All Forum Posts by: Philip Hernandez

I'm in negotiations for a 12 unit in Cleveland right now, and will be raising 150k to go towards down payment and reserves. Our plan is to lower expenses for the building (gas is in landlords name now etc.) make minor improvements to units/common areas, and slowly bring rents up to market rate. Property is already stabilized, but to bring up to the valuation that we are seeking it will likely take two years before we can refinance out investor capital. I was advised by a mortgage broker that one of the ways my partner and I can structure the deal, would be to take on a private loan in the name of the LLC that we are forming. He told me that those investors can either be on the loan in the form of a promissory note, or they can be placed in second position on the property. Does this sound like the best strategy moving forward? Also if I end up securing multiple investors for the 150k that we are raising could multiple people be put into second position after closing?

@jimkennedy thank you so much for the detailed response. Are there other tax structures that are possible or that you would recommend if we did not go with the TIC? Also would it be possible for my ownership in the TIC to be connected to debt, ie a commercial loan to cover the remaining balance for the property to be in my name, or would the purchase price, and % of ownership in the real estate have to be related to the cash that is used at the time of purchase. I am also planning on taking on more debt to be used to improve the property we are looking to purchase, whereas the partner with the 1031 exchange would not contribute any additional capital following the purchase.

I have a potential partner that has sold an investment property and moved the proceeds into a QI for a 1031 exchange. How would it be possible to purchase a multifamily property using the funds from this exchange? I've heard conflicting information regarding using TIC's to set up real estate purchases in this way. Also this partner would be contributing most of the capital for the purchase, and I would be doing most of the work, is it possible to set up the TIC so that the partnership would be split up 50/50 like this, or does it require that % ownership match capital contributions?

That single family is in Cleveland .  I’ve visited Oklahoma a few times this year. And thought of investing, what markets are you in?

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $62,000
Cash invested: $50,000

Single family home with a 26k rehab, currently rented out. Learned a lot about electrical through the issues that came up fixing this guy up.

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

Cash flow, in an improving neighborhood

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

MLS

How did you finance this deal?

Traditional financing

How did you add value to the deal?

Rehabbed electrical, bathrooms, and kitchen, upgrades throughout

What was the outcome?

Rented out at $950 a month 50k total invested into the deal

Lessons learned? Challenges?

Electrical was a headache, had serious upgrades needed, Went with a cheap bid on the contracting , and they did not do the level of upgrades needed to fully upgrade the electrical, had headaches for the first month that I rented it out.

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

@rebeccabauer is my prop manager, she’s a pro.

@edbrancheau what market are you investing in?  I’m planning on taking the money to fund my next deal,  I’m in Cleveland though, and the home prices are so low that a couple grand means a lot more than in some other markets like the west coast, where $2,000 fee to pull out an extra 30k makes more sense

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $62,000
Cash invested: $90,000

BRRRR deal did a 60% cash out refi left about 10k in the deal. Full rehab, building has solid section 8 tenant in it, and going well

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

Cash flow, decent enough area to find solid tenants, pull out cash at refi

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

MLS, worked with Agent

How did you finance this deal?

cash out refi from primary residence

How did you add value to the deal?

fixed roof, replaced furnace, full bathroom and kitchen rehab

What was the outcome?

Currently in appraisal, fully rented out at $1550 before expenses, $400 a month cash flow

Lessons learned? Challenges?

Duplexes have lower limits to how much banks are willing to cash out refi without exorbitant fees. I had calculated my return based on a 75%LTV, ended up doing a 60% to avoid higher fees on closing costs

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

Rebecca Bauer, she's great