All Forum Posts by: Ryan Webster

@Christopher Wasowicz

Call a plumber, they can turn the water on or can request the water dept to turn the water on. Depending on your municipality. you'll need the realtor to let you in when you turn it on to look for leaks so you can tell the plumber to turn it off before flooding the property. If the property is winterized you'll need to re- winterize. But I would not do this deal until I confirmed the plumbing was in working condition unless I was sure I got it cheap enough that I could afford to fix anything that might be wrong.

@Victor Avelino

Depends, do the properties together meet your cashflow and roi criteria? Underwrite the properties income and expenses as a portflio. Does the portfolio generate a return? Will the bank lend on it? What if one is vacant can the other cover the expenses of both?

@Jacob Fitzgerald

No deal, if is doesn't meet the 1% rule. I wouldn't waste time digging and deeper.

@Keith Ware

Show me a good deal, a good business plan, backed by solid market research, and a qualified experienced team to exicute the business plan, and I can help you get the money. Direct message me when your ready.

@Brian Spink

Your not wrong. Generally the jump to small multifamly does not yield higher returns in your under writting. The piece you are missing has to do with forced appreciation and market cap rates. When you get above four units the lending requirements and appraisal techniques become dependent on your sub markets cap rate. Just because you buy a property at a 6 cap does not mean it will stay a 6 cap. You need to change the way you under write and look for value add opportunities.

Make a phone call to your commercial lender and ask what cap rate they use to under write small multifamly in your sub market. Begin using this cap rate to determine value. Noi/cap rate =value. Next determine weather cap rates are trending up or down. You want them trending down this indicates high demand in your market.

Now you need to increase noi. Look for below market rents, out dated units, poor management, utilities paid by landlord. Any increase in noi devided by cap rate will equal appreciation in value.

You always need cashflow in real estate. Cashflow provides security, proof of concept, financial freedom, and the ability to keep your investment in a down turn, but wealth in multifamily is built by forced appriciation, and tax incentives. Most apartment syndications archive their projected returns through forced appriciation. Value add is an extremly poweful strategy if deployed in the right asset in the right market, and with a solid business plan.

@Mike Brown

Brrrr

Buy

Remodel

Rent

Refinance

Repeat

The advantage of the brrrr strategy is that you can recycle the same capital into the next deal. In rare cases you can even create new inexpensive capital. Both rely on the creation of new equity through renovation.

The numbers in your example most likely wouldn't work as a brrrr deal as you would not be able to refinance out your initial 35k investment without over leveraging. In today's market conditions I would be very careful going over 75% ltv without a solid business plan.

The power of brrrr comes from the repeat where you roll your recycled or new capital into the next deal. If you where to pay down debt with new debt from the refinance you just have more debt on the same investment. Not more cash flow. You want to snowball your refinance capital because this money is cheaper than hard money, or other outside investor capital. There is a great book on brrrr investing available in the bigger pocket book store

@Dimitry Peters

Cap rate is a important metric. It is a measure of an investments return, a properties value, and the market in which a invesement is located. A complete understanding of cap rates can tell you alot.

If you are investing in multifamly ( 4 units and above) cap rate will determine appraisal, future appreciation, how easily you can exit, and how much your bank will lend you.

When looking at a markets average cap rate you can determine if there is high demand for your particular asset class in a market. The lower the cap rate the higher the prices, and higher the demand in that market. This will help you with your exit when you go to sell the property. Not only will finding a buyer be easier in a high demand market but your chances of appreciation are greater especially if you can get into a market that has strong economic indicators where cap rate are compressing or trending down.

Forced appreciation is also calculated using market cap rates. The formula is as follows any increase to the noi devided by the market cap rate equals appriciated value.

It is very important to understand cap rates I'm your market. Whether they are flat, going up, or going down. Cap rates are a very simplistic value used to measure the much more complicated and diverse economic eco system in each market

They allow us to quickly and easily asses the health and condition of a local investment economy, and more accurately predict the future returns on our investments.

@Eric Paul

Start building your team now. Be transparent about where you are in the process. And follow up consistently to show your serious and still engaged I persueing your goal. You'll need a broker and manger to help you find and qualify your invesent property before you make an aquisition. This is one of the reasons you need to build your team first. Greenville is a great market.

As you'll be investing long distance the more units you can get the better. The number of units will help spread expenses and make it easier to secure debt.

@Edward L lauckern

Investing outside your home market comes down to three things.

Firstly build a team you trust and can lead, and business plan that makes sense for the property and the market.

Most importantly you'll need a great property manager.

Secondly qualify the market you plan to invest in, and find a specific area in this market youd like to invest in. Learn everything you can about this sub market then find a manager that knows more than you.

And last find a great deal with enough cashflow to pay your team, yourself, your debt, and keep operating reserves full.

You'll need to plan ahead so nothing goes terrible wrong and build trust In your team for when things change you and your team can pivot with the changes.

@Lucas Rankin

Do not announce new ownership announce new management. You do not want everyone to know who the owner is. People tend to come put of the wood work when you put your self out there. Keep the letter simple. If you are planning on self managing introduce your self as the new manager only. Explain any changes ,updates, improvements you plan to make to the park. Give the new phone number for any questions/ maintenance request. And give the new address for mailing in rent. If you are hiring a management company let them mail a letter but do proof read it or discuss the content youd like in the letter.