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JScott

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Maybe I've missed it in replies but curious opinions on taking out a home warranty on rental property for self managed? I haven't had any luck selling my last house after 5 months on the market and decided to offer it up for rent and just signed a 1yr corporate lease with the option to extend up to 3 years (or more I suppose). This is my first rental and my agent suggested since I'll be self managing to get a home warranty to make contractors etc easier as needed for major repairs. I've read good and bad and debating so was curious if others have a strong opinion or suggestion. On a positive note the house is now about $500 income a month vs $2000 a month expense sitting there....

Personally, I'm not a fan of home warranties. They tend to be more trouble than they're worth -- they don't cover everything, you sometimes have to fight to get a claim paid, etc.

Just my preference, though...
 

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steelandchrome

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Personally, I'm not a fan of home warranties. They tend to be more trouble than they're worth -- they don't cover everything, you sometimes have to fight to get a claim paid, etc.

Just my preference, though...

Thanks.
The house is just 5yrs old so hopefully not much to worry about anyways. I will keep the $600 and hope for the best ;)
 

JScott

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Figured I'd update the thread, and use it as an opportunity to thank @SteveO, who originally got me thinking about the idea of value-add multifamily and syndications about 12 years ago...

For the past 12 years we've been talking about syndicating a large project, but the timing was never right, the deal wasn't there, or I didn't have a team that I felt could handle it. But, in a couple weeks, we're closing on our first apartment complex -- 152 units in Houston for just under $20M.

Total cost -- purchase plus renovations -- is about $23M. We're using $14M in FMAC debt and raised the other $9M through private/passive investors. Expecting a 4-6 year hold.

I'll write more about this deal once we close and as we start to execute our business plan.

But again, thanks to @SteveO for the inspiration a long time ago!
 

MetalGear

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Figured I'd update the thread, and use it as an opportunity to thank @SteveO, who originally got me thinking about the idea of value-add multifamily and syndications about 12 years ago...

For the past 12 years we've been talking about syndicating a large project, but the timing was never right, the deal wasn't there, or I didn't have a team that I felt could handle it. But, in a couple weeks, we're closing on our first apartment complex -- 152 units in Houston for just under $20M.

Total cost -- purchase plus renovations -- is about $23M. We're using $14M in FMAC debt and raised the other $9M through private/passive investors. Expecting a 4-6 year hold.

I'll write more about this deal once we close and as we start to execute our business plan.

But again, thanks to @SteveO for the inspiration a long time ago!

  1. @SteveO is the man for sure
  2. Congratulations on the syndication
  3. Was that 4-6 year time frame to hold something you came up with through gut intuition or quantitative data?
  4. Maybe a mix of both?
 
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JScott

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  1. @SteveO is the man for sure
  2. Congratulations on the syndication
  3. Was that 4-6 year time frame to hold something you came up with through gut intuition or quantitative data?
  4. Maybe a mix of both?

4-6 year hold is pretty typical on a value-add multi-family syndication.

A good rule of thumb is that about 50% of units turn over every 12 months. Which means that to renovate every unit (without kicking tenants out) will take about 2 years. Add about a year to stabilize the property, and you're looking at about 3 years from purchase to stabilization.

Buyers like to see 1-2 years of stabilized income in order to purchase based on the NOI, so a sale in year 4 or 5 is pretty typical.

Given Covid constraints right now, we are baking in an extra 12 months in the business plan before we start on the interior renovations, so 5-6 years is our realistic target.

That said, we do pro-forma numbers for everything from 3 years to 10 years, so that our investors know what to expect should something impact the business plan along the way (like a market shift or black swan event).
 

Determined2012

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Figured I'd update the thread, and use it as an opportunity to thank @SteveO, who originally got me thinking about the idea of value-add multifamily and syndications about 12 years ago...

For the past 12 years we've been talking about syndicating a large project, but the timing was never right, the deal wasn't there, or I didn't have a team that I felt could handle it. But, in a couple weeks, we're closing on our first apartment complex -- 152 units in Houston for just under $20M.

Total cost -- purchase plus renovations -- is about $23M. We're using $14M in FMAC debt and raised the other $9M through private/passive investors. Expecting a 4-6 year hold.

I'll write more about this deal once we close and as we start to execute our business plan.

But again, thanks to @SteveO for the inspiration a long time ago!
I can't wait to follow your journey with this!!! Salute and congrats!!!
 

JScott

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I can't wait to follow your journey with this!!! Salute and congrats!!!

Thanks... Closed about two weeks ago, and the asset management and property management team are starting to execute.

If we hit our pro-forma on this one, we should have about $10M gain over 5 years! So, definitely huge potential here...

Heading back to Houston today to make offers on a few more properties. Goal is to get another one or two of these in the next few months... Covid is providing some decent opportunities...
 

Outdoorlife2005

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Hey J

I have both your books and I love them! I'm also a pro member over at biggerpockets.

Who is a good hard money lender to use these days?
I've spoken to a few but they want $25-30,000 cash down. I hate saying this but I want to get started with 'less' cash down.

For example, house is $50,000. It needs $20-25,000 worth of work. ARV is $105,000-115,000. Those are the type of deals you can find in my area. Rent for a 3 bedroom home is currently around $900-1,100.
Are there any HML's who would lend with $12-15,000 cash down? (that you know of based of your experience that is)

Here in my hometown there's ONE real estate investor. He's buying around 12 houses per year. He's using the brrrr method. He has zero competition. He's up to 50 single family homes and he built a 40 unit apartment complex here in town. He's getting the houses off market for the most part. Banks call him before they are even listed. BUT there's 20 houses I've driven by that need some major repairs. Once I get cash saved up I want to start knocking on doors to try and buy one. Its a small town. 20 minutes from a major city. Population is around 5,500. The nearest city population is around 150,000 people. I've approached the local investor and he laughed me out of his house as soon as i told him I want to buy houses, fix them up, rent, refi, and repeat. He promised me I would never break into my hometown market because he dominates it..
 

Alleghenyman

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J, any tips for finding a good general contractor? I have trouble finding a non-flaky company to do more bespoke work than just windows/siding/roof replacements and am reluctant to stake the success of my project on whether a GC I’ve never worked with is going to flake out. The most reputable companies seem to be building custom homes or doing high end work.
 

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