Tribe of Multi Family Mentors Live Q&A w/ Reed Goossens

TL;DR

Reed Goossens shares insights on real estate investing and mentorship.

Transcript

what's up bigger pockets chris lopez here and welcome back to their live q a for the tribe of multi-family mentor show i got my co-host terence doyle terence how are you man still trying to digest my food from lunch but uh other than that very well super excited to be here in the studio with our guest and you yes so we're very fortunate we'd read g... Read More

Key Insights

• Reed Goossens emphasizes the importance of networking and education in real estate, highlighting the vast opportunities in the US compared to Australia.
• Understanding market cap rates and NOI is crucial for determining the value of multi-family properties, differing from single-family homes.
• Local market knowledge is key; knowing the price per unit and cap rates helps in accurately assessing property values.
• Building relationships with brokers and lenders is essential before making an offer on a property to understand lending criteria.
• Reed advocates for consistent self-education and doing the 'reps' by underwriting multiple deals to understand market dynamics.
• Finding a mentor who resonates with your goals is vital, and they can be located anywhere, not just in your target investment market.
• Investors should develop a team on the ground in their target market, including brokers, property managers, and lenders.
• Reed's journey from Australia to the US underscores the potential for success through persistence and leveraging available resources.

Questions & Answers

Q: How do you calculate the ARV of a multi-family property?

The ARV of a multi-family property is calculated using NOI and market cap rates. It's essential to know how much you can grow the NOI and understand the entry and exit cap rates. This differs from single-family homes, which rely on comparable sales.

Q: What are the key differences when underwriting a 4-unit versus a 10-unit property?

For a 4-unit property, lenders focus on the borrower's creditworthiness, while for a 10-unit property, they consider the rental income as part of the debt service. A 10-unit is viewed as a business, making its rental income crucial for underwriting.

Q: How can an investor start learning about market metrics?

Investors should educate themselves consistently by learning about NOI, cap rates, and market dynamics. Engaging with local brokers, property managers, and lenders, and underwriting multiple deals in a market can provide valuable insights.

Q: How do you initiate contact with lenders before buying?

Contact local banks and lenders early to understand their lending criteria and establish relationships. Brokers can also provide information on which lenders are most active in your target market, helping you craft competitive offers.

Q: Should you find a mentor in your target investment market?

While a mentor doesn't need to be in your target market, your team, including brokers and property managers, should be. A mentor who resonates with your goals and offers valuable guidance can be located anywhere.

Q: How do you find mentors in a specific location?

Utilize resources like BiggerPockets, local REIA groups, and networking events to find mentors. Engaging in forums and posting about your needs can connect you with experienced individuals willing to offer guidance.

Q: What percentage of gross rents should be underwritten as expenses for property management?

For a 50-plus unit complex, property management expenses typically range from 4% to 6% of gross rents. This varies based on the property's location, size, and operational efficiency, with larger properties often benefiting from economies of scale.

Q: How can active duty military personnel invest in real estate?

Active duty military can leverage their unique position by identifying strategic markets where they have personal connections or advantages. Building relationships with mentors and utilizing online resources can help overcome distance challenges.

Summary & Key Takeaways

• Reed Goossens shares his journey from Australia to the US, emphasizing the importance of networking and education in real estate investing. He highlights the unique opportunities available in the US compared to his home country.

• Understanding market dynamics, such as cap rates and NOI, is crucial for valuing multi-family properties. Reed stresses the need to know your market, including price per unit and cap rates, to make informed investment decisions.

• Building relationships with brokers and lenders before making offers is essential. Reed advises consistent self-education and doing the 'reps' by underwriting multiple deals to gain market insights and confidence.