All Forum Posts by: Robert Rixer

When you start raising money, the kinds of investors you're going to get are individuals who want to make a better return than the stock market. This does not align with buying most buildings in cash.

Once you progress in your investing efforts you may come across more UHNW individuals, family offices and institutions who would take the lower return for limiting risk (all cash deal). But unless you're already connected with these investors, there's likely going to be a mismatch.

Office conversions are generally very tough and $100k/unit sounds light on the surface. Love the hustle and go-getter mentality tho.

Cost of capital is high right now. You don't want to cash-out refi and then be sitting on cash costing you 7% while you search for a deal. Based on the info in your post, my recommendation would be to turn these assets into well oiled machines and max out their NOI. Then if/when another good deal comes up, you can approach a lender and look at leveraging either of the properties in order to fund the down payment of the new property. But not a moment before.

I'm a believer that there are deals to be had in any market. No matter where you settle upon, your idea to build really comes down to your goals. If you're goal is a long term hold, you're almost certainly going to do well even with a market rate deal in any of those states. But if your goal is to cashflow positive from the Day 1, you may find it very challenging due to current day interest rates, high cost of construction and the fact you won't have the efficiencies of a seasoned developer building at scale.

Purely answering the 80% vs 90% leverage question, in most cases it's better to reach for that 20% down. It's tempting early on to leverage as much as you can so you can do more deals and keep liquidity, but increased cashflow especially with PMI will make you sleep a lot better at night.

Localized knowledge for an agent or investor is needed to answer most of these questions. But in general, your biggest risks are not necessarily what's the maximum rent you can get, but can you find a reliable tenant that will always pay and pay on-time. And will you have ongoing maintenance issues beyond your CapEx based on the building's age.

I personally would be suspect of this deal. At $5k/month with a 40% expense ratio, you're at a 21% cap..

The good ones will have access to off-market deals. What off-market really means is that the seller refuses to sign an exclusive listing agreement with an agent but tells the agent if they bring them a buyer, they'll payout a commission. This is virtually non-existent with SFH's but is commonplace with 2+ units.

Underwriting is highly overrated by new investors. The real skill is understanding the variability and risk in each number which is not always numerical or scientific. The only way to achieve this is by looking at and doing real deals.

Very underrated question. A lot of people who learn the theory of multifamily investing are often taken aback when they graduate to the real world by how deals seemingly don't work. Usually the discrepancy lays in poor assumptions:

1. Every investor is expecting day 1 positive cashflow.

2. Every investor is trying to max out leverage like you are.

3. Sellers apply market cap rate to their in-place NOI to determine their ask price.

Great story. Question is, without the land deal, would you have "bitten the bullet"?

The broker giving advice is akin to asking the barber if you need a haircut.