How I Turned a DUPLEX into 20 Units!
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- Опубликовано: 22 июл 2015
- In this video we talk about real estate investing and how we turned a duplex rental property into a 20 unit apartment complex. Learn more about us at www.DeRosaGroup.com or on Bigger Pockets at www.biggerpockets.com/users/mf...
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OMG you are my old landlord! Great Job Matt!!!
Thanks! Hope you are well!!
@@DeRosaGroup Yes, I am. Thank you, years ago I really needed a place and you gave me a chance. You have no clue how much that meant to me and my family.
My girlfriend and I own a 4 units, live in one of the unit. We are closing on the 4 units next in a few weeks.
Same vision, thank you for sharing.
Thanks! To get a big basket of goodies and bonuses PLUS a coupon to join our DeRosa Insiders program for $1 the first month, just text DEROSA to 66866. Go to www.derosagroup.com/insiders to learn more about Insiders.
You're awesome Matt! Thank you for all of your insights.
Wow 😮 love your strategy, that video really lift me up today and my goals, I’m studying to get my real estate license in New York, but I live in Nj
I’m biggest is to be an Investor just like you, lol my gf and I are working to invert in the future. We are working on our credit now, we both an our 20’s.
Great job and I’ve been followed BiggerPockets for a few months now, “ wow” I learned so much from it. I just Subscribed to your channel and a 👍🏾
Very thoughtful advice, thanks for share your advice and experiences. Best of luck on your future endeavors.
there are a million ways to do real estate and here is a perfect example of one. buy up streets, buy up neighborhoods. I see alot of this in texas currently, where a owner sells multiple duplexes and fourplexes on one street. Its a great way to start. I think if you go owner occupied and move every year you could have low downpayment mortgages, but investors and lines of business credit is a faster route to get there. Thanks for sharing.
Thanks Erica! Its a great way to leverage your investment. It also allows you to control the quality of the block which will in turn raise tenant happiness and longevity!
There is another big advantage to "Residential" or Home Mortgages: Interest Rates are still historically low, and with a Residential Mortgage, one can get the Rates locked in for 15 - 30 Years. (If possible, it is better to pay off debt sooner). On the other hand, I am finding Commercial Loans might be amortized in 25 years, but they come due in 5 - 10 years. Which requires that the debt be either paid off or refinanced again after 5 or 10 years.
what is your Net Worth?
Ericka Williams 一
Ericka Williams it’s a great strategy.
I really want to get into multi rentals to add to my single rentals.Thanks for Sharing!
Loved your strategy and your detailed responses to all of the questions in the comment section. I’m subbing to your channel
Valuable content here. Thank you!
can u talk more about what you looked for when initialy picking your first multifamily to start your portfolio.
thanks.
Awesome Video, thanks for uploading this!!
Great video. Good luck with your real estate ventures.
Thank you. This was very informative.
Yes very helpful thank you. I did notice just calling around to different local banks they have different guidelines and qualifications for loans. However when it comes to home loans they all seem to stay true to the Fannie Ma guidelines. I will keep searching tho thanks.
Great portfolio build! We do that specifically but only with SFRs (Single Family Residence) in Austin, Texas. Keep it up!
Thanks for sharing and congratulations!
Thank you, this Vlog was exactly what I needed. I’m a little guy looking for my next property and this video taught me, reminded me, to be patient and that a good deal isn’t necessarily a big deal.
So glad you got that, it was the intention of the vid!
Really liked the information in this video. Gave me a general idea of how acquiring 20 units can happen. I am 21 thinking of starting in the real estate business very soon.
Grest info, thanks, im.looking for a 3-4 unit property now...any tips on the search?
Most of those deals are on the MLS so start there. Also try the REO auction sites like Hubzu, Xome, or Auction.com.
Hey Matt, been reading your and Liz's blogs on biggerpockets.
wannawatchu66 thanks!!
Hi matt , you make a great point! My take on that is always keep your options open, which is a great way to look at things.
not sure about the 1030 as im in canada but im sure we have something similar, i'll look into it and get back to you on that as you may have others who maybe asking the same questions
How much did you pay for the units? And how much are you selling...that's the most important info that we would like to know thx.
Love this video! I am looking to buy a duplex in the next year, and I'm getting married at the end of this year. Thankfully we both have good money habits - but we do have a fair amount of student loans. I want us to be in a much better financial place than our parents our in, and I know we have to start making good decisions now.
Idk if you're still checking this video - but did you ever live in one your units or did you own a separate property the entire time you managed them?
So glad to hear, Dave. We bought our first property (a duplex) when we were in our mid 20's - and just about to get married as well! Starting young is a great thing to do. Just keep studying and learning!!! Hope our videos on our channel are helpful. If you have a specific question you want want answered, please email us at helpme@derosagroup.com. Every Monday we answer questions from our subscribers about real estate investing!!! :)
Im just getting into real-estate ..... whats the best way to attack wholesaling ?
Which bank is good that you would recommend for a first deal in Philadelphia?
Thank you so much for the info you rock!
Juan Cifuentes Thanks glad to hear you enjoyed the video and our channel! If you ever have any real estate related questions please email us at helpme@derosagroup.com :)
so u started with the exchange and kept adding on from there.
Good info. Great video. Do you know of any good information on raising money?
Thank you,
Jim
Jim Brooks I taught a course on how to raise private money out of your own network for a local REIA in Jersey. They are selling the recording of that course, you can find it at www.sjreia org
Great job Matt!!!! Keep it going man!!!! We are on a similar path!!!
Thanks! To get a big basket of goodies and bonuses PLUS a coupon to join our DeRosa Insiders program for $1 the first month, just text DEROSA to 66866. Go to www.derosagroup.com/insiders to learn more about Insiders.
I currently own a duplex in KY and would like to do what you've done. Did you leverage the duplex to buy the other duplex. When did you bring on other investors?
How awesome! Thank you very much for this video!!
Thanks! To get a big basket of goodies and bonuses PLUS a coupon to join our DeRosa Insiders program for $1 the first month, just text DEROSA to 66866. Go to www.derosagroup.com/insiders to learn more about Insiders.
where do you find a row of quadplexes? I can't even find one single decent deal
congratulations good information
Awesome video. Thanks for sharing :)
thanks for watching!!
Key word: Vision. It's not going to happen by accident. Vision accompanied with action equals success.
Congrats on your success and selling! I would like to have a property manager manage the buildings when it comes time to do so. Any suggestions on doing that with 2-4 unit buildings?
Sure, you can find a pm that charges a flat rate for smaller multi
Thanks and that camera rules!
Glad you enjoyed!!
Nice. That’s how I got started. Great video
I would like to know what I can do to be like you. I live in Texas and the housing market is big here with old homes.
Great stuff! If you'd start over again with what you know today.... What would you have started to buy? Single family, duplex, 4 or 6-plex or bigger?
hey Chris - If I had to start over and it was today's market, I would do fix and flips in nice areas and use those proceeds to buy small multis and single families. If I didn't own my own home already I would buy a small multi and move into it. Once I did that for a year I would use that track record to enroll investors in larger multi projects.
love the back story about this deal! so I want to get into real estate and I intend to buy my first multi family house that has 3-6 units. i will be occupying one of the units. I know nothing about what it's going to take to maintain and manage this building bcuz I have never done anything like it before and I don't know how to do any repairs. I want my tenants to be taken care of when problems arise so I'm considering hiring a property manager, but I want to do it myself bcuz 1) I'd be living there already 2) I want to gain experience and knowledge. Can anyone offer any advice or suggestions? thx matt n derosa group for another great video!
Hey Emmy - I would stay at 4 units or less because you can obtain better financing (low money down for owner occupants) at that size. Also manage it yourself. You will figure it out as you go. Use www.BiggerPockets.com as a resource if you aren't already! Good luck!
emmy tones multi units for your first is very risky. You should start with a single unit or even juat rent out a room in your home to get a feel for management. Youd also better know your local landlord / tenant laws. I think multi unit is nit a good idea for an inexperienced investor. Make mistakes on a smaller scale. Start small.
I have always heard..buy, reno, rent, refinance, repeat. But no one clearly defines the refinance part of the equation. are you talking about a cash out refi to stockpile cash for the next one or just refi-ing to lower the interest rate of a hard money original loan?
Jesse Peters both, whatever makes sense.
If you are going to repeat the process, you'll most likely want to refi all or most of your cash out so you can put it into the next deal. As long as you keep pulling your money out, you won't run out.
Great Info. I would like to know how bringing in and investor with you on these properties works? Do they have a % of the ownership in the buildings or do you just use their capital and pay them back their capital plus a % at some point?
Thanks in advance for the information!
Hey Curtis! They have a percent ownership of the building, which gives them a percent of the profits, appreciation, and equity build up through mortgage paydown. We pay out profits quarterly on cash flow. Here is an article and video I did on entity structure on Bigger Pockets not too long ago. You can find a lot of great information on deal syndication on Bigger Pockets, you should check it out
www.biggerpockets.com/renewsblog/tripled-portfolio-creative-entity-structuring/
@@DeRosaGroup hi I can't play the video?
Excellent content thank you!
Thanks! Have you read Matt's Book Raising Private Capital yet? If not go to www.biggerpockets.com/privatemoneybook to pick it up and also get a bunch of bonuses including an Ebook on buying apartment buildings!
This is very inspiring. Thanks for sharing.
Thanks for commenting and watching! Glad it inspired you!! :)
Awesome insight.
Love the story. Very motivating. Thank you
Thanks! Have you read Matt's Book Raising Private Capital yet? If not go to www.biggerpockets.com/privatemoneybook to pick it up and also get a bunch of bonuses including an Ebook on buying apartment buildings!
hey great video. I'm getting out of prison soon and have plans to start a real estate business with a great friend of mine who's getting out sooner than I. stories like yours really inspire me. thanks and keep that entrepreneur spirit alive. God bless
It’s been a year could you update us, are you ok ?
You had RUclips in prison?
@@Chris-uo3rj that’s what I was thinking like wtf guys in prison are out here surfing the web and watching RUclips
Investment in crypto and stock has become very profitable, and very good options in securing a better financial life that's where i belong and survive from.
Hey thanks for the video! My boyfriend owns 6 acres of property in Texas. We are very new to this industry. We are looking into financing a modular duplex home and starting off with that. Our plan is to survey the property by 1 acre and slowly work our way up. Any advice?
Ashley Lopez this is a good question, please email it with some more details to helpme@derosagroup.com and I will answer it on the you tube channel!
went to your website, it's all just options to buy books and hats. what happened to the free book?
Hi! So my question is, is there a way to buy in Texas while living in New York. Because, Im living in Texas right now where there are very good deals but I might move to New York in few years for an important projetc...
Paracle7 of course, many people invest in states they don't live in. Your biggest task will be to find a solid local property manager you can rely on. Do that while you live there so you can inspect them locally.
I bought an 8 plex....3 years later, I took a couple hundred thousand out on a refi, I then bought a 15 unit building. In 4 years I will take money out and buy another and will keep this routine going until I have 60 or more. I'd love to someday own a large 200 unit complex.....what a day that will be!
T McGe how much did you have to put down to get the & plex? And what was your credit score at the time when you got it? If you don't mind aharing
Looks like thats close to where I lived for awhile in Delco PA 😊
Love the story! Want to do the same for myself.
Thank You!
I'm really interested in this form of real estate. It's just about the taxes that has gotten me all confused. Why 1031 exchange?
if you have the cash to buy 2 duplexes, do you buy in cash or get a mortgage and get 3?
Tom money is cheap right noe, go for the financing and buy 3!
Congrats on the sale great strategy.
Thanks Kevin!
Have you bought another rental property sence then?
Absolutely. We are constantly buying. Check out the RUclips channel to see more deals we did. most recently we bought a 49 unit, there is a recent video about it
10-31 Exchange....🤔🤔🤔 I'll look into that. Please share some of your leasing strategies. Thanks, in advance!
Good! Glad you liked it. There is a ton of info on leasing and 1031 on this channel!
Very inspirational. I’ve been looking for 16 or more units but haven’t found “the one” yet. Would appreciate knowing more about multi family.
Hi ExplorerLink! Thank you so much for the support with our channel! I would reccomed the Biggerpockets bootcamp! It covers every stage of multi family acquisitions and what mistakes to avoid etc. Watch the intro video here and learn more. Keep in mind registration was extended and will close by tonight! get.biggerpockets.com/multifamily-fallbootcamp-fall22-derosa/
I'm 24. How old were you and your gf when ya'll bought your first piece of property. And how much was the down payment?
Thanks in advance
How levered up are you
You mentioned having to bring in other investors. Why? How? Tips on locating?
Not doing videos any longer? Great stuff and thank you.
Doing tons of videos, hope you subscribe and check them out!!
Just subscribed!! Thank you
ok!! Let's say all the investments in this street are as you're saying! And you posted this video in July, 2015; and the last unit you bought was a year and a half from the selling date. Let's say you published this video after a year from the actual date you filmed it (the sale date), then somehow the story of 1/4 value of the last purchase becomes surrealistic since this makes the date of the purchase between 2013 and 2014!!! I can not remember any ression by this period! But I might be mistaken, I only got confused!
But overall, I liked the story! Thanks for sharing.
Good work
I would definitely like to get into something like this
Great opinion. Easy to follow and understand. I wish I would have started earlier, but it’s never too late. Dont want to be the richest dad in the neighbor, but one that sets his children with funds to go to college and take them on yearly vacations.
great info
Thanks!
It would be nice if you could make a video on what a class A, B, C, D apartment complex properties are and what features go into them? What is Section 42 housing and the difference between Market and section 8 housing? Hotels are rated on a 5 or even a 7 star rating. Depending on the amenities are depends on the star rating. I have been told that a 5 star hotel has to have a minim or 2 restaurants and they have to have a pool & hot tub, 24/7 Valet & Room Service etc. Is there a minim square footage for each type of apartment complex and for example if one apartment complex had 2 or more elevators a Pool/Hot Tub, Fireplace in the living room and master bed in each unite, Back-Up Generator that could operate the entire apartment complex 24/7 on one tank of fuel for at least 7 day's straight vs a place that may have back up power but it may operate one or two lights in the haul and the elevator but not the apartments themselves. Can you explain the differences and maybe walk through different types of apartment complexes and show the condition and the different amenities are and the minims and the numbers on how they are classed?
I am a 27 year old single father raising my son on my own and I find it so intriguing the possibility of making an income from real estate. I hate having a daycare raise my child because of of long 60hour work weeks. I currently own my home but would like to start acquiring rental properties. Do you have any suggestions on how I could get started?
That's awsome ill check it out did you use a company like b2r for financing?
Sounds great! No, we did not use B2R for financing the 49 unit. We raised private money for the down payment (which was around 1 million) and we then worked with Investors Bank to secure a mortgage. We have heard good things about B2R, so we might use them on future deals! Hope that helps!
Yes thank you. What bank and or how do you find investor friendly banks? Would it be considered a commercial loan because of all the units? What was the down payment percentage? 1 million is up there.
Kevin Mcmullen - We typically use small community banks located in the area of the investment property. The lender for this particular property only had 4 branches, so they were very small. You want a bank of this size so that you can meet directly with the powers that be on your loan. For some, I get to sit down with the Cheif Underwritter or even the bank CEO. You can leverage relationships over time at these kinds of banks. To your other questions yes it is a commercial loan, anything above 4 units is commercial. For that deal the loan was 75% of the value of the property. I hope that helps!
another great video!
Thanks Barry, we appreciate it!!
Keep it up!
I live in Northern California. Prices for a duplex range from 550k to 900k. Cap rates are ok, about 6%. There are some cheaper units about an hour north of us but not by much. I qualify for appx 400k from FHA. should i buy a one unit home first or go duplex? If i cant purchase a duplex what do i do? I have been told to find a "rich uncle" but dont know how long before i pay him back what i borrowed. Just lost, any suggestions?
+NAKGL66 Hi Nak - there are a bunch of options out there, I would have to know more about it to give real advise. Your best shot is to get eduated first. Head out to Bigger Pockets, it's free. Look us up, here's the link to the company founder, Matt Faircloth. www.biggerpockets.com/users/mfaircloth
See you out there!!
Be careful with "Cap Rates", especially around 5 or 6, because unless you have a good way to grow the income of the property... you will probably not see an escalation in the value. In Commercial Units, it is primarily the income, which is what determines the value - aka Cap Rates. So try to buy properties that you have a road map to increase the rents quickly, so you can also build equity quickly.
How much is the average cost of buying 16 units
Sweet, I'm also in Ewing Purchased a rental property 2 months ago
Michelet Fleurant Ewing nj is a great market for rentals and flips!
Hey Matt, What steps do I take to make a legal 3 family into 4? The Zoning is currently an R3 Residential and the property taxes are currently at a commercial rate
Start with talking to the zoning officer in the town. It could be as of right, meaning in to convert now. They can tell you the process to get it rezoned if necessary.
I bought an 8 plex 3 years ago, next year I plan to buy a 12 plex or larger! My goal is 40 units.....when I get there, I'll buy another 40. Good Luck folks and have fun!
T McGe keep it up! I’m 18 and in real state school. Was wholesaling but i’d rather be an agent. I’m saving up capital to buy homes in memphis to rehab and collect rent on. I just got credit and i’m learning about the different financing on loans for real estate. My goal is to own over 100+ units by 30
T McGe
How much are you neting per year??
You're already a success. First you build it in the mind. Then it will follow in the physical
Extra hint. Look also into making friends in Thailand Costa rica. South america. Places out side the u.s where you can buy and build on land for a fraction of what it costs here and air bnb it *wink
What's 8plex 8 rooms or ?
I saw this apartment deal advertised on comercial real estate website good luck, from those pics they look really nice inside 👍👍
That's actually the new owner trying to flip it, not us lol
Thanks for sharing...my family has been in the Real Estate Business since the 1950's. A 4-Family that was handed down through marriage to my grandmother and my mother. Unfortunetly, do to my mother's illness, my brother has power of attorney and do to nursing home cost will just sell it now just to get them off his back. We are sick about it. Your good information has been helpful. I will steer him to your website...
In order to do that you need a lot of cement, two x fours and shingles.
Or a 1031 exchange and a business plan
Fantastic great idea
Hi Matt,
l have a daughter in Howard University and l am looking for a house to buy around the school so l would rent it to her and her friends. Can you help me with any ideas. The houses around that area are so highly priced.
Thank you.
Did not watch. How did you do it? Section 8
Which is easier to sell a 4-unit or a 20 unit? There's more investors and more financing options.for a 4-unit vs. 1 20-unit building
Colorado Loan Pro you are correct the financing is better for 4 units, and they are cheaper so there are more buyers for that property size. the buyers for 20 units are less but you can sell properties of this size for higher per unit in today's market.
How do you find investors to go in with you ? Also how do you purchase so many without paying one off first? Banks will still give you Loans on different houses even though you have a few out on other mortgages?
Multifamily loans are considered commercial real estate loans. They are different from residential loans in that they base the loan on the cashflow of the property as long as you can put 20-25% down. If the numbers are good such that you can easily afford the loan, have good credit and can afford the down payment with a little bit of cash reserves, you will get it financed regardless of how many other properties you own. Some lenders do limit the you though if you appear over extended.
This video would be more helpful if you could break down how you structured the deal with partners, what percentage was your profit, and did you just keep getting approved for mortgage after mortgage? We all would like to buy building after building on the same block. We get the 'why', but everyone glosses over the 'how'.
Can a 1031 exchange roll into new construction duplexes or 4 plexes?
I believe that you can use 1031 for new construction but you need to find a way for the 1031 funds to pay for the construction costs during all the staging of the project. This can be difficult, so you'll need the right construction lender to comply with you on a 1031
Derosa Group like use the 1031 exchange money to fund the construction loan down payment???
What a great story! My question is how does the current market effect this type of investment. With real estate being so expensive in the current market, is it still worth spending the outrageous prices to rent out for investments? I realize its a question and answer with many potential variables. I would greatly appreciate some advice. Thank in advance.
Wonder what the difference of aII your purchased units and aII the units you soId 10 years Iater
The price range was a big swing. We bought the first ones for $320K a building and then paid that debt down over 10 years. Then we bought two more buildings down the block, one for $150,000 and the other for $80,000. Both needed a ton of work, aound $80,000 per building. We sold the portfolio for $1,450,000 for 20 units so $72,500 a door which was actually below our cost basis on the original purchase but well below our debt because of principal reduction. Hope that helps.
@@DeRosaGroup and if you were getting positive cash fIow per month that wouId aIso be taken into account in your profits, aIthough I couIdnt imagine you wouId seII these if the net cash fIow was super high, unIess Iike you said you found a kiIIer deaI to redistribute the equity
Wow really cool
Hi, Thank you for sharing this video. It's a nice way to condense the management. My question is, is it advisable or even possible to make these SFR's into a single commercial property and are there certain advantages in doing so?
+Mary McDonough - These were 4 family buildings from the beginning so the already were considered multi-family structures. Through buying a bunch of similar structures on the block we were able to assemble what was considered a collection of 20 units. The buyer saw it that way and was willing to purchase it as a 20 unit complex. This would be much harder on a stretch of single family homes but I have seen folks try and sell a package of single families. So it can be done but they don't need to be on the same block. I hope that helps!!
good for you
thanx
It remains my dream to own multiunit dwelling's. However, as you know, the market in California is tough. What suggestions would you give me as I start to locate and save for one?
The Vita Family set some goals with realistic time lines, find a market that works for you maybe a market that you have some local legs that can help you manage the building.
Can one sell his or her private home and do a 1031 exchange to buy an apartment complex for investment not to live in it?
No need, you can keep the proceeds on the sale of your private home, up to 500k if you are married. Talk to a CPA about it
Thank you
Yw!
Good Wisdom
Thanks for the information. Everything was explained in layman's terms, which was easy to understand. I used to work, whereas, I was responsible for locating people's addresses, & I would come across tax parcel information. But thanks to this video, I now I understand its purpose. Thanks.