General Flashcards
Perseverance in REI:
Get used to dead ends and rejections, but as you continue forward, deals will come that you will close.
Classes of Multi-Family Properties
A = Luxury properties usually 10 years old or less
B = About 20 - 30 years old and mixture of white and blue collar
C = 30 to 40 years old, renters for life. Can include Section 8. Must screen them properly. Look for No Evictions, Require 2 years constant employment, Require 2 constant years renting elsewhere before applying to yours.
D = Bad properties in bad neighborhoods, can still make money here
14 Steps to Acquiring 1st Property
- Decide what SIZE building you want to start in
- Decide WHERE you want to invest
- Determine WHAT TYPE of multi family you want
- Put your TEAM in place
- MARKET to get your first deal
- ANALYZE the deal
- Create the OFFER or letter of intent
- NEGOTIATE the deal
- Create and SIGN the purchase agreement
- Do your DUE DILIGENCE
- RENEGOTIATE the deal
- Start your FINANCING
- Choose a MANAGEMENT company
- CLOSE the deal
How to find value-add properties?
Usually have things like burned out landlords, bad management, need repair, high vacancies, low rents.
How many offers you need to make a week to be serious?
One or two a week
Three ways to profit from a property?
- Option 1: Buy and Flip. Like a wholesale. Buy under market, sell at market.
- Option 2: Buy and Hold. Always look for opportunities to raise rents as soon as you get a vacancy and focus on emerging markets.
- Option 3: Buy, Reposition, Sell. Ideally you can get a C building in disrepair and bring it up to B quality.
What vehicle to buy property in?
NEVER buy in your own name. Use an LLC that uses name of property’s street to protect yourself.
Where were cap rates during the writing of Multi-Family Millions?
A: 6-7
B: 8-9
C: 10-11
D: 12+
Three phases of geographic areas and properties?
Growth, maturity, decline
Where to get average occupancy/vacancy numbers?
from local brokers or property managers
In commercial real estate world, value of a property is determined by:
Cap rate and cashflow
Normally see higher cap rates where?
In rougher neighborhoods because they are riskier
What strategy to have depending on current market trajectory?
In a down market, buy for cash flow. In an up market, buy for appreciation.
Only pay to go out and visit a site after:
After you already have it under contract after doing your own analysis at home.
CAM
Common area maintenance.
