All Forum Posts by: Steve Daddeo

Hi Jeremy, I think you consider starting to build your network of potential partners now, rather than after you find the deal. If a great deal lands in your lap and you don’t already have partners lined up, there’s a good chance you’ll miss out while scrambling to find someone who’s interested, understands the deal, and can move.

Begin having conversations with people now such as friends, coworkers, other investors. Share your plan, know your numbers, what kind of deals you're looking for, and the value you’ll bring to the table (e.g., finding the deal, managing it, doing the legwork). Ask about their interest level, capital availability, and timeline. That way, when the right deal comes, you're ready to execute effectively.

As for earnest money and proof of funds - those are real challenges when you're starting without capital. Another reason why pre-established relationships are key. If a partner is ready to work with you, they can help provide the proof and EMD to get the deal under contract.

Let me know if this was helpful.

Hi Steven - great question and welcome to the journey!

I was once in a similar situation as you with out-of-state investing, I can say this from experience: your property manager can make or break your deal. It’s absolutely critical to find someone you trust, who communicates well, aligns with your goals, and doesn’t hit you with hidden fees. Unfortunately, I’ve seen some property managers treat rentals like their profit centers rather than helping you succeed as the investor.

For my your first out of state deal, I recommend a turnkey property. When I first started out of state investing, I didn’t have a local team in place for rehabs, so turnkey made the most sense.  It let me focus on learning the process without juggling contractors from a distance. It was a lower return than riskier deals might’ve offered, but the stability was worth it for a first step.

As you build relationships and gain confidence with your market and your team, you’ll naturally feel more comfortable taking on light value-add projects. The key is not to rush that part, but rather build your foundation first.

Whatever you choose, make sure you fully vet your PM. Ask about their fee structure, how they handle maintenance requests (make sure you approve all request), vacancy rates, tenant screening, etc. And don’t be afraid to walk away if something feels off.

Let me know if this was helpful.

Hi Michael - Welcome to the journey. Great to see your enthusiasm and the research you’ve already done!

As for using a hard money loan to cover the down payment on a DSCR loan, I'd strongly advise against it. That kind of approach typically over-leverages the property, putting you in a risky financial position. If anything doesn't go exactly according to plan (vacancy, repairs, delays, etc.), you could quickly find yourself underwater.

Instead, I’d focus on one of two paths:

A) Save up the 20% down payment yourself. It may take time, but it puts you in a much stronger position, reduces your risk, and sets a solid foundation for your investing future.

B) Find a partner who can bring the down payment, while you bring the time and effort ("sweat equity"). You can handle the deal sourcing, management, and day-to-day work while your partner funds the project. It’s a great way to get started and build experience with less capital out of pocket.

You’re on the right track by educating yourself.  Stay cautious about strategies that involve stacking multiple layers of debt right out of the gate. Feel free to reach out if you want to talk more about partnerships or running the numbers.

 Yea absolutely, here are a few.

1. Foundation or Structural Issues - Cracks in the foundation, sloping floors, or doors/windows that don't close properly can point to major structural problems. These repairs are costly and can lead to long-term headaches.

2. Bad Neighborhood Trends - Even if a property looks like a good deal, check if the neighborhood is declining such as rising crime rates, lots of boarded-up homes, or businesses closing down. It will be harder to attract high quality tenants in these areas.

3.  Overpriced homes - sometimes people put their property on the market hoping to catch an inexperience buyer.  Always run comps to make sure you are getting at good price. 

4. Extremely low price homes - if it feels too good to be true, it probably is. There could be some major hidden issues such as mold, foundation damage, liens on the property, or legal complications.

Hope this helps! 

I think where the benefit from agents will come in is finding off-market deals.  If you have a good agent, who is "in-the-know", he will be in contact with owners or other agents that have opportunities that are not on loopnet, crexi, etc. 

The biggest difference will be financing the deal. When it comes to financing, banks will look at this as a commercial property and will underwrite it based on the income and expenses the property will generate. So you'll need to get a certain DSCR ratio (typically 1.25x) as well as a LTV (75%-80%). The amortization will probably be 20 years, you can ask your lender to amortize it over 25 years if they have that product. Also, there is sometimes a balloon payment after 10-15 years. It really depends on your lender and the product they have for a commercial RE loan.

Hi Bao - what’s your current interest rate on your primary residence?

If it's anywhere in the 2–4% range (like a lot of people locked in during the last few years), you might want to reconsider refinancing. That would be an extremely attractive rate you probably won't be able to replace, and refinancing into a higher rate — even with a DSCR loan — could cost you a lot more long-term.

Hey Jordan, welcome to the community and huge respect for the path you're on!

House hacking a multifamily is an awesome first move. It gives you both cash flow and a place to live, which is a powerful combo for building wealth early.  Here are a couple quick tips that might help:

1.Run your numbers conservatively: Assume vacancies and maintenance costs are higher than you expect. It’ll keep you safe.

2. Location matters even more with multifamily: Make sure you're buying in an area where you can easily fill units with good tenants.

3. Start networking and building your team now: A great agent, lender, and property manager (even if you self-manage at first) can make or break your deals.

I hope this helps. If you ever want to bounce ideas off someone, feel free to reach out happy to help however I can!

Hey Dozar - double check with your state privacy laws.  But overall, you should be able to put security cameras on the exterior of the building and common areas (hallways, parking garages, etc.) as long as you properly disclose to your tenants that there are cameras there and you are not invading on tenant privacy.

Also note, you'll still need some type of internet connection so you can monitor remotely. Perhaps you offer it as an inclusion for your tenant, or you'll need to have separate internet systems hooked up.

Let me know if this helps.

Hey Fernando, welcome to the community! It's awesome that you're getting an early start which will make a huge difference down the road. It sounds like you're approaching this the right way by living frugally, saving aggressively, and being open to learning.

One piece of advice I’d share is to keep focusing on education while you build your savings. Read books, analyze deals (even if you’re not ready to buy yet), and network as much as possible. The more comfortable you are with the numbers and the process, the smoother your first deal will go when you're ready.

Also, don't feel like you need to have everything figured out right away. You'll naturally refine your strategy as you learn and grow. Flipping, rentals, BRRRR, house hacking, etc., it's all out there for you to explore.

Glad you’re here. It’s cool to hear where people are starting and see how their journeys unfold. Feel free to shoot me a message anytime.  Looking forward to seeing how things go for you!

Hey Ryan - The LTV is measured against the Value of the property. You got to see how much debt the bank will lend up to first, before taking existing debt into consideration.

So first take $300,000 and multiple by 80% you get $240,000. This $240K number is how much total debt (HELOC + Existing Mortgage) the bank will consider lending up to.

Step 2, take $240,000 - Existing Debt ($148,000) = $92,000 (New HELOC Increase).

On a side note, shop around for other lenders that are offering HELOCs. I have some in my area where there are no closing costs as long as I keep it open for a year.  

Let me know if this helped.