Will Coleman and Mike Taravella Interview award winning multifamily syndicator Bruce Peterson.
Despite low cap rates, investors still need a place to put their money. The low cash on cash returns in muti-family are still better than letting cash sit in the bank with low interest rates.
Success in real estate is all about taking action. You can’t hesitate, you must be keep moving forward, taking daily strides.
Stress test your property in your underwriting.
- Assume no rent increases in year 1
- Underwrite 70-75% break-even occupancy
- Increase your exit cap rate by 15-20 basis points every year of the hold
- Account for the possibility of reserves
Reserve Strategies:1) Look to delay capex during the first six to nine months in order to use the reserves once returned 2) Evaluate the possibility of return of capital following the end of the reserve period
Floating vs Fixed Rates: Avoid floating rate terms for real estate financing. Due to its unpredictability, it adds a lot of risk to each investor on the deal.
Its not the strongest companies that survive in business, its the most adaptable. Create a company change is operations and adjust based on the circumstances.
Expert Pro Tip: “Be honest with you are”
Bruce Peterson – LinkedIn
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