Buying, Renovating & Selling a 6-Unit Multifamily Investment Property | Real Estate Ride Along Ep. 1
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- Опубліковано 8 вер 2024
- In this episode, real estate investors Chris Lopez & Terrance Doyle take us on a walkthrough of a 6-unit multi-family investment property that Terrance and his team are in the middle of flipping. They go over the key items to pay attention to when considering what to renovate and update such as location, layout, and tenant needs.
After the tour, Chris & Terrance head back to the office to do a complete investment property deal analysis of the transaction to show you carrying and operating costs during the rehab as well as the potential the building has once they are able to get market rents.
Finally, they run through the numbers from the perspective of the buyer/investor who they plan to sell to and show how you can get an almost 23% return on your money after the first year!
This is the Real Estate Ride Along Show.
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Connect with Terrance on Instagram at / terrancedoyle and his website at thevareco.com/
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10:11 If a boiler is more than 15 years, it should normally be replaced. With a new heating system in place, we can charge more in rent, because a working heating system is what renters want.
Plus, I'd imagine a new boiler would be a little more efficient than an old, dated 15 year old unit. I could be wrong, I'm not a HVAC guy, but it seems like that'd be a case. Which, would help keep the tenants power bill a little lower, happy tenant. "Oh my power bill is only $60-80 and it's January?! I love it!"
"Great question"..lol
Hahaha...
Every question can’t be a great question. Lol
Maybe... Maybe not.... You didn't see the not-so-great questions that didn't make the final cut
BuildingWealthWithRealEstate fair.
Great comment!
Not very balanced is he lol
A lot of great questions lol
Yep, that's our style! haha
Excellent job explaining this deal and covering the financials. Many times just listening to these small conversation pieces helps understand so much. Thanks and great RE deal.
Athena is a smart lady, asking the right questions
Yes she is!
I like this. It’s has a real in the field feel to it that’s lacking on UA-cam right now.
Had anybody count how many "that's a great question" was said in this video?🤣😆😆
Thats a Great Question
Every question is a great question lol
Lol yeah. I think they already knew all the answers, they just asked the questions so the audience could understand.
Great assessment, now ask me a great question. 😂
@@noahmount5389 there was some of that for sure, but it unscripted and some were natural questions.
BiggerPocket, love love love this series. This is going to be a homerun
Thank you! We're excited about doing these. let us know if you're ever in Denver
Great question!
Excellent info on how the project was financed and the number crunching. Loved this video!
thank you!
Hey hvac contractor here. Have you guys thought about vrf for for air conditioning if you want to keep boilers? Highly efficient depending on the region of the buildings, but they're quiet and zoned for each unit also.
We are doing a live Q+A discussing it. None of us know what it is. We ended up putting window units that we installed into the wall. Can you explain VRF? cost?
Well it stands for Variable Refrigerant Flow.
But its essentially a "large mini split" oxymoron I know.
Benefits: perfect for buildings with large boilers.
Can say that the units have central air so you can charge more per rental. Thus increasing value of building.
High efficiency so the power bill wont be so bad.
Cons: Depending on the size of the building and how many rooms per unit, the cost could be substantial. Atleast 15k for a 6 unit building.
You would also be responsible for the energy bills, but that can also be billed back to the tenants.
This Content is Priceless, I really appreciate your time and knowledge!
would love to see more Content like this :) !
Thank you! We have more shows dropping over the next few weeks.
Great review guys love the cash flow breakdown -more case studies like this are invaluable content
Bold, smart, and courageous 🙌🏼👍🏼👌👏good job on this flip.....❤️👌👏
I don't understand the 5 year fixed loan. So are you not paying this property off?
That was a good change up.
This is a really nice value add deal. Great concept and video. Excited to future episodes.
Why are you making less profit as the cap rate goes up? Shouldn’t you be making more since your earning a higher percentage?
The expenses on this deal seems understated. A property that old there is no way it only requires kitchen and bath remodel. You are guaranteed to have mold and damp issues, pest control issues if not outright damage, roofing and ceiling issues, plumbing issues, flooring issues. What is the point to have new kitchens and tiles and a lick of paint but old plumbing and roof etc
You're right. We didn't touch on all the repairs. Some of them just didn't make the final cut for the video. There was a lot of other work completed during the rehab.
Man, that cap rate seems low. I thought you didn't want to get into any cap rate below 7-8%.
I've been investing in apartments in DFW and other Southern growth markets for the past 6 years and have never seen a cap rate over 5%, but that hasn't been a barrier to great returns.
For 6 units that’s $100 a unit that’s a bad deal, but in today’s environment any cash flow is good and the numbers definitely ensure positive cash flow.
Well done with the video! I really enjoyed watching it. I'm looking into getting my first multi unit property this year and this breakdown really helped me understand a lot of what goes into it
Great! Are you planning on house hacking or buying a rental?
Bad idea on heating best way to go to forced air with air conditioning is to keep hot water boiler and install water to air heat pumps you use the boiler to temper water temp and you run to heat pumps .maintain water at only 85 degrees heat pumps will heat or cool according to apartment demand .if bottom tenant wants heat and top apartment wants cool they feed each other hardly no energy use at all .to cool water temp in summer you use a cooling tower best energy efficient system you can have you can cut energy cost more than half. Mechanical contractor 35 years
Thanks guys , Are there any videos on how you guys do comps on your commercial property’s !??
The program was great, super informative and educational in the details. But, the music was distracting. Please remove or lower the music volume in future episodes.
Thanks for the feedback, we'll pass along the feedback.
RideSpider unnecessary music
BuildingWealthWithRealEstate yeah
100% agree, needs to be much lower in the mix. Great video otherwise!!!
How to find the wealthy investors who are willing to invest hands off?
Its all about networking! That's the secret its tough right now because of covid but keep you projects posted on social media and ask your social followers do they want to invest an old IRA or 401k on your next project hope that helps.
Loved this episode definitely learned a lot Terrance is a smart guy and knows his real estate keep up the good work!
Can you boost up the rent if you renovate The whole apartment unit to more of expensive look? Or stays the same
Boiler? For real? Why waste the money and piss your tenants off? A lot of archaic pieces used to save you like negative several thousand dollars. Hmm, weird. Not very bigger Pockets level I am used to.
IT is a great question 🤔🤔🤔
@terrance Doyle and I will be here in UA-cam comments to answer questions on the property. Let us know what you think!
That's a great question.
I really like this. It must take a while to understand real estate investing at this level. How does he study to learn all of this?
Great...Calculative video...
How much of that profit (once you sell the property) would you lose once you claim that in your annual income taxes? How much would the IRS take? On the other side, don't you lose some of that equity by paying rental management , which includes your gardener, maintenance guys at the apartments that are there day to day, the front office people, your overnight security, ?
Nice work!
Thank you I really appreciate what you guys are doing,
Awesome informative video. Thank you very much for setting out the numbers as you have done. Would like to see more...
Thank you. See more numbers on this property? Or just going forward?
Luxury apartments with no dishwasher is crazy haha
I'm 18, trying my best to convince my dad to help me get started. I have the knowledge (I think) and I just need his help with the finances. He doesn't trust the market, especially with the events of 2020. Hopefully I'll be able to get something soon and show him it works. Right now I'm looking at a $50,000 property the needs to be fixed up really good, then turn the garage into an efficiency living space to create more value and income for a better appraisal.
Good luck.. I could never convince my dad of anything. Still can't at 45 yrs old lol.
Why does your Dad need to help you get started? Aren't you a self made man? I can suggest some ways to make fast cash if you don't mind hard work.
We're doing a Facebook Live and discussing this. The three of us all recommend house hacking as the best way to go. It's less risky. Have you thought about it?
Brilliant info!! Thanks guys
At what point can you sell a multifamily building after purchase, renovation, and rental? Is there seasoning required?
Great Job guys! Keep it up!
May I have some more please?
*Thats a great question*
🤣
Hey thanks fellas
Great video! Loved being able to walk through the process with you guys. Excited for the next one!
Thanks guys! Terrance and I have been following your show to get some ideas. Lots of great ones... plus ones of like not getting locked out :) I say that as someone how has been there and done that too. haha
@@BuildingWealthWithRealEstate Haha lessons learned the hard way stick the most!
How are they renovating multiple units with $150k?
I have a tri plex my first property already rehab should i sell or keep i plan on doing more flips in the future
do you know where i can find a sample of the contract to sign and how equity investors work?thanks
What if my question is just an 'iffy' question? Does it get bumped up on this video to a 'great' question? I think so.
That's a great question!
For low income people close to 700k is a life changing amount of money. With someone not having necessarily a ton of capital to start buying properties or to start a renovation project how would they enter the world of real estate to build wealth?
Go to another market other than Denver. I just purchased a duplex for $90k in Columbus, OH. You could get it at 25% down for $22,500 or the best thing would be to house hack and live in one side which means you could get an FHA loan and get the place for $4k or less.
Well I bought a four plex using my va loan no money down. Also look into fha loans which only require 3.5% down. Just depends on what game you are wanting to play
I recently bought a property for only 45k in cash, you could also put about 20k down on an 80k duplex and pay it off quickly to start scaling
House hack to build experience and equity. Or if you want to get into bigger deals sooner, find a value that you can add to investors. Which for most is finding the deals.
TBH in this situation you will need to build up a nest egg I would recommend anyone bring a 20% down payment to anything. FHA loans are great but ultimately you need to raise your income check out wholesaling because 3 deals at 10k apiece can get you the money you need to truly start building wealth. Never allow your self to real estate rich and real life poor. Because repairs are apart of this business and you need active income/ nest egg for that. I explain what wholesaling is on my channel.
Great content & format!
thank you!
this is awesome content - hope to see more of this series!
thank you! We have more coming out.
That’s a great question 🙄🙄🙄🙄🙄
Who’s trying to invest in real estate? 🙋♀️
🙋🏿♂️
Do or do not, there is no try. -Yoda
great question...lol
That's a great question
ikr
What does your deal acquisition look like? I am always curious on how teams like yours are acquiring these value add properties.
Loaded question. Lots of networking, persistence, and then performing (buying quickly) when people bring deals. A quick way to burn sources is to give criteria for what you want and then not buying it when a deal comes your way.
Love videos like this
Awesome info thanks guys!
You're welcome!
When you sell, what is your potion?
I guess Everythings a Great Question🤔!! Great info tho....
Id love to work multi famly projects .our corportaios has the experience
Wouldn’t a higher cap rate yield a higher purchase price? Can you please explain this a bit?
tenants should pay for electricity and heating they use, not landlords.
If landlords pay, then tenants do not care saving it. If they pay what they use - then they do not waste it (and make landlord pay it).
Most multis are individually metered for electric in Denver. Some have one gas meter or individually. We write our leases with an estimated amount of utility usage. If it spikes, the landlord is allowed to collect more. It rarely does. Gas is soo cheap, that's helpful.
What was the purpose of having Athena there?
That's the whole point of the show! We bring someone to walk the property with us and ask questions. A lot of the Q&A, unfortunately, gets cut out in the editing process.
Great question
Your management budget is 6% seems kind of low for smaller apartment.
How do you price it attractively when you the investor may still have to pay debt, which is not included in the cap rate calculation?
Cap rate is NOI divided by price, meaning price is NOI divided by cap rate. NOI is what the investor influences by the quality of the renovation and the type of tenants that can be subsequently placed, at what rent,, and by controlling expenses, while cap rate is determined by the local market.
I saw a view of the demoed unit. Was there an actual walk through of a finished unit? Did I miss it? Thanks.
There wasn't a walkthrough of the finished product in this video. Later this week, we're going to update the blog post on Bigger Pockets with after photos
Here's a link to the post: www.biggerpockets.com/blog/real-estate-ride-along-buying-renovating-selling-six-unit-multifamily-property
I counted 6, "that's a great question's" up until 16:36 . If anyone wants to take over and count, please do! 😅
You mentioned the caprates in Denver possibly compressing in a few years down to under 5%. How do you think Covid changes that?
@Luis On all the data that I've reviewed, I still think we'll see cap rates compressing.(1) Cheap debt will fuel the growth. (2) Many investors from CA and NY are 1031ing money into Denver because of the stronger cap rates and upside. (3) Overall, Denver is in an extreme housing and rental shortage. Lots of people are moving here. a few PM's have told they've had a spike of NY and CA renters moving to Denver. With many workers going remote, I wouldn't be surprised if many left the expensive markets. Denver is still relatively cheap too many of them.
BuildingWealthWithRealEstate where do you find this data to review? Do you have an specific websites you use to gather such real estate data? If so what websites as I want to conduct research.
I'm not getting rents, I can't pay my property tax. I've been emailing my representatives, no help!
Who are your representatives? Like the government?
@@MasteIsIllmatic Yes, Senators and Congressmen are your representatives. Public school is hard, huh.
@@thisismagacountry1318
How does her representatives help her get rent? Can you answer it without the insults? This is a place to learn.
Hi Julie, sorry to hear about your situation. Do you have someone collecting rents or do you do it yourself? Are the tenants not paying because of covid? Do they know that when this situation is over they will owe you full back rent and this could also affect their credit rating? They should also be getting stimulus checks to help pay something on the rent due.
@@MasteIsIllmatic Sure, it's not the rents. She needs a forbearance on the property taxes until the cashflow comes back. Local and State governments need to address the current shortfall due to Covid. Most banks and financial institutions are already adjusting like the car insurance industry taking smaller monthly payments until the economy comes back. That's the most pressing issue.
Essentially I gleaned from this look for a hard up Boomer who didn’t spend any money to keep his place updated, low ball your offer, reno, then double(?) the rents. Gotcha.
Watch Episode 2 of Real Estate Ride Along here - ua-cam.com/video/dxnjoc6BYG8/v-deo.html
"Thats a great question"
🤔🤔🤔 renovation budget sounds super low who do you have doing this work!?!!
Fantastic work guys
Thank you!
The vibe changed when that girl came on
So What exactly is a great question?
“That’s a great question”!
🤔🤨😒
850k for 6 unit apartment. Denver is expensive.
How is a loan on $1,000,000 at 3.83% for 5 years only 57k a year in payments?
Is it 30 year am but fixed for 5 of them?
Do you bought this out in cash?
Terrance. I recommend you call a question "great" only once per video.
I just want to ask a question that is off topic to see how great it really is.
Whats your question?
@@a.j.gallegos2191 have we been visited by extraterrestrials and do we have craft not of this world?
"gremlin"
@BuildingWealthWithRealestate Would u partner with a newbie who is able to bring 1million dollar 💵 loan to the table?
What are the loan terms? Right now, finding the money isn't the hard part, it's finding the deal. Controlling the deal is extremely valuable.
Did this feel very scripted or unauthentic? Other than that loved the information given.
It was definitely not scripted. In between takes, we were busy with phone calls and emails and don't have the time to script it out.
The sense of entitlement is strong with this one,...
Great question
The background music is both distracting and unnecessary. Absolutely unnecessary.
This felt super rigid. I love the content, but it wasn't fluid in it's presentation.
I agree
First
This isn't 2009. No one cares.
i wonder if any of the questions he’s being asked are great questions.... 💀
maybe in ten years this video will be relevant. real estate investors are going to be put thru hell on earth for probably the next five years and five years to recover... else we hyperinflate, then owning real estate would be essential to maintain yr net worth
Time will tell. I have an 11 unit under contract for a client and the rates from a local came in at 3.85% for 5 years, 4% for 7, and 4.1% for 10 years. They are not worried.
That agent Athena is a cutie 😍
Is she single?
.....thats a great question.
Third
stop saying that's a great question dude
Wow, 800k for a 6 units.. super high
That girl scares me.
Number 1 mistake is she needs to dress like a lady. You do not have a professional image. The best thing you can do is hire a videographer a college student who needs an internship or a friend who knows how to put videos together and start your own UA-cam channel showing your journey. I not sure if that was a man’s suit jacket and tie but apparentcr is everything in this business. Once again this is not shade not being mean This info could make you hundreds of thousands. Start your own yioutube channel REAL ESTATE WITH ATHENA OR ATHENA REAL ESTATE GODDESS.
Non professional actors, 😜😜😜
That's a great question