All Forum Posts by: Yasir Einaudi

Hello @Fabian Ledezma,

Congrats on taking action and really wanting to reach financial independence.

First off, The VA Loan is possibly the best loan out there and good job in wanting to house hack (live in 1 unit rent the others). That's definitely the right move!

Make sure that your agent knows the ins and outs of this type of loan as it requires a particular guidelines (must appraise, and pass a thorough inspection)

Second,

I’m familiar with the property you are evaluating,

It’s not in the best growing area of town, it’s actually considered Westway, rents in this area are low, $400-$500 per door,

Furthermore have you considered your exit strategy? Look at the properties around, Plenty of manufactured homes around it - ask your Investor friendly real estate agent for a CMA and see what has sold in the last 360 days (stuff doesn't move a lot in this area)

From the calculations you are adding 50% of expenses and you are also adding your Finance payments, this is never the case so make sure you talk to your realtor and really ask them to guide you in what the expenses are for this property. As for rent roll, utility charges, lease agreements with current tenants, etc) 

Having a one meter for all of the units is definitely a massive NO when you are the landlord. Your potential profit will get reduced by the  waste and lack of accountability of the tenants as they are “already paying for their utilities with rent” type of mentality, so expect high Utility bills.

I made this mistake in my first property - had a duplex with one electric meter and refrigerated air on both units. 
Whatever your decision is, it will be a good one as you will learn a ton!
good luck and welcome to the invesor’s club!

Yas

@Charles Large I am fully aware of the economic changes that are coming to Mexico, the political influence is and will definitely have a massive impact on investors' portfolios.

I was recently reached by a Mexican investor looking to bring most of his reserves to town due to all of this. His goal is convert it to cash flowing properties - which here in El Paso, is not hard to find at all.

Good luck in your new venture! reach out if you need any local guidance.

Thanks

Yas

Sounds good @Gabriel Ruiz, when are you in town?

Would be nice to chat and talk about the market of El Paso,

Let's grab a cup of coffee.

Thanks

Yas

Hello @Gabriel Ruiz, welcome to El Paso, Texas.

You can get started with $85K, but the ideal way to do it is to use other people's money to maximize your returns.

I use local hard money lenders that have diverse terms and use them depending on what my goal is.

For flips, look for no prepayment penalty and low origination points.

$85K will only get you a 1400 - 1800ish sqft single family home depending on the area, then you have to look at the cost to fix it. The good thing is the El Paso is known for much cheaper cost to remodel a home than the average US cost.

I work with local fix and flip investors and are getting them 1-2 homes per month, there are a couple decent meetups for investors. Once you are here let me now and I will recommend you some.

Good luck!

Yas

Hey @Steven Austin

Seems that you are overthinking too much, Let me guess, you have read a ton of books, listened to a bunch of podcasts and read a lot of posts and still do not know where to start?

Stop waiting for perfection (perfect timing, perfect conditions) before you do what you know you should have done long ago. Being ambitious is great but aiming for perfection is unrealistic, impractical and debilitating. Aim for constant improvement and consciously and methodically work towards positive change where you need it most.

Pick a strategy and stick with it!

In order to consistently and consciously move from mediocre to amazing, create a plan and totally commit to it. Don’t give yourself an escape clause. Identify and commit to your non-negotiable behaviours.

I can tell you which one is best, without knowing your goals, motivations, and background,

Don’t assume. Don’t act on hunches, act on facts.

Find a deal and work the numbers, and take...

Be more proactive; do stuff! Get out of the theory and into the practical. Now! Do at least one thing each day every day that will get you closer to where you want to be. Even if it scares you. Especially if it scares you.

Have a sounding board (coach, friend, mentor, relative); someone who will provide you with relevant, meaningful, specific, unemotional feedback – you can’t be objective about you. Make sure it’s someone who will tell you what you need to hear, not what you want to hear.

Stop rationalising, justifying and explaining what you’re not doing. Try honesty, it’s quite effective. And liberating.

Now, what with all honesty, what do you think is stopping you form starting?

Yas

Hello @Nicholas O'Hara,

Are you new to real estate investing? Flipping is definitely doable in El Paso, it was named the most affordable city in the nation, so it's getting a lot of exposure from out of state investors (Specially CA) FYI.

The most important part of a flip is buying it right, location does matter - I have heard horror stories of flippers that come from other cities and want to implement the same strategies they did back home and they end up sitting on their property because they either bought too expensive, or in the wrong neighborhood, or invested too heavily in finishes that the comps of the neighborhood simply didn't have.

Study.

I suggest you read the book Flip by Clay D. if you are set with that strategy.
Also, be aware of costs, I know a lot of wholesalers that are clueless with the costs and just throw a random rehab number to the investor with the hopes they will sell the property.

Find a great realtor that is also an investor, I became one myself since I struggle to get the right guidance - there aren't many out there that are familiar with the construction and investing side if the industry.

Don't think you will make a ton of money on your first flip, be happy if you are able to walk away without a loss, I can guaranteed tho that you will LEARN a ton, and that is what you NEED right now.

Regarding the so called "Recession" I believe it's more a consumer's belief through influence of media showcasing the tariffs war etc, what we really now is that for it to hit us - RE investors - there has to be an alarming increase of foreclosures which guess what? they aren't. Look at the number and the trend, its actually going down. My 2 cents..

Good luck in your beginning! We are here to help!

Thanks,

Yas

Fantastic strategy @Jake Denning,

Here in our market, in El Paso, Texas I recommend this strategy to everyone starting in Real Estate Investing. I started House Hacking with a rental ( rent a big house with 4 or more rooms and rent out the rooms to colleagues) Once I had some cash, I bought my first property over 10 years and rented out the rooms. It was great, I learned to be a landlord, learned about remodeling, while living nearly free.

I would recommend house hack to everyone starting out in the industry and specially if you have the ability to use a VA loan, for military personal stationed in Fort Bliss for instance, I have helped people who get a monetary allowance called BAH which is a set amount of $ for their housing needs every month. Since VA required 0% down payment, it's just a matter to find the perfect house hack property, negotiate the closing costs so that they get to buy a property cash-free, rent out the rooms or units (if applicable). They then get to gain the appreciation, build equity, and get to keep the $ saved from their BAH. Perfect hack for someone with these benefits, specially if staying 24 months or longer stationed.

Thank you for sharing!

Yas

Investment Info:

Large multi-family (5+ units) buy & hold investment in El Paso.

11-Plex Currently being remodeled, Increased CAP rate from 8% to 14%.
Bringing the building from a C- to a C+

What made you interested in investing in this type of deal?

Better Cash Flow

How did you find this deal and how did you negotiate it?

MLS, 2 months of negotiation

How did you finance this deal?

Commercial Loan

How did you add value to the deal?

Remodeling, 12-month leases

What was the outcome?

Increased CAP rate to 14%, from 8% when I bought it

Lessons learned? Challenges?

C- neighborhoods are not for everyone, learned about Evictions (personally handled all of the legal through writ of possession), Pests control (bed bugs, roach infestation).

@Amber Saulsbury

@Irina Belkofer is correct in laying the CAP rate formula, as I read in one post above where they included the financing expense which SHOULD NOT be included when calculating the CAP rate.

Anyways, here in El Paso, Texas I can buy a multi family (8 unit or over) C- building with a CAP of 8% - 9%, Most investors settle for that, but my value play strategy is, I come in and rehab the units, add individual water meters and charge it back to the tenants, sign 12 months leases, raise rents, swap washing machines for coin-operated machines, you get the idea, anything that helps me reduce the expenses. For one of my properties, I was able to bring the CAP rate up to a little over from an 8% to a 14% while maintaining a very LOW vacancy rate (1-2 weeks per unit once the 12-month lease is up). I am finishing remodeling the last unit, and I am planning to either sell to an investor that wants a turnkey property, or refinance the complex and get my cash out, and repeat the strategy).

I know how a few people think about CAP rates (that is not the full picture, there is no appreciation taken into consideration, etc), The simplest way to see the value of CAP rate is: Commercial Appraisals almost ONLY care about the CAP rate to determine the value of the property (at least in my area). and guess what? Banks ONLY rely on what the commercial appraisal says before they approve your commercial mortgage. So without an attractive CAP rate, there is no commercial loan. (Commercial appraisals generally have different cap rates guidelines depending on the quality of the building and location)
If you are interested in a 2-4 MFH then CAP rates are not considered when appraising, as these are valued through comparables within the area. Furthermore , these are still regarded as residential loans.
Good luck, make sure you find the right agent that is an investor as well or at least knows about RE investing, about market rents, and that can recommend contractors, etc!

Yasir Einaudi