All Forum Posts by: Timothy M.

If I were you, I'd read this 50x over. Omar's advice is spot-on here.

Also: why are you jumping straight into 60+unit MF deals? Why not just grind your way up by purchasing 1-4 unit deals, and once you have a proven track record of success, moving on to progressively bigger and bigger deals?

As an aside, I will say from personal experience: I am very, very turned off when pitched by folks that mention anything about their personal history of overcoming setbacks. For a potential business associate, all I want to see is a demonstrated ability to make money for me.

One last bit of unsolicited advice: If I were you, I would start small with your own funds (or friends and family) and grind up into the small multifamily space. Once you have a foothold there, if you're interested in going the 'solicit funds' route, I would highly, highly recommend paying a professional to write your ad copy for your website. The current "about us" section is - imho - quite difficult to understand, has multiple grammatical errors, etc.  

@Elenis Camargo Hey Elenis, I tried to type this up on your blog post but somehow the system was acting wonky. Will try to write it here instead.

I'm curious about your accounting - it doesn't look like you have accounted on any of the properties for capital expenditures.  You say in your blog post that you just "plan and forecast" when you will pay for capex upgrades / repairs... but you haven't accounted for this at all.

I'm a big numbers guy, so here goes:

You say your first property clears 250 in profit a month, or 3k a year. Over the course of ten years, 30k in profit.  But what about... a roof? 5k? Boiler? 2-3k? HVAC repair? 2-3k? Redoing the flooring or bathroom or plumbing? Another 5k? All of a sudden, your 30k evaporates up really quickly. My back-of-the-envelope calculations already ate up like half of it.

Another poster asked about this so on the blog, so I won't belabor the point - and certainly don't want to pour cold water on your very evident enthusiasm! - but it is, frankly, a bit disingenuous (and maybe dangerous?) to not account for this at all in your calculations.

There's a separate issue with not budgeting at all for property management; you currently have a well-paying gig as a part-time property manager (and I self-manage on some properties, too, so I understand this!) but you probably need to account for this as an imputed labor cost that you're just paying yourself.  To say that the property returns $250 is somewhat disingenuous, when effectively like $80-100 of that is just labor that you're paying yourself.  If you had to pay a PM to rent the place out... ouch, profit gone in a heartbeat.

Again, not trying to pour cold water on you here, just hoping to offer some constructive ideas for how to better evaluate costs going forward.  Good luck!! 

100k in equity on that first property and only returning a few hundred a month profit?? Ouch :(  And that's the best of the lot?

That's probably 5k a year profit - on the generous side - on 100k.  

Property 1: Sell

Property 2: Sell

Property 3: Sell.

Sorry you're going through this, @Jesse Kreun.  Hope you're learning as you go; keep your head up and hang in there.

@Cassidy Burns I have no dog in this fight, so to speak, but note on Craigslist there are multiple renovated places in Trinidad (3br; one offering a free month, one is furnished [!]) in the $2,200-2300 range. I would just encourage you to be very conservative with your numbers, especially if you are telling your client they will be able to rent a place in Trinidad in the "minimum of $3,000/month" range.

I also own in Trinidad and know many, many people who both own and rent in Trinidad, and unless you're butt-up against the H street corridor / Florida Ave, do not believe $3k is a reasonable rent to expect on a renovated 3BR, and there is a lot of daylight between what I would guess as a reasonable starting point and "minimum of $3k."  Again, no dog in the fight, just offering another perspective for reasonable rents in the area.

Hope your clients knock it out of the park and make that much, though! 

Uhh, a 3br/1ba unit in Trinidad renting for "a minimum of $3,000/month"?  This seems... VERY optimistic.

Unless I'm missing it here, you didn't account for PMI...? Your pro forma shows that you're putting down only 10% - that'll tack on another few hundred to your costs per month.

Also, in no world is a 900k property going to have only 2.5k in closing costs.  

You've answered your own question - telling the brokers what YOU need for a CoC return is a baseless metric, since they can't/won't know what you have wrt financing. You should instead tell them you're looking for something like "a property that returns 1% of gross purchase price per month" or "a property with an asking price of 500k with Net Operating Income of 50k", etc. etc. (I just pulled those numbers out of thin air, but you get the deal)

good luck! 

@Michael Bennett

Congrats man - may it be your first of many in 2019!!

@Chris B.

Sounds like you are doing great.  Why not just bide your time, stack up a little dough, and wait for the next great deal to pop up - no sense rushing it. You've clearly got a model that works, so just... keep doing that :)

@Mark Del Grosso

Congrats!  Mind sharing some rough #s on amount invested, cash flow per month, etc.?  No sweat if you'd rather play those cards closer to the chest.