All Forum Posts by: Shalini Kadaveru

Hi @Mark Feldman, curious to know why are you looking for a 30-yr loan term. What is your exit strategy? If you sign up for a 30-yr loan and want to exit in 10-years, you have to pay penalty/defeasance.

Congratulations on making those first steps! 

@Neech Yates, for real estate investing you need deals and you need capital. If you are looking to find a mentor my recommendation is to start attending meetups in your area. And in the meanwhile start looking for properties that meet your criteria on CREXI and Loopnet. Reach out to brokers and join their mailing lists. You can do this in parallel while you are searching for a mentor that meets your needs. 

@Ron Singh My recommendation is that you must first finalize your investment strategy before finalizing your debt partner. For example, do you want to (1) buy and hold for 10+ years, (2) rehab and exit in 3-5 years? The bank loan you can get depends on your DSCR (debt service coverage ratio). If the property is in a low cashflow market such as the SF Bay area, you will have to put more equity down for the DSCR to be at least 1.25. The loan amount that you can get doesn't change if you are doing a 1031 exchange. Credit unions have more flexible terms than Fannie/Freddie. However, CUs offer mostly recourse loans, while Fannie/Freddie has non-recourse loans.

@Dave Rav@Dave Rav, it boils down to the individual's goals. The analogy that comes to mind is the founder of a startup. If you have 100% ownership of the company, the company will not be able to grow as fast in most cases. Some founders have lifestyle businesses and want to keep their businesses small. There is no problem with that approach. However, if your desire to grow the business and serve more customers, you have to dilute the equity to hire the best talent and build the right team. You have to share the pie with others so that the size of the overall pie increases.

@Gerardo Waisbaum, you haven't shared the real estate investment strategy you are using. I am assuming that it is a value-add. For value-add projects, I would suggest:

• 1) Get comfortable with the future rent improvements after the value-add project.
• 2) Speak with commercial real estate brokers and property managers to get information on rents, OPEX (operating expenses), and exit cap rates
• 3) Depending on your exit strategy, you can look into getting I/O (interest only) loan for the first few years to manage cash flow better and reduce the capital required upfront for repairs.
• 4) Analyze more deals and share your analysis with the brokers. The deal flow will improve as long as you get back to real estate brokers and keep reinforcing your investment criteria.
• 5) If this is your first deal, consider a JV with other like-minded real estate investors so that you can get started and be more flexible on the returns. Gaining momentum is critical!

As @Canesha Edwards suggested, a house hack would be a great way to get started. Maybe you are already doing some of these steps. Here are the actions that I would recommend assuming that you want to go the house hack route:

1. 1) Look up small MF properties in your area on MLS (Zillow, Realtor.com, etc.)
2. 2) Analyze these properties to check if they cash flow. You might have to spend some time educating yourself on analyzing a property. Bigger Pockets calculator and books published by BP are good sources.
3. 3) Get prequalified by talking to a mortgage broker. Once you know the prequalified amount, you can answer whether you can do this solo or need a partner.
4. 4) Find an investor-friendly realtor. Again you can use BP as a resource to start with the listing agents on the MLS site to get a start.
5. 5) Be patient. It takes time to find the right property. Meanwhile, tell everyone in your network that you are looking to buy small multifamily.

Good luck with your journey!

@Johnny Constantino, I have some contrarian advice here. Since you are looking to get started, my advice is to look at markets where you have an unfair advantage, as Brandon Turner calls it. Look for markets that you or your partners live or are familiar with. Having boots on the ground is an essential criteria based on my conversations with bankers, especially if your team is new to real estate investing. Since you are not a fan of your local market, are there other markets where you or your partners:

1. 1) grew up or currently have family living there
2. 2) like to vacation and therefore travel there frequently
3. 3) gone to college

Familiarity with the market will help you move forward quickly because you will be confident in making your decisions. Once you have invested in 1+ deals, you would have built up your experience, and the criteria for selecting your market will evolve.

@Mulugeta Berhe, have you already spoken to a mortgage broker? If not, I would highly recommend you to talk to one. Here is the information that I gathered after speaking with a few mortgage brokers - the agencies (Fannie, Freddie) take into account several factors such a:

1. 1) Min of 1M loan amt
2. 2) Having property manager
3. 3) Experience with investing in rental properties
4. 4) Networth of investors must be greater than the purchase value
5. 5) Boots on the ground

Since you already own rental properties, my hunch is that it will make it easier for you to get an agency loan but speak with a couple of mortgage brokers.