All Forum Posts by: Sam Domach

@Kelly I. - CoC return is just over 11%

@Pete Woelfel Thank you!

They do most of the maintenance themselves, other than something that I would want an actual contractor to come out and do. I currently have it set up as a rent reduction and then they will fill out a 1099 at the end of the year for tax purposes. 

Investment Info:

Large multi-family (5+ units) buy & hold investment in Kewaskum.

Purchase price: $635,000
Cash invested: $127,000

I was able to secure an off-market 11-unit apartment building in the Greater Milwaukee Area. The building is fully rented out and has a property manager currently living on site.

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

The stacking method. I first purchased a duplex, then a triplex and was looking for something a little bigger with the current rates and outlook.

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

I found this deal off-market through a family friend. I negotiated based off the ROI that this property would net post all expenses.

How did you finance this deal?

I financed this deal through a local Credit Union. Was able to get a 3.75% 5 year term amortized over 25 years with a 20% down payment.

How did you add value to the deal?

Through the purchase and negotiating with the seller based on the inspection, the electrical will be redone and the roof will be redone.

What was the outcome?

The outcome is I now own the 11-unit apartment building and its cash flow :)

Lessons learned? Challenges?

This was my first time dealing with Commercial Lending, which is a whole different animal than residential lending. I called 20+ banks, from large institutions to smaller, local banks. I found that by far, the smaller local banks and especially credit unions, were able to provide the best financing available. 3.75% is a great rate for a residential property, let alone a 11 unit and they were flexible on the down payment which is less money out of my pocket.

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

I bought it off market, so I did not use an Agent which was another first for me.

Thanks @Annie Zambito!!

Hey Chase! I started out in my journey going right into Multifamily deals. I bought a duplex first, then a tri and am now under contract on an 11-unit apartment building as my third purchase. I think as you can see from the comments back, there is no right one way to start off on this path. It all comes down to your financial situation and your appetite for being potentially uncomfortable with your living situation.
If you are short on cash, wholesaling is always an 'easy' way to get started with little overhead and potential to do deals quickly.

If you have some cash or other people's money to use, flipping and/or buy&hold can be the appropriate path. If you are comfortable living next to someone, look into house hacking and then moving out after a year. If you don't want that, look at investing in the duplex and having two renters. Different situations with loans and such, but can offer a wide array of avenues for you personally.

For me, it is always a numbers game. Run the numbers, verify and trust the numbers and no matter what avenue you take in your investing career can pay dividends.

Sam

Hey Marcus!

Thanks for the info! I have 2 properties and am closing on a third, the first two are a duplex and triplex currently under my personal name and the third I am closing on at the end of March is an 11-unit apartment building. With the commercial loan, I was able to close under my LLC, but through the duplex and triplex I was not.

I do keep my properties in good standing and have solid leases with all of my folks, however, when I was searching for an umbrella policy, since I currently rent my own home and don't own it, they wouldn't give me an umbrella. Maybe that was just he insurance carrier I am using, but wanted to try to get them in the LLC for even more protection.

Thanks for Brandon's YouTube on this, I will make sure to watch it!

Sam

Hey BP!

I am looking for a real estate attorney that would be able to help transfer a couple properties that are currently in my personal name over to my LLC for asset protection. Any recommendations out there? 

Thanks!
Sam

I am not fully aware of roofstock's fee structure or what you had to pay a realtor/roofstock to purchase the 'turnkey' property, but in my opinion it seems like a math problem...

If you sell it, you are out what those fees were, what your realtor fees and your negative cash flow and you would gain back the appreciation on the house if someone is willing to pay it.

If you keep it, you first need to figure out a way to get the cash flow positive that some others have replied to on here. Raise rents, drop property management and manage yourself for a bit, etc. One quick action by you can take it positive, especially if you are okay with managing it yourself. If you get it positive, and you still want to sell it, your math equation becomes how many months do I need to own this to cover on the amount of fees/etc. that I paid to get the house. That gets you back to breaking even and you can do with the house what you would like.

Thanks,

Sam Domach