All Forum Posts by: Tony Nguyen

@Timothy Granderson - What type of value adds are you looking to do? Just strictly lease ups or redevelopments? I'm based out of Orlando, FL and have strong ties in Orange County, CA since I used to live in Huntington Beach so can actually help you in both markets.  

Thanks

'always' is rarely used to stitch deals together. ever investor has different needs and ever deal is different. you'll want to come up with a template of how you'd want to make your initial offer to your investor, but be ready to give here and take there, depending on your investors needs. 

@Dan Cho I think we all want to help, but those scanned images are going to make it difficult for most people to chew on for you, or maybe just me. Let's start with the back of the napkin approach since you don't have much time:

lease type? (full service, gross, nnn, etc)
gross income?
expenses?
reimbursable or not?
net income?
deferred maintenance? 
what's your plan with the property? what's your goal? 

@Mark Hamblin I'd start smaller and snowball. With that much cash, if you pick up the right deals, you can do a lot of damage. I've seen people double or triple their money in 12-18 months with just half a million. 

Since you're newer, perhaps you can partner with operators you trust and cut a deal so it's a win-win for everyone. The right Broker will also be your best friend so I'd go interview a bunch, take notes, find out who the players are in those markets and pick your right hand man. Also, since you're going out of state, management will either make or break you, so beware of that as well. Good luck and welcome!

The small loan is challenging. I've met some mortgage brokers in the past who will lend the smaller amounts (less then 50k), but will charge 6 points. 

@Henry Le Find those with value adds and you'll be able to get closer or exceed the 10% or simply adjust your criteria to find a min 8% cap. The value adds don't need to be a home runs either. Escalations are a good source of value add, going from a local to national tenant is a big one and on the big stage, adding an outparcel to a shopping center would be great too. To conclude, maybe you're looking at the wrong deals? Just some thoughts to chew on. 

Credit unions definitely are easier from my experience, but won't lend non-recourse (assuming that's your question). An idea would be buy via hard money (or private loan) and then take the deal to the credit union after w/ equity to look stronger?

@Alex Saleeby Thank you! In your opinion, what is a healthy cash reserve?

@Philip Chu Thank you! I gave my Dad some equity, rights to do all renovation work and the management fee to manage the units for us; I don't do any of the daily operations, I only focus on acquisitions and making sure financing is in line. I've used PM companies in the past and just haven't had luck in that department. The deal I cut with my Dad really helps because since he has some equity now, he's going to watch every dollar that's spent and handle every tenant/project with the utmost care - he's been doing an great job. When we close on the 40+ unit, the plan is to hire a part time manager and ultimately move Dad out out of the day-to-day operations and just manage the property manager. My role will still be working on the vision, financing and acquisitions. 

@Andrew Syrios For the most part, I do think they're accurate. My day job is commercial investment sales so from a capital markets position, I'm comfortable. Definitely not an appraiser, but I think I know just enough to have a sense of if I'm close or not. 

@Mike Dymski Thank you! Surprisingly, the 40+ unit is 100% occupied and there is no deferred maintenance at this point of our inspection. The only value add will be rent bumps for all units of $50-$75 each. We are also going to convert a large number of 1 bedrooms to 2 bedrooms, but those details are currently being ironed out. In case you were also suggesting a cash reserve like our man above, what is an amount you think would be acceptable? 

 Thank you for your input and kind words. I do believe the appraisals are accurate. The values they're coming in at are very close to the numbers I come up with. I'm only buying in a handful of neighboring zip codes so am pretty familiar with the cap rates and rental rates. Again, thank you for your kind words. 

November last year, I bought a vacant 9 unit for $210k, put in $40k to renovate and after fully leased, it appraised for $440k. In April, I pulled out 80% or $318k and used $200k to pay off the private loan of the 9 unit and $118k to buy an 8 unit for $265k. 

The 8 unit was under performing and by next month, based on the same metrics of the first property and after speaking to my bank, it'll likely get appraised for $400k. At a conservative 75% (lender is quoting 80%), I'll be able to get $150k from it. This money is untouched at the moment because I'm searching for a larger deal (more on this in a bit).

Last week, I bought a 4 unit for $120k and the value will be worth $200k in a couple months with the same metrics as the first property. I plan on getting $160k out of this one and pay off the $120k private loan and using the 40k balance towards the larger deal. 

With the 3 deals above, after paying off the private loans, I'll have $190k equity I can use to put into the larger deal along with about $150k of my own capital, or $340k. I just got an offer accepted for a 40+ unit for about $1.6M. 

My question is am I over-leveraging? I don't think I am, but after talking to some older folks who are against debt to began with I felt as if my growth was a little too fast and I should be careful moving forward. All the loans above have 10 year to 15 year balloons if it matters. Is there anything my experienced BP members can see that'll cause a hiccup in my plans? If so, what adjustments should I make now to lower my risk? 

Thank you.