, you would split the cost of the utilities amongst the tenants (based on sq footage, #units, etc). 

Each state has its own rules for this, so check into them before implemention. If your state allows it, you could charge a flat monthly fee based on floorplan type (easiest to implement and administer).

@James Robert, the benefit of a 4 unit vs a 5+ unit is that under 4 units are still considered "single family" and you may be able to get a loan as your primary residence with a comparatively low down payment.

However, make sure you can afford the place even if rent collection drops and make sure you are conservative in your expense projections.

@Andrew Michaud, what you have labeled as "Net Income" is actually "Net Operating Income" (NOI).

Value of the property = NOI/Cap rate

At a cap rate of 5 (not sure what it is in your market but this is a conservative national avg), the value would be around $3.8mm

The expenses seem on the low side as others have said. Also add in property management, payroll, etc for underwriting purposes.

Are these expenses from the seller or broker's pro-forma or actual T12? Don't forget to factor in increased property taxes after the sale, etc.