All Forum Posts by: Wayne Chou

Hi Tim, may I connect with you for advice.  I'm in Los Angeles.  I'm interested in learning what a seasoned investor's matrix and strategy look like and out out of state opportunities. Thanks.

Gentlemen, thank you so much for your comments. My ROI differs from the traditional assumptions which include appreciation and other factors. I'm looking at a simple point-in-time matrix based purely on cash flow return. My approach is to look at value-added deals since my partner is a GC. We've seen and helped other RE investors scale and become successful. We decided it's time to help ourselves. That said, I'm underwriting the ROI purely based on cash flow in Day One. Equity from appreciation and loan principal payment will be captured in ROE; hence conversion to increase unit count and bump up cash flow. Flip or hold will be a decision in 5 years. The stock market has been doing well with 20%+ return. I understand there are other reasons to consider that are not in the equation, i.e. tax planning and long-term benefit, improving cash flow over time, and equity gain. I'm wondering compared to the return from the equity market I'm hoping to hear and learn from seasoned investors what are your buy matrix and mindset to cross that bridge and sign the PSA.

Thanks again for your input.

PS: Greg, a shout-out to the City of Brotherly Love. I was just in Philly two weeks ago visiting relatives.

Hello BP community, I’m so happy to stumble upon this community. I really appreciate any input and thoughts to help gut-check my matrix before signing the PSA. This is my 1st multifamily investment. I narrow down to 3 deals: 6U, 10U, and 12U. With all of the underlying assumptions being equal, the current rent roll provided the following matrix.

Down Payment - 30% to 35%

ROI – 3.5% to 4.0%

COC - 5.0% to 5.5%

ROE – 22% to 29% (ADU the garages)

The higher ROI & COC are from Section 8.

The ROI and COC are not motivating but the potential ROE with the upsize in ADU was the reason for me to jump in. But, setting aside the potential ROE, is the ROI (net loan P&I) and COC a reasonable buy matrix? I've looked at a dozen deals and none make sense or require 40%+ DOWN!

Thanks in advance.