Commercial Real Estate NEWBIE (trying to get that cashflow)
Looking to get into buying some apartment properties in the near future.  Currently working in Japan but would like to buy in Texas. Have around 250k liquid currently and at a loss on where to begin but am thinking 20% down would be a good start. Any advice would be great, be it books, YouTube tutorials, etc. Has anyone purchased property as an Expat? TIA!
[{"id": "gt50hi7", "text": "I imagine you\u2019ll need more than 20% equity to buy apartment buildings.  With $250k i doubt you have enough to buy more than $1MM in property.\n\nDo you understand how to underwrite to NOI, cash flow after reserves, cash flow after financing costs?", "replies": [{"id": "gt548rx", "text": "I dabbled in some YouTube videos but to answer your question no I don't,  I'm still green. Probably should start there.", "replies": [{"id": "gt555h2", "text": "This should be a decent starting point:\n\n\nNet operating income (NOI) = net property revenues - property operating expenses\n\nCash flow from operations (CFO) = NOI - capex reserve - TILC reserve\n\nFinancing costs (FC) = debt service\n\nCash flow after financing (CFAF) = CFO - FC\n\nReturn on assets (ROA) = CFO / purchase price\n\nReturn on equity (ROE) or cash on cash return = CFAF / cash invested\n\nCap rate = NOI / purchase price\n\nOperating leverage = an increase in CFO leads to a greater increase in CFAF due to debt\n\nFinancial leverage = ROA - ROE", "replies": [{"id": "gt55b7u", "text": "Thanks!", "replies": [], "depth": 4}, {"id": "gt6ymo5", "text": "Nicely done.", "replies": [], "depth": 4}], "depth": 3}, {"id": "gt5lbuf", "text": "You may want to partner with experienced apartment investor for your first deal, you will learn a lot about how they underwrite something and what typical assumptions they make. Also you will need to build a trusted team of attorney, CPA, maintenance team / property management, etc.", "replies": [{"id": "gt5leln", "text": "Great info. Thanks", "replies": [], "depth": 4}, {"id": "gu8xsi9", "text": "that's always the interesting there. Where do you find these investors aside from any local meetups. Just cold calling and offering yourself and capital for any upcoming deals?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gt50kgj", "text": "My best advice, learn how to underwrite. Every broker in the world will paint you a rosy, best case scenario, picture. From there, its making those connections. Talk to brokers, build a rapport and let them know what you're looking for in what market. Hopefully, something off market will get tossed your way. \n\nAdventures in CRE is a good place to learn. Granted, the models they use are institutional and certainly are overboard for uses, but tool around, watch their videos and get an idea of the way they think about a deal.", "replies": [{"id": "gt51w5x", "text": "&gt;Every broker in the world will paint you a rosy, best case scenario, picture\n\nLike calculating the NOI as rent - (property taxes + insurance). Because, as we all know, properties do not require maintenance, property management, and reserves.", "replies": [{"id": "gt53x2z", "text": "Vacancy?  What\u2019s that?", "replies": [{"id": "gt54c9v", "text": "\"I mean is fully occupied now, is not like anyone will ever leave tomorrow\"", "replies": [], "depth": 4}], "depth": 3}, {"id": "gt54x5n", "text": "What's the average fee for property managers?", "replies": [{"id": "gt55j6y", "text": "It depends on the property and market, but it can be from 1% to 6% on the rent.", "replies": [{"id": "gt55p0r", "text": "5-6% seems steep but I can see how it could be potentially worth it.", "replies": [{"id": "gt573if", "text": "It\u2019s a ton of work keeping units full.", "replies": [], "depth": 6}, {"id": "gt5cfpf", "text": "keep in mind when they say 1-4% type numbers they generally are talking hundreds of units and staff is not included in that, it is expensed against the property.  If you buy a 10 unit you are going to pay 5-10% all day long and anytime anyone steps foot on the property you will get a bill.  Leasing commissions will frequently be on top of this too.\n\nYou will find people who will manage for less, tons of res agents with no experience do this to supplement their income.  They also don't know wtf they are doing", "replies": [{"id": "gt5d1xc", "text": "Great info! Thanks", "replies": [], "depth": 7}, {"id": "gt5vn0v", "text": "Good points, going with a professional management team (not just a random licensed broker) will get you expertise in so many areas; quicker turnaround times for emergencies or even just solid regular maintenance, better marketing for tenants, better tenant retention and keep your butt out of trouble with govt regulations or avoiding a lawsuit. Those are just a few advantages. This is the ultimate \"you will get what you pay for\".", "replies": [], "depth": 7}, {"id": "gt7enhx", "text": "No one manages for 1%. 10,000 units and you\u2019re still paying 3.5% as a floor. If you think you\u2019re paying that, you\u2019re paying for it somewhere else.", "replies": [{"id": "gt7f858", "text": "100%  thats why I just said that !", "replies": [{"id": "gt7fg0r", "text": "You said 1-4%. That\u2019s misleading at best.", "replies": [{"id": "gt7fox9", "text": "They guy above me said 1 to 4 and I listed several reasons why that wasnt going to happen", "replies": [{"id": "gtnvtlw", "text": "My apologies, I guess I mixed you up with the other guy", "replies": [], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}, {"id": "gt6yrhq", "text": "A good property manager is worth far more than the typical fee structure (and no, I'm not a professional property manager, but I do hire some excellent ones).", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gt54ime", "text": "Thanks! These terms are definitely good starting points  to look at.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gt52b02", "text": "You should consider single tenant NNN leased property. Either way for commercial property expect to put 30-40% downpayment", "replies": [], "depth": 1}, {"id": "gt548q9", "text": "Not sure how it is in Texas but in my market (Cincinnati area) the &lt; 1 million market (which is where you'd solidly be) is absolutely filled with distressed properties from \"out of town owners\".  It isn't a high enough price point to really have good management and justify a lot of consultation expenses.  The people who do well there are local and know their shit and are their own boots on the ground.  Expect smaller banks to not like you being an expat as the guarantor too.   They want property and buyer to be local.", "replies": [{"id": "gt55way", "text": "I definitely see how having no oversight on your assets could become costly.", "replies": [], "depth": 2}, {"id": "gt599x1", "text": "I'm a broker and used to live in the Cinci/Dayton area.  I am now in St. Louis, but I know that area.  Can you elaborate a little bit on what you are seeing on the distressed side (areas, caps, etc.).\n\nI consider St. Louis to be a similar market, but I don't see any distress.  I see signs of it in the future (burned out landlords, etc.), but prices have not yet come down to reflect that.  People have gotten into bad deals over the years, but they are still holding out for prices higher than what they paid.... They aren't budging... Yet.", "replies": [], "depth": 2}, {"id": "gt5yczi", "text": "Yep, I work at a smaller bank in Texas as a lender     I\u2019d laugh at the guarantor being an expat out of country", "replies": [], "depth": 2}, {"id": "gt63x20", "text": "If he does something while an expat, a partner would definitely help the process.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gt54cug", "text": "I figured as much trying to educate myself so when I do come back stateside  I can hit the ground running.", "replies": [], "depth": 1}, {"id": "gt5ezty", "text": "This is a great way to loose all your money hahaha", "replies": [{"id": "gt5hefk", "text": "Lose* \n\nHahahahhahahaha SMH", "replies": [{"id": "gt5hjuh", "text": "Enjoy YouTube University my friend \ud83d\ude0e", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gt5o76x", "text": "Welcome! I\u2019m a commercial real estate attorney in Dallas. I personally invest in warehouse. Not a ton of options for solo at that equity. I have clients buying very small retail or warehouse for that $1m. Single tenant so a bit of risk but check out my YouTube channel for legal tips! \n\nI also post on Adventures in CRE as their legal contributor.", "replies": [], "depth": 1}, {"id": "gt5qgij", "text": "I get deals in Houston for the type of property you\u2019re looking for. Feel free to message me", "replies": [], "depth": 1}, {"id": "gt5rhwm", "text": "Look into the education provided through the CCIM Institute. Great education and worth the money. \n\nAs for buying real estate at that level and being out of country, your greatest challenge will be getting financing. You\u2019ll probably be forced to put 35-50% down, as you are an out of market owner that they can\u2019t get good litigation service on. A local bank will have a very hard time swallowing that financing. Also, you need to be aware of the FIRPTA laws. Look them up. \n\nIf you were looking at financing $5M and above, institutional lenders would play in your arena. Under that, lenders become scarce because of the \u201cout of market borrower\u201d scenario.", "replies": [{"id": "gt5uhxm", "text": "Interesting. Thanks for the advice.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gt79jsj", "text": "Never owned commercial property, live in Japan, want to buy apartments in Texas... \n\nREITs were made for people like you", "replies": [{"id": "gtbandg", "text": "This is the only right answer", "replies": [], "depth": 2}], "depth": 1}, {"id": "gt874zj", "text": "I suggest listening to podcasts. Some have insights on exactly the topic you are talking about. How to invest while being an expat, or how to invest while having a full-time job. Some podcast guests went through the same experience as you. [https://blog.cashflowportal.com/top-7-podcasts-for-real-estate-syndicators-in-2021/](https://blog.cashflowportal.com/top-7-podcasts-for-real-estate-syndicators-in-2021/) here, you can find a list of podcasts to listen to.", "replies": [{"id": "gt8b63o", "text": "Thanks!", "replies": [], "depth": 2}], "depth": 1}, {"id": "gt8b53h", "text": "Thanks!", "replies": [], "depth": 1}, {"id": "gt8jy34", "text": "You may want to look at partnering with an experienced investor for your first deal. If you do not know any, I would suggest looking for a syndicator or find that you can invest in, that will help you get your feet wet so you can start learning. Also, I would bet you will be able to get 75-80% LTV.  I can get that all day for nice office, apartment, flex, self storage, or industrial assets in the Midwest.  If you have any questions I\u2019m happy to help.", "replies": [{"id": "gt8ngs8", "text": "Thanks!", "replies": [], "depth": 2}], "depth": 1}]