All Forum Posts by: Robert Rixer

All well and good to dream big, but you need to understand the practicalities and probabilities of getting the deal to closing. Waiting until you get a deal under contract to then see if you can put together the debt and equity is a recipe for disaster. Talk to lenders, potential LP's and partners to see if there is even a pathway for you to get a 100+ unit deal done, and if so would would the parameters of the deal need to be. 

My belief is that if you can find a good enough deal, you can make it work - even with limited track record.

The theory is spot on, in practice however that logic rarely plays out - at least in recent years where multifamily has been crazy. Having said that there is no unreasonable number, you never know unless you ask the question. There's no shame in buying at your market valuation, as there is a ton of upside to take advantage of. 

Same principles apply - being busy will create opportunity. Start with Reonomy or Costar to identify all the 100+ units in your target market (on and off market) and then see if you can get into direct contact with some owners. At the end of the day, whether small or large deals it always comes down to relationships.

I can't help you with Jersey specific questions. But 3) Try multifamily specific brokers, crexi and loopnet, although 2-4 units maybe scarce.

4) A home equity line of credit is a good source of funds however it will generally make your overall monthly payments higher, so unless a deal is very solidly cashflowing, a HELOC may put you into negative cashflow.

7) Typically electric/gas are paid by the tenant - however this isn't true across the board. These are some of the questions you have to ask on a case-by-case basis.

LLC's are still the way to go but yes you can't tap into owner occupied mortgage tools such as HELOC's or high leverage. Unpopular opinion since I know you're trying to buy the next property, but keeping your equity in a deal is gold. Payments stay lower, cashflow better and it'll boost your balance sheet not to mention lower risk when things go awry.

EMD is a fickle thing. Typically it's meaningless until it goes hard and percentages of pp have definitely dropped over the years. Old school investors typically value it more. It's hard to negotiate EMD down because then it gives the appearance that you're not a serious buyer. A buyer making a huge fuss about EMD is likely going to be a red flag in the seller's eyes.

Best way would be to negotiate a smaller amount up front and then put the balance of the EMD down once you've gone through your DD.

Put up other collateral or increase your offer. I never liked seller financing as the leverage in the negotiation goes to the seller.

Good on you for making the jump into multifamily. You will still have an electric bill even if tenants pay their own unit. You will likely have common area lighting (interior and exterior), perhaps heating and cooling too. 

But my biggest advice, make sure you properly comp the property. Make sure you are not overpaying. Just because you can afford it doesn't mean you should. High down payments will make almost any deal cashflow, but equity wise you don't want to be starting off underwater.

There are too many variables to get any kind of meaningful prediction. Positive and negative forces will cancel each other out to some extent. My opinion is that the overall direct effect of immigration policy on any given market will pale in comparison to other factors such as the economy, inflation and deregulation. 

These are all outside of your control. If you buy in at a good cost basis with solid fundamentals, you're going to come out ahead in the long term.

@Ian Stuart Interesting take. If you are correct, I think it's far more than just the multifamily market that will be in trouble.

@Ray Hage Agreed. I think the idea of owning your house at all costs has had it's day in the sun and people are waking up to the fact that renting is often times the financially sound decision.

@Anna Catron High leveraged operators have always been wiped out with enough time, I don't think that will change. But I do share the sentiment that leverage in general will always be around.