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How To Line Up Funding For Your Commercial Real Estate Deals

We talked briefly, if you watch prior videos, about residential lending and some of the basic mortgage programs. This is commercial lending. This is typically if you see on the screen, typically five units or more. Residential lending is a single family, two family, three, a triple decker or are four units.

Commercial lending tends to be five units or more. It can be something that’s less than five units if it’s held in a special purpose entity like an LLC. If you own the property individually and it’s under five units, it’s typically residential property or residential mortgage broker or a lender could help you. If it is five units or more or held in a special purpose entity like an LLC, then it is commercial lending.

Typically what you find with commercial lending it is performance based. When you’re dealing with residential lending you’re dealing with your credit score. You’re dealing with your debt to income ratio and you’re dealing with loan to value and a couple of other factors that affect you personally.

When you’re dealing with commercial lending, it’s more lenders are making the decision based on the performance of the property. When I say performance of the property I mean what rents are coming into the property? What is the rent roll for the property? What is the total gross rents that the property collects versus the total expenses or outlay of cash needed to operate the property on a monthly basis, on an annual basis?

Typically what commercial lenders like to see is what’s called a debt coverage ratio of let’s say 1 1/4 or 1.25 which means, I’ll give you the simplest example. If you have debt on the property or a mortgage on the property and that mortgage is about $1000 per month, most lenders like to see at least 1250 in income coming in or a 1.25 debt coverage ratio. They also want to see that the property is cash flowing on a regular basis. They want to see that you can sustain the property over a long period of time and that it is going to be successful for you. Again, it has less to do with your credit score and your personal debts. More to do with the property’s performance over time.

What else can we talk about commercial lending? Rates tend to be a little bit higher than residential lending. Typically a half a point I would say from my experience. You’re seeing a half a point, maybe a point more depending on the risk that the lender assumes with the property. Commercial lending can be recourse and nonrecourse as well. Nonrecourse loans means that you do not need to give a personal guaranty. If the property for some reason does not perform, and the note is not paid, you will not be personally liable for that. When you’re talking about residential mortgages, if you do not pay you get foreclosed on and that foreclosure goes onto your credit report there’s a ding there when you go to purchase another property.

If you are relatively new to the commercial lending space, most lenders probably will want you to give a personal guaranty to the LLC or the entity holding the property. Once you have a little bit more experience, or you hit a certain loan volume, a certain loan number, typically a million dollars you can usually look for a nonrecourse loans where you are not personally liable for that entity or the performance of that property if the property does not perform to expectations.

Last but not least, you are typically going to find LTV between 75 and 85% so loan to value ratios between 75 and 85%. Which means unlike residential lending where you can put as little as 0% down with a VA loan or a 3 1/2% down with FHA and 3% down with mass housing, most commercial lenders are going to want to see at least 15-25% what they call a skin in the game. They want you to have some equity into the property right off the top. That equity can be the equity pulled together by partners. You can have several owners of one LLC pulling funds together to make that down payment of 15-25%. That’s a lot of times what you see especially with properties of a million or two or three million dollars where it is unlikely that one individual has the capital or even if they do, wants to risk the capital themselves. You find that a lot of individuals tend to pool money together with two, three or more partners form that LLC to meet that down payment requirement.

That’s commercial lending in a nutshell. If you would like more information on commercial lending, or would like to be connected with some of our commercial lending contacts, please click the link in the description below and fill out the quick form. Tell us a little bit about yourself and we can connect you with one of our contacts, one of our lenders that we do business with.

Financing

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Never Pay Capital Gains Taxes On Your Investment Property Sale

What a 1031 exchange is, it basically is a tax vehicle that allows you to trade up to larger properties. Let’s say for instance you have a three family and you have some equity and you’re thinking about selling. If you sold that three family you are going to get hit with a capital gains tax, or you’re going to hit for capital gains taxes on the sale of that property.

If the value of the property went up, if you’ve obviously been taking a depreciation allowance every years so your basis is down, the federal and state government are going to say, “You received capital gains from this investment and you are going to get taxed on the sale. To avoid capital gains taxes and to use that money or the portion of tax that the federal government would have taken, to enhance your portfolio it makes a lot more sense to avoid those taxes and use that extra cash to grow your wealth and put it into the next property.

What a 1031 allows you to do is to avoid capital gains taxes, long as you’re following the IRS rules and you are trading up or using the proceeds of that sale to fund your next property. It’s typically used to trade up for a larger property. Let’s give you an example, I sold a $600,000 property and I bought it initially at, let’s say $400,000, I paid the debt down to three, and I was probably going to have a capital gain of let’s say around $200,000 on that property, if not a little bit more.

If I get hit with a capital gains tax and then use the proceeds to invest, I have less money to invest. A smarter, easier way would be to, not easier way but a more intelligent way, would be to use a 1031. Be within the law use a 1031 exchange to trade up to a larger property. Basically what you have to do is you have to use a 1031 exchange company and you have to follow certain guidelines to avoid that capital gains taxes. You have, I believe, identify a property within 60 days and close on that property within 90 days.

Those laws are changing depending on what administration is in, and where we are in housing and how the housing market is doing. Those are the type of things that you want to make sure, using a qualified company, because as those laws move and the rules change, you want to make sure that you are within compliance so you do not get audited or get hit with tax after the exchange

Make sure you’re following the time tables and identifying your property and purchasing and securing the property within a solid period of time. That’s what a 1031 exchange is. That’s how you can use it. Some of the best and the brightest real estate investors in the business are using 1031 exchanges over and over and over again to trade up to larger and larger properties and keep their money moving. They’re constantly keeping their money moving.

For more information about 1031 exchanges or to be connected with a 1031 exchange company, please click the link below in the description, tell us a little bit more about yourself and what you’re looking for. We can certainly connect you with some of the companies that we use on a regular basis. Thanks, hopefully this was helpful.

Financing

 

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Choosing A Real Estate Investing Partner? Consider These Factors 1st

Real estate can be expensive, a lot of work, and difficult to acquire. Partnering with another investor can be an excellent way to break into the business or continue your portfolio growth. But before you grab just any partner, here are four factors you must consider.

What are your timeline?
When investing in real estate with a business partner important consideration is your investment time. For example, if you are age 55 and investing for cash flow to supplement your retirement, while partnering with someone age 35 who is investing for long-term appreciation and portfolio growth, this partnership may not work out. You may be looking to sell the property and cash out in 10 years while your younger partner may be looking to hold on a bit longer. Not to say that you can only invest with people your age, but this is definitely a discussion you should have from the start of your venture. Even business partners of the same age should have the timeline discussion.

What are your investing goals?
Are you investing for cash flow or appreciation? Are you looking to invest in the city or suburbs? Locally or out of state investments? Are you looking to be active or passive with your rental property? Are you looking to buy a couple properties or build a large portfolio? These are some of the questions you and your potential business partner should ask each other before putting a deal together. If you, for instances, want to self manage a couple multifamily homes, while your potential partner wants to purchase a 50 unit building in a neighboring state, there is going to be a disconnect down the road.

Is this an ethical person?
There are a lot of choices to make when dealing with investment real estate and you must know that your partner is making decisions that are ethical, moral, and within the law. Is he or she creating a win-win when dealing directly with a seller? Does he or she avoid discriminatory practices when dealing with tenants? Is he or she truthful when dealing with loan officers? The things your partner does or doesn’t do will directly affect real estate and relationship you have together.

What do each of you bring to the table?
Experience, cash, and time are the three big factors that any one partner can bring to the investment table. You may have one partner who has years of experience investing in real estate, but lacks the additional investment capital for the current deal. If you partner this individual with someone who has cash and wants to learn more about the business, this may be a match made in heaven. What are your strengths and weaknesses? What about your potential partner? Have this critical conversation early on in the process. One person brings significantly more to the table than another partner, this doesn’t necessarily mean the partnership won’t work. Maybe the equity ownership within the property is divided accordingly.

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On December 14th, 2016 I finally closed on my first rental property! For over a year I have been educating myself as much as possible in real estate investing to one day finally take the plunge. That day finally came. A couple months ago, a property on the MLS cam back on the market. It was a 3-family in Mattapan that needed a decent amount of work to get it up to rental condition. Listed at 390k, I initially tried to get the property at 350k, a price that, once I ran numbers, felt would put me in the best position when it came time to refinance out of my purchasing loan, which I ultimately used hard money for. I submitted the offer with no contingencies, all cash and gave up the buyer’s side commission because I knew on the back end it would be worth it, but that was still not good enough and after some continued negotiation, had to settle for purchasing it at the full asking price. This would create additional challenges, but at the end of the day, if you believe in the deal, you’ll make it work.

Financing the deal was another challenge as I really wanted to find a lender that would finance a percentage of the purchase price and renovations. It was not until it was too late that I found a couple lenders where this was possible. At least for the next one, I will have this component lined up for a more streamlined process. I ultimately had to settle on using hard money, which is great for a short turnaround, but is so incredibly expensive to someone like me who hates to waste money. When it comes to hard money, if you have any other option, please use it instead.

Since the closing, it has been a mad scramble to start the renovations and make sure everyone is working constantly and as efficiently as possible. This is just another thing you will have to do when you slightly overpay for a property. Despite the challenges early on, I couldn’t be happier or more excited to have closed on my first rental property. Every day that passes makes me want to find the next deal more and more. Just always be ready for the more than likely roller coaster ride!

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the fourth and final section of the webinar, we talk about six ways to create more value in Boston rentals, creating a “preventative maintenance schedule” and should you hire a professional and what do they charge.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the third of four sections of the webinar, we talk about protecting your real estate investments and essential landlord/tenant forms that you will need throughout the course of running your business. Many people will say it’s not “if” you will get sued, but “when” so learning about all the strategies that can protect your investments is imperative.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. In the second of four sections of the webinar, we talk about how you should handle your income, expenses and taxes when it comes to your rental properties. This is another area of focus that is very important when running your business.

For more resources and tips on managing your properties, please contact us.

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In our latest series of educational webinars, we explored the topic of self managing your rental properties vs. hiring a property manager. Even if you initially plan to self manage your properties, it is important to still factor in the cost of hiring a property manager. In the first of four sections of the webinar, we talk about the eight tools every small landlord needs, mastering your rental market and marketing your rental units. Each topic is very important when running your properties like a business and making the best decisions for the business.

For more resources and tips on managing your properties, please contact us.

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Tenant screening can be one of the most important aspects to owning rental property. The more due diligence you preform in this area will only lead to a more stress free future when managing your property. So first, what are some qualities that make up a great tenant?

Qualities:
Ability to afford rent – not just the rent, but look for the applicant’s income from their job to be at LEAST 3x the monthly rent.
Stability of housing – look for renters that have lived somewhere for more than a few months at a time. Finding those who have rented for at least a year are most desirable.
Cleanliness – it would be best to desire someone that will appreciate the quality of apartment you are providing them and know that they are going to take care of the unit as you would. A neat trick that you can do is to take a peak inside the applicant’s car. This can often times be a good indicator as to how people treat their own possessions.
Pays rent on time – this one could be argued both ways, (opportunity to collect a late fee) but the issue here is the tenants are more likely to stop paying altogether in the long run. Ultimately this just creates more stress than is worth your time.

Here are a few things that you should be looking for in each applicant and if they do not meet these standards, should lead to a denial.

What I would call “absolutes.”
Income greater than 3x monthly rent
Good references
No evictions EVER
Clean background

As a reminder, never discriminate against race, color, national origin, religion, sex, family status or handicap as these are all protected classes according to Fair Housing Laws. You should also check up on State and Local Fair Housing Laws to further ensure you have doing everything within your legal right.

To truly succeed in being a landlord, treat it like a business. And this is one of the most important parts of your business. Do your due diligence, be consistent in your screening and always, always stay true to your screening guidelines.

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Cash Flow

Cash Flow by definition is the total amount of money being transferred into and out of a business, especially as affecting liquidity. In real estate investing, what this means is:

Total Income – Total Expenses = Cash Flow

While you would assume total income would consist of just rent, make sure to include other potential sources of income including application fees, late fees and laundry income. If these sources are possible, also make sure to estimate your numbers using a conservative approach. In the long run this will be the most beneficial approach. On the flip side, your total expenses are NOT simply your mortgage, property taxes and insurance. Other expenses that cannot be overstated include utilities, potential flood insurance, repairs, vacancy, property management and capital expenditures. The last three expenses can be used as percentages against your monthly income from the property. Failure to include ALL possible expenses could lead to you purchasing a “deal” that actually turns out to be no deal at all.

Depreciation/Appreciation

Once you have purchased a property and become a landlord, it is to stay up to date with the value of your property and identify whether appreciation or depreciation has taken place. While this is very important post purchase, factoring in appreciation for an investment decision is speculative in nature and brings unneeded risk into the situation. In the event that your property has depreciated over time, there may be significant tax advantages to this and those same advantages may even be available to you if your property has appreciated over time.

Net Operating Income

Net Operating Income by definition equals all revenue from the property minus all reasonably necessary operating expenses. To look at this simply, NOI is calculated on a monthly basis using monthly income and expense data, therefore it can be converted to annual data just by multiplying by 12. The important thing to remember with NOI is that the formula does not include debt service costs, (loan costs) which differs from cash flow. One of the biggest reasons a landlord will want to know this number is because Net Operating Income plays a huge role in determining the value of your property. For this reason, it is in your best interest to work towards maximizing this number using different strategies to accomplish this.

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Now that summer is finally here, it is a good time to take a look at all potential maintenance needed for your properties. As the winter months tend to be the quieter time of year, spring is typically the time that tenants move out, whether it is a result of a new job or just general life changes. Therefore, it is most important that you inspect your properties to ensure that the condition is such that you can turn them over quickly. If not, it is definitely important to address such issues to maintain the desirability of your property. Some specific areas of maintenance include:

Landscaping
One of the more important summer maintenance areas, a well landscaped property can do very well for the desirability of your property. Falling under curb appeal, this is one of the first things a potential tenant or buyer will notice when first seeing your property. And seeing as first impressions can be very important, it is critical to keep your property well maintained on the outside. The good news is that this is one of the easier jobs to do yourself and should be relatively easy to receive help if need be.

Siding and Walls
Like landscaping, the siding and walls on the outside of your property go a long way to maintaining its desirability and positive first impression appeal. When cleaning your siding is all that is required, simply wash the siding with a soft cloth or ordinary long-handled, soft bristle brush. This can be done using water and mild soap. The best approach is to start at the bottom of the siding, work your way up and rinse the cleaning solution completely before it dries. If siding needs to be replaced, this is another relatively small job and can be learned and applied in a relatively short period of time.

HVAC Systems
Your tenants are definitely going to have working A/C during the summer months, so this is one of the most important areas of focus within your property. One of the specific components to pay attention to for A/C maintenance is cleaning the air conditioner coils, both inside and out before cooling season begins. When the coils are dirty, the system runs longer, which reduces efficiency and increases cooling costs. Another component to address is to check and refill the refrigerant charge if necessary. If you do not have the right amount of cooling refrigerant, you run the risk of damaging the air compressor. Lastly, clean and calibrate the blower system components for optimal airflow. This will lead to a longer lasting and more efficient system.

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The last topic that we covered in our sit down with Anastasia Tacewicz from GMH Mortgage Services was some of the things you want to be considering when choosing a mortgage professional. This is a key individual throughout the home buying process so you will really want to do your due diligence when selecting someone to work with. Anastasia is a great reference as she is someone who we have worked with in the past and have had great experiences with.

Need more info about mortgages or about getting pre approved? Contact us at 617-297-8641

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Dear Malden and local North Shore Landlords,

My name is Joe Rodriguez and I am a Licensed Realtor, and fellow Landlord on the North Shore. If you have an apartment(s) for rent, I would love to assist you in finding and placing the ideal tenant. As a real estate professional living and specializing in your rental market, I work directly with the most qualified tenants around, and currently have several such tenants looking for rental space.  I would love to visit your rental, take some pictures to begin showing it to my very interested client base, as soon as possible. If you list your rental with me and he Mandrell Co we will take care of your tenant’s application, credit checks, employment and background checks, lease agreements and more. Our services include:

  • Showings: We coordinate all showings of your vacant unit and allow you to relax and no have to worry about taking phone calls from non-qualified individuals.
  • Tenant Applications: We collect all tenant applications which includes all necessary documentation to verify the application information is correct.
  • Background Check: Our office conducts a series of criminal and sex offender checks on all applicants. We want to ensure you’re tenant is who they say they are.
  • Employment Verification: We contact the current employer of all applicants to verify their work  status and ensure their income was stated properly.

When you list your rental with me and The Mandrell Co, we will handle everything for you from start to finish. . The best part about listing your rental with us is that there is absolutely no charge to you for our services!

Please contact me if you’re interested in placing a well qualified tenant in your rental or if you have any questions about what we offer.

I look forward to working with you.

Sincerely,

Your North Shore Real Estate Specialist, Joe Rodriguez

 

Joe Rodriguez Real Estate ProContact Me: (401) 641-5774

Joe@MandrellCo.com

www.JoeRodriguezRealEstate.com

 

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Come join us on September 19th (Quincy Marriott Hotel) for this year’s Real Estate Investor & Developer Trade Show. During the event we plan to have a great discussion on Hard Money Lending. Chris Tobin from Endeavor Capital will be joining us for the day to tell us about his business and to answer all your questions about funding deals through hard money.  Some of the points Chris will touch upon include:

• What is hard money and how does it work?

• What do lenders look for and how can I qualify for a loan?

• How do I get a proof of funds letter so I can make offers?

• What type of property will Endeavor will lend on?

• What if I have bad credit? Can I still get the loan? 

This educational seminar will take place on the same day and in the same location as the MA RE Investor Trade Show. Seating is limited, so please RSVP to save your spot. Only members of Boston Wealth Builders will be allowed to RSVP. To become a member, please visit the group website at http://www.BostonWealthBuilders.com. Membership is complete FREE and only takes a couple minutes.

Hope to see you there!

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Your invited to join Boston Wealth Builders at the Quincy Marriott Hotel (September 19th, 2015) as we learn how to intelligently improve our property values. Come get a better understanding of what local appraisers are looking for when determining the values they place on property and how you can ensure your home’s appreciation. This event is free to the public but you must RSVP as seating is limited.

The residential appraisal is an integral part of the real estate transaction since appraisers are the trusted vendor for lenders in the mortgage business.  Whether you’re a real estate homeowner or an investor, understanding the appraisal process is a critical component for increasing your property value for the years ahead.  Danyl Collings, of Forsythe Appraisals, will be addressing the following items in regards to real estate appraisals:

1.)  What are the three main items appraisers are looking for when appraising real estate investment properties?  Why are they important?

2.)  What information can you provide the appraiser to expedite your appraisal process and getting the report into the lender?

3.)  Understanding your improvements to the property relative to the property’s market neighborhood and Town/City.

4.)  Why is rental income important in an investor appraisal?

Since 2009, Danyl has served as branch manager for Forsythe Appraisals, LLC – Boston Branch which provides residential appraisal services in MA, NH and RI.  In this role, he is in charge of the sales, marketing, recruiting, training and report quality and delivery for the Boston Branch.  Forsythe Appraisals, LLC is the largest private appraisal firm in the County with over 250 + appraisers throughout the United States.

To RSVP for this event, please click the link below. You’ll be asked to create a FREE account and join Boston Wealth Builders. Once you’ve become a member you can RSVP and save your seat. Hope to see you there!

http://www.BostonWealthBuilders.com

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Thinking about making a rental investment property purchase? Investing in real estate can be very exciting but also very nerve wrecking. Most investors act too quickly or not quickly enough on a potential purchase leaving themselves in a bad situation or without ever securing a deal. Before you submit an offer on the property ask yourself the following questions.

Is this property right for me and my investment needs? What are my short and long term investing goals?

Is this the right property for my risk tolerance? Do I have cash in the bank if things don’t go exactly as planned?

What is the structure of this property? What is the tenant makeup of the building? Will I manage myself or should I hire out?

What are the conditions of the properties big ticket items? Roof – Windows – Heating – Foundation – Plumbing – Electrical?

What are the buildings expenses to operate? What income does the building produce? Whats the return on my investment?

Your answers to these question will provide you with a good feel for the property, your financial situation and hopefully give you a very quick yes or no as to your decision to move forward. It’s also a good ideas to visit each potential purchase with your real estate agent as well as your handy man. These two team members should be best equip to help you make a sound investment decision.

Looking for more tips on investing in rental property? Join Boston Wealth Builders by visiting http://www.BostonWealthBuilders.com. Membership is completely free!

 

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Are you interested in buying or selling property in Allston or Brighton? Before you do, making sure you fully understanding your local market is very important. Receiving regular market updates will also allow you to see what similar properties are selling for as well as what landlords are charging for their rentals.

Here is Allston/ Brighton multifamily sales and rental market statistics for the last 6 months.

Total Multi-Family Listings SOLD: 24

Average Living Area by Square Feet: 2,904

Average Listing Price: $833,812

Average DOM (Days on Market): 44.04

Average Sales Price: $818,917

Average Rent for 1 Bedroom Units: $1,571

Average Rent for 2 Bedroom Units: $2,039

Average Rent for 3 Bedroom Units: $2,531

Average Rent for 4 Bedroom Units: $3,186

Want to get a FREE Sales and Rental Market Report for your specific area(s)? Just send a quick email (or complete the contact form below) to Contact@MandrellCo.com to receive your monthly report. In the title put the words “FREE Boston Sales Statistics” and in the body, add the up to 3 areas you’d like to receive data for. Your name and email will be added to the next monthly reporting cycle. It’s that simple to stay up to date and ahead of the curve!

Please call us directly at 617-297-8641, for custom reports or questions about the data provided.

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I recently received a lead from a friend of mine about a 10 unit multifamily building going up for sale in the coming weeks. This friend knows I’m an investor and thought it would be a good opportunity for me. While I appreciate my friend thinking of me, this property one of the worse investment option I’ve ever come across….despite the price.  Here are the 8 features of this building that kept me from pursuing the opportunity.

  1. The property’s street position – The first thing I thought when I stepped out of the car was “what an awful position this building was in” It was located toward the bottom of a steep hilly street. There was no doubt in my mind that when it rains this basement would be taking on water. Upon entering the basement, it took a matter of seconds to smell the damp air.
  2. The condition of the roof – The roof was one of the things that was not very visible from the photos my friend sent. Once I arrived at the property I could see a couple immediate turnoffs. The 1st was that the roof was slate.  Slate is a great material when it’s in good condition but can be very expensive to repair. From the street I could see that the roof had already been patched and at some point and the patch was done with shingles versus the original slate material. This was probably done because the owner couldn’t afford the cost of the slate replacement. The 2 note I took was the steepness of the roof. When you’re replacing a roof the steeper the roof’s angles are the more difficult the work becomes. When the work become more difficult the price goes up.
  3. Public Transportation/ Parking – Before we entered the building I asked the owner about public transportation in the area. He replied that the bus stop was about 3 blocks “that way”. While 3 blocks isn’t very far for most people, please remember that this building is located on a hilly neighborhood in New England. Walking up or down a hill in the snowy weather is not the easiest thing to ask when you are trying to recruit good tenants. I also noticed there was parking for 6 vehicles while the building consisted of 10 units. Assuming each tenant had only one car, there would still be a few units without an open spot.
  4. Beautiful Victorian Structure – While Victorian homes are very appealing when properly maintained, the upkeep for this property style can be very costly. I don’t believe this is the best building style to choose for a rental apartment investor. This is something I noticed prior to visiting the building but the low price sucked me right in.
  5. No Uniformity – When you purchase a building with 10 plus units and none of the apartments are similar in size, shape or layout, the building become difficult to manage. For example, if I’m purchasing new kitchen cabinets for this building a would have to access each unit and measure whats needed for each individual space. If the apartments were uniform in terms of the layout, I would be able to measure one unit and multiply the order by 10.
  6. One Heating Unit – This isn’t a problem for every landlord but I personally do not like the idea of having one heating system for an entire apartment complex. Every tenant is going to either be too cold or too hot depending on the temperature you maintain in the building. Those that are too cold will consistently be calling the landlord to increase the heat and those that are too hot will a crack window to regulate the temperature in their units. In either case you have trouble. The alternative is to convert the building to separate heating systems for each unit, but this isn’t exactly a small investment.
  7. Inconsistent Rental Income – When I initially asked the owner about the occupancy of the building I was told that 9 of the 10 units were filled and rents flowing. By the time we connected with the property manager and received a tour of the building we found the it was closer to 6 units filled. I’m not sure where the disconnect happened but it didn’t appear the current owner could keep these units rented.
  8. Poor Job Market – Before we concluded our tour of this building I asked the property manager about the economic state of the city. His answer was less than encouraging and in so many words he told me that the “no one in the area could find work”. If that’s true then “no one in the area” can pay rent and this certainly isn’t the investment for me.

Are you looking for more investment articles like this one? Sign up to receive blog post! Drop your name and email address in form to the right.

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We have a unique opportunity that’s just come into our office. We have a client looking to sell a 4000 square foot lot in Dorchester with approved plans to build a 3 family home. The building would consist of 3 bedroom, 2 bathroom units and would include one parking spot for each unit. The seller is looking for $195,000 or B/O. The Dorchester multifamily market is still red hot and this deal is not expected to last long. Please email us at Contact@MandrellCo.com for more information and/ or a copy of the city approved plans.

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Are you a new investor trying to learn his/her local real estate market? Are you a seasoned investor that trying to explore a new investment area? In either case, below are some great way to quickly become a local real estate guru!

Subscribe to your local newspaper – The local paper isn’t real estate focused but it will give you a very good idea of what’s happening in your new market. You really want to be up to date on what new businesses are coming to town, how the local economy is doing, what political changes are happening and anything else that will indirectly affect the real estate values in that neighborhood.

Find a local real estate Investment Association – Put yourself in the middle of local real estate conversations. Your local REIA allows you to connect with people of similar interest. You can learn from them as well as share your experiences. Many times you can find deals from local wholesalers as well as private money investors, and potential partners. Boston Wealth Builders is a local Boston Investment Group and membership is completely FREE. Join Today!

Get Sold comps from your agent – One of the best ways to gather information about your local market is to study what’s selling in that market. What are buyers paying for properties similar to the type you’re considering? How quickly are they selling? Is it a buyers or sellers market? The easiest way to gather this information is to ask your local real estate agent to send you “Sold Comps”.  All you need to provide is your email address and a list if the areas you’re interested in. These sold listings can be sent to you on a weekly basis. If you would like to receive “sold comps” from The Mandrell Co, simply send us an email (Contact@MandrellCo.com) with the towns you’ve selected and we can set that up for you within 24 hours!

Get Rental Comps from your agent – If you’re investing in rental property it’s also important to understand your local rental market as well.  Your real estate agent can also provide you with these “rental comps” just as easily.

Get Google Alerts for your keywords – This is a really cool feature offered by Google.com. It allows you to systematically search the web for information regarding certain keywords you’ve selected. How doe this help you become a local real estate expert you ask? Let me give you an example. If I wanted to become an expert within the Malden real estate market I would set up “Alerts” in google for key terms such as “Malden Real Estate, Malden Homes, and Malden Developements”. Google would then automatically search the web for me daily and email me any news articles relevant  to those search terms. I would be getting all Malden news sent right to my inbox versus having to periodically search for it. To set up google alerts visit https://www.google.com/alerts

Subscribe to a local real estate blog – To sign up for blog post like these by placing your email address in the box at the top right hand corner above! All post are sent directly to your email address.

Neighborhood associations – Join your local Chamber of Commerce. Your local chamber is full of people that make a difference in the community. If you want to know what’s happening in a particular neighborhood, these are the people to speak with.

 

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19-21 Fessenden St., Mattapan MA – A six-unit apartment building in Mattapan has sold for $860,000. The property consist of two side by side 3 family buildings.

The building is comprised of six three-bedroom, one-bathroom apartments. The units are separately metered and the tenants pay utilities. The property offers a paved off-street parking lot located in the rear of the building that accommodates six to eight vehicles. Other features include front porches and coin-operated laundry available in the basement of the building. The cap rate at the time of the sale was 9.2 percent.

The sale was originally reported by Bankers and Tradesman – www.BankersandTradesman.com

Do you want to know what investment properties are selling in your area? Want to know what your property is worth or what you can expect to pay as an investor? Contact us (Contact@MandrellCo.com) for a quick list of sold comps in your selected neighborhoods. FREE, no obligations reports.

 

 

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The Mandrell Company would like you to give a warm welcome to the newest member of our sales team, Priscila Elias!

A native of Brazil, Priscila brings her warm personality, family real estate investment knowledge and exceptional customer service to the North Shore. Priscila is an accomplished sales professional with over six years of experience in customer-focused positions. Priscila has a natural ability to find innovative solutions and works hard to ensure satisfied clientele. Through her work experiences and connection to the real estate investment industry, we know Priscila will succeed and be a real asset to the firm.

Priscila can be reached at Priscila@Mandrellco.com

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5 Must Know Concepts For Boston Real Estate Investors

There are five basic real estate concepts every investor must understand and I’ve outlined each of them in the video below and text below.

 

Appreciation:
When an asset increases in value it is said to have “appreciated”. The opposite of appreciation is depreciation, which is the decrease in an assets value. I concept of appreciation is important to the “buy and hold” real estate investors because (typically) the longer and asset is held the higher it value. The increase in real estate values has usually kept pace or grown faster than the US rate of inflation, hence why it’s known as one of the best hedges against inflation. You can estimate your property’s future value by using a “compounding calculator” and choosing a rate of inflation. I like to use the rate of 2.5% which is relatively conservative.

Amortization (Debt Pay Down):
Amortization is the systematic decrease in your investment property’s debt. When you make your mortgage payment each month a portion of those payments decrease the principal balance of your mortgage and a portion will go to the bank in the form of interest payments for the use of their money. In the first 5-10 years of a 30 year mortgage the majority of your mortgage payments will go toward interest. You start to pay off more of your principal balance toward the middle and end of your amortization period. You can calculate your principal balance at a future date by using a mortgage calculator with an “amortization schedule” attached.

Equity Spread:
Your equity “spread” can be calculated simply by taking the value of the property at any given point and subtracting the debt on the property at that same point. When you first buy an investment property your equity spread is equal to your down payment, assuming you purchased the property at market value. To find your equity position at a future date in time, calculate your future value and your future principal debt on the loan and subtract these two number.

Cash Flow:
Cash flow is the money left over after you’ve collected all your rental income and paid all your rental expenses. If you’re renting two 3 bedroom condos and collecting $2000 from each unit, you have a monthly “gross income” of $4000 from your rental portfolio. If your mortgage, taxes, insurance, water and repair expenses total $3000 per month you have a surplus or “cash flow” of $1000 monthly or $12,000 annually.

ROI (Return on Investment):
ROI is a measure of your investment performance. For example, if I have a stock investment and it provides me with and ROI of 6% and a rental property that give me an ROI of 10%, than my rental property is providing me with a better return on the money I invested. The higher your ROI the better.

Did you find this video and blog post helpful? Please follow our blog for more real estate investment tips.  Drop your email address at the top right hand side of this page!

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So you want to invest and build wealth in real estate huh? You’ve heard stories about other people who’ve purchase rental real estate and made a good living and now you want to do the same? I can tell you that getting started in real estate isn’t difficult it just requires the right state of mind and a prolonged focus. There are many very intelligent people that completely understand real estate and the benefits of investing but avoid the venture due to lack of patience. These people are looking for instant gratification and that’s not something real estate can bring. Success in this business require a long-term mind set and the ability to see into the future. It requires a sacrifice of time, energy and money today for a greater amount of all three down the road.

Answer the questions below to gage whether you’re ready to dive into the world of investing.  There are no right or wrong answers and no grade, but this quick test will help you understand whether investing is the right path for you.

1. Are you a patience person? When you decide you want something do you go after it aggressively?

2. Do you tend to get discouraged when things do go exactly as planned?

3. Do you take rejection to heart? When someone tells you “no” do you ask someone else?

4. Can you picture the life you want 5-10 years from now or are you more focused on today?  

5. Are you willing to give up some of your time and energy today and become a student of the market?

Real estate investing isn’t for everyone and not everyone that enters this industry will make it down the path to wealth.  It’s a tough road but for those who can stay on it long enough they’ll be able to build the type of wealth they’ve only heard about in those above mentioned stories.

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Do I need different insurance if I’m house flipping? What type of coverage do I need for vacant homes?

Make sure you are properly covered! Vacant homeowners insurance (vacant home insurance hereafter) is special insurance protection placed on a residence that is expected to be empty or unoccupied for over 60 to 90 days, or perhaps much longer. Every insurance policy offered by a property insurer is different and there are even variations from State to State, but no “regular” homeowners insurance policy is able to cover a house that is not being lived in.

In order to properly protect the home, the existing policy needs to be cancelled and a special vacant home or vacant building policy needs to be put in place. A new policy has to replace the old. The vacancy policy is not the same as the existing homeowners policy in most cases. The homeowner has to understand what the differences are, and also should expect to pay much more for a vacant homeowners policy.

Read more at http://www.articlealley.com/article_818308_33.html?ktrack=kcplink

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