It passed.
03-09-2023 | 12:26 PM
#341
Gets Weekends Off
Joined: Apr 2007
Posts: 5,529
Likes: 497
I started with single family rentals in 2008, but quickly moved to CRE. My experience resembles FMH's.
I developed my CRE plan while.on reserve in 2010. I went so far as to write a business plan with financials that I took to the bank once I filled in the property specific numbers. Using a $100k down payment and 900k of SBA 504 financing I bought a 270 unit self storage facility from a disinterested owner. It was listed by a "non storage" broker and was languishing on Loopnet The existing manager stayed with the property, but retired a few months after acquisition when work expectations were made clear. With proper management, facility improvements and $250k of expansion (on borrowed money) the facility was valued at 2.5M within three years. The increased cash flow supported a 900k cash out refinance that funded subsequent acquisition and development.
This exceeds typical leverage and gains available in the market today. It also took hours of direct involvement. Today, a similar property requires 20-35% equity and would take 3-5 years before refinancing the initial investment back out. It still beats most other investments.
At the opposite end of my investing spectrum, are apartment syndications where I've never even seen the properties. I've lost money on one and made double digit IRR on others. Returns are dependant on the syndicator and the property. DYODD. Learning multifamily valuation and financing is critical. Bad financing terms can sink a well run property. I learned the downside of bridge loans and Fannie floaters and rate caps over the last year. Properties with long term agency debt are providing good distributions.
In the middle sits a STNL (single tenant net leased) property. It was purchased in 2021 with cash in a 1031 exchange. I visited the property once after it was under contract. The real inspection was from an inspector I hired. Since then I've been inside the property twice and driven by two other times. Rent comes from a national brand tenant on the 1st of every month. At some point I can get loan and use the capital for another investment, until then the net rental income is 7% of the purchase price.
Most real estate horror stories include one or more of the following:
-Unscreened tenants-Government subsidized rent
-Condos
-Coastal ie cyclical markets
-Anti business sentiment (blue states)
-Lack of DD in the property or syndicator
-Speculation on appreciation
-Ignoring the importance of cash flow.
I developed my CRE plan while.on reserve in 2010. I went so far as to write a business plan with financials that I took to the bank once I filled in the property specific numbers. Using a $100k down payment and 900k of SBA 504 financing I bought a 270 unit self storage facility from a disinterested owner. It was listed by a "non storage" broker and was languishing on Loopnet The existing manager stayed with the property, but retired a few months after acquisition when work expectations were made clear. With proper management, facility improvements and $250k of expansion (on borrowed money) the facility was valued at 2.5M within three years. The increased cash flow supported a 900k cash out refinance that funded subsequent acquisition and development.
This exceeds typical leverage and gains available in the market today. It also took hours of direct involvement. Today, a similar property requires 20-35% equity and would take 3-5 years before refinancing the initial investment back out. It still beats most other investments.
At the opposite end of my investing spectrum, are apartment syndications where I've never even seen the properties. I've lost money on one and made double digit IRR on others. Returns are dependant on the syndicator and the property. DYODD. Learning multifamily valuation and financing is critical. Bad financing terms can sink a well run property. I learned the downside of bridge loans and Fannie floaters and rate caps over the last year. Properties with long term agency debt are providing good distributions.
In the middle sits a STNL (single tenant net leased) property. It was purchased in 2021 with cash in a 1031 exchange. I visited the property once after it was under contract. The real inspection was from an inspector I hired. Since then I've been inside the property twice and driven by two other times. Rent comes from a national brand tenant on the 1st of every month. At some point I can get loan and use the capital for another investment, until then the net rental income is 7% of the purchase price.
Most real estate horror stories include one or more of the following:
-Unscreened tenants-Government subsidized rent
-Condos
-Coastal ie cyclical markets
-Anti business sentiment (blue states)
-Lack of DD in the property or syndicator
-Speculation on appreciation
-Ignoring the importance of cash flow.
03-09-2023 | 01:59 PM
#343
seeing the country...
Joined: Oct 2006
Posts: 4,003
Likes: 34
From: 73N A
Excellent info, both to FH and Gunfighter, much appreciated.
Question - did you search within the local area (ie, within a hour) or did you look further afield? Also, I'm assuming that a property with existing tenants or mostly filled with tenants is much better than a vacant property?
Question - did you search within the local area (ie, within a hour) or did you look further afield? Also, I'm assuming that a property with existing tenants or mostly filled with tenants is much better than a vacant property?
03-09-2023 | 04:47 PM
#345
Line Holder
Joined: Jun 2015
Posts: 1,996
Likes: 177
#1 Learn how to value property. This is where books and videos come in.
#2 Formulate a plan. How do you intend to make your money? Stabilize a distressed property and sell it? Cash flow for years? Have an exit strategy.
#3 Be patient and wait for the right property that fits your plan. Don’t buy on emotion or out of impatience.
#4 Figure out how to close the deal. Don’t be afraid to get creative here. Put financing together. There are a million ways to acquire a property. It’s not what you’re familiar if you’ve only bought houses.
I’m happy to share the details of my experience with this particular property. I bought it for 575k with 70k down. I got financing through a big bank but they wanted 35% down. So I had to seek private financing for the rest of the bank’s requirement (see #4 above). I paid that off as soon as I could because it was costly. But I needed it because I knew this was the right property.
The property has 6 offices and was about 35% vacant by square footage…which is a lot. This affects the NOI (see #1 above), which in turn affects property value. So I got a good property, albeit financial distressed, for a low price. My game plan was to make some small cosmetic improvements and patiently wait for the vacant spaces to get leased, all the while bending over backwards for the existing tenants to make sure they stayed. Once I got the spaces lease up…it took more than two years…and with rent increases, the NOI has almost tripled, which results in a current value of around $1.2M, of which I owe $340k to the bank.
The $5k a month is cash flow. This is after all expenses (utilities, repairs, property taxes, insurance, etc) and debt service (loans). Like I said, money in my pocket, before income taxes…different subject. But I will say in addition to depreciation, your own children under 18 as employees are gold mines.
Property taxes are $14k a year. I challenged the assessor’s value last year and won. Most property owners pay an attorney to do this, but I did it myself. It was easy. Utilities around $1k a month, depending on season. I pay for almost all exterior repairs. But you can structure new or re-negotiated leases however you want. For example, this property went through a rash of broken windows (vandalism) that I kept paying for. So the next time I negotiated a new lease I made sure it had the tenant responsible for windows. The world is your oyster when it comes to leases…as long as you can get a tenant to sign it.
It’s not necessarily easy money, there have been plenty of frustrations. But I have learned a ton, it’s been moderately enjoyable, and the return is unreal. Seriously, look into it and don’t be afraid of the unknown.
#2 Formulate a plan. How do you intend to make your money? Stabilize a distressed property and sell it? Cash flow for years? Have an exit strategy.
#3 Be patient and wait for the right property that fits your plan. Don’t buy on emotion or out of impatience.
#4 Figure out how to close the deal. Don’t be afraid to get creative here. Put financing together. There are a million ways to acquire a property. It’s not what you’re familiar if you’ve only bought houses.
I’m happy to share the details of my experience with this particular property. I bought it for 575k with 70k down. I got financing through a big bank but they wanted 35% down. So I had to seek private financing for the rest of the bank’s requirement (see #4 above). I paid that off as soon as I could because it was costly. But I needed it because I knew this was the right property.
The property has 6 offices and was about 35% vacant by square footage…which is a lot. This affects the NOI (see #1 above), which in turn affects property value. So I got a good property, albeit financial distressed, for a low price. My game plan was to make some small cosmetic improvements and patiently wait for the vacant spaces to get leased, all the while bending over backwards for the existing tenants to make sure they stayed. Once I got the spaces lease up…it took more than two years…and with rent increases, the NOI has almost tripled, which results in a current value of around $1.2M, of which I owe $340k to the bank.
The $5k a month is cash flow. This is after all expenses (utilities, repairs, property taxes, insurance, etc) and debt service (loans). Like I said, money in my pocket, before income taxes…different subject. But I will say in addition to depreciation, your own children under 18 as employees are gold mines.
Property taxes are $14k a year. I challenged the assessor’s value last year and won. Most property owners pay an attorney to do this, but I did it myself. It was easy. Utilities around $1k a month, depending on season. I pay for almost all exterior repairs. But you can structure new or re-negotiated leases however you want. For example, this property went through a rash of broken windows (vandalism) that I kept paying for. So the next time I negotiated a new lease I made sure it had the tenant responsible for windows. The world is your oyster when it comes to leases…as long as you can get a tenant to sign it.
It’s not necessarily easy money, there have been plenty of frustrations. But I have learned a ton, it’s been moderately enjoyable, and the return is unreal. Seriously, look into it and don’t be afraid of the unknown.
03-11-2023 | 11:05 AM
#346
in holding
Joined: Dec 2017
Posts: 252
Likes: 0
From: single-pilot multi turbine captain
getting the thread back on track
Hey all - can anyone excerpt what first year pay & min guarantees are with the new contract? Profile not updated yet...
Actually, digging around I found this link which provides answers if correct (65 and $108/hr):
https://d2r1lrrqctgamh.cloudfront.net/delta/TA/TA%20Reference%20Guide.pdf
Actually, digging around I found this link which provides answers if correct (65 and $108/hr):
https://d2r1lrrqctgamh.cloudfront.net/delta/TA/TA%20Reference%20Guide.pdf
Last edited by Continuingappch; 03-11-2023 at 11:24 AM. Reason: found answer
03-11-2023 | 12:51 PM
#347
Moderator
Joined: Sep 2011
Posts: 8,225
Likes: 1,193
[QUOTE=Continuingappch;3606120]Hey all - can anyone excerpt what first year pay & min guarantees are with the new contract? Profile not updated yet...
Actually, digging around I found this link which provides answers if correct (65 and $108/hr):
https://d2r1lrrqctgamh.cloudfront.ne...pdf[/QUOTE]
http://contract2019.org has what you are seeking.
Actually, digging around I found this link which provides answers if correct (65 and $108/hr):
https://d2r1lrrqctgamh.cloudfront.ne...pdf[/QUOTE]
http://contract2019.org has what you are seeking.
03-12-2023 | 07:00 AM
#348
Gets Weekends Off
Joined: Dec 2005
Posts: 4,047
Likes: 20
From: 7ER B...whatever that means.
Really enjoying the investment discussion. Truly. Buuuttttt... does anyone know when crew meals are going to start showing up? Im talking actual, planned on crew meals, not just the "hey I have a couple meals left over if you guys are hungry" deals. The Implementation MOU just says "no later than" August. I've got a couple 5:10-5:20 domestic legs coming up this month and just wondering what to plan for.
03-12-2023 | 07:03 AM
#349
Line Holder
Joined: Jun 2015
Posts: 1,996
Likes: 177
Really enjoying the investment discussion. Truly. Buuuttttt... does anyone know when crew meals are going to start showing up? Im talking actual, planned on crew meals, not just the "hey I have a couple meals left over if you guys are hungry" deals. The Implementation MOU just says "no later than" August. I've got a couple 5:10-5:20 domestic legs coming up this month and just wondering what to plan for.
03-13-2023 | 01:09 PM
#350
Gets Weekends Off
Joined: Apr 2016
Posts: 3,980
Likes: 185
From: Looking left
Really enjoying the investment discussion. Truly. Buuuttttt... does anyone know when crew meals are going to start showing up? Im talking actual, planned on crew meals, not just the "hey I have a couple meals left over if you guys are hungry" deals. The Implementation MOU just says "no later than" August. I've got a couple 5:10-5:20 domestic legs coming up this month and just wondering what to plan for.
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