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We're Kicking Off the New Year with True Freedom Achievers' Weekly Newsletter

True Freedom Achievers, LLC
602-538-7331 - Mobile  Mike@MikeLima.com

www.TrueFreedomAchievers.com

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Kick Off your New Year with Better Information & the Best Deals!  Welcome to True Freedom Achievers Weekly Newsletter


Best Cash Flow Investments:
By: Mike Lima

​Cash is cash, but some cash flow is better than others — and easier to obtain – Particularly when it comes to purchasing residential real estate investment properties.

For instance, compare a 6-unit apartment complex with a Tri-plex and a Single Family Residence (SFR). The amounts in red represent the advertised monthly rental income for that property.

Which do you think is the best deal for the typical investor?

The 6-unit property offers the same rental income per unit ($600), but is cheaper per unit than the Tri-plex, so is this the best investment, right?

Typically, NO.

But if 3 units pencil out as a strong investment, a 6 unit property next door to it , at al lower per-unit price, is even better, right???

WRONG.  Unless you're willing/able to pay all Cash rather then leverage your money.

Most likely, the best investment for you and most investors will be the Tri-Triplex, particularly when compared to the 6-unit apartment complex. It all comes down to financing.

When obtaining conventional financing, two to four residential units can be financed in the same manner in which you would finance a SFR investment.

That means you can obtain financing at 75-80% of your purchase price, through a large number of lenders and mortgage brokers.

You limit your cash investment to 20-25% and the financing is relatively easy to get, even nowadays.

In order to finance the 6-unit complex, you would have to obtain Commercial Financing, as it is over the 4-unit limit imposed by Fannie Mae & Freddie Mac.

This is a significant difference, as such financing is much harder to obtain, and the LTV’s would likely be in the 50% range.

So not only is it more difficult to get financing on a 5+unit property, but you will need to come to closing with tremendously more cash.

Now let’s compare the Tri-plex with the SFR. Both are the same price, yet the Tri-plex offers $700/mo more in cash flow, so that’s the best deal, right?

Well, probably… But there are a couple questions you will want to ask before locking in your investment strategy:

  • Is the Triplex master metered?
  • What will your property management fees be?

Note that multi-units often have master metered utilities, meaning there may be one water meter (or electric meter or gas meter) for the entire property.

Typically this means that the landlord must have the utility bill in his/her name.

You’ll want to check to see if the landlord is currently allocating these utility costs back to the tenants/units, and revise your pro-forma P&L accordingly.

On a SFR, the tenant typically pays all of the utility costs associated with the property, so you normally don’t need to factor that into your expenses.

Secondly, check with your property management company to see what the difference will be for typical management fees. While 3 (or 6) units provides greater differentiation (if one tenant leaves, you still have others there paying you), they also may require more management fees per rental dollar.

You will likely incur more leasing fees and repair costs over a 12 month period with a $150,000 Tri-plex than you will with a $150,000 SFR. 

So it's important to make sure you're comparing apples to apples when comparing properties with 4 or less units with those that are 5+ units, primarily due to the better financing options on 4 or less units.  We have a strong cash-flowing 4-plex in North Phoenix available for purchase -- see the first featured property below, or go to www.TrueFreedomAchievers.com to view the opportunity.

 

Real Estate Humor:


 

Featured "Pin" of the Week:



Quote of the Week:

"The secret of success is learning how to use pain and pleasure instead of having pain and pleasure use you. If you do that, you're in control of your life. If you don't, life controls you"
Tony Robbins 



Featured Homes:

Featured Investment Property: Turn-key 4-Plex with 14% Cash on Cash Return!

15601 N 30th Street, Phx 85032 -- $197k 

4 units at 2/2 & 960 s.f. each; 2 story units with private patios.
OFF-Market; Stucco/Tile; Fully tenanted at $2,200/mo gross rents.
Price = $197k Cash or Lease-Option with $30k deposit
$3k Earnest Money to secure it.   


Front Side
Courtyard Kitchen
Living Room Bathroom 

15601 N 30th Street, Phoenix 85032 -- Click Here for a MAP!!

Cross-streets: Greenway & 30th Street 
  • 4 PLEX with all 2/2 Large Units
  • ~3,840 s.f.  - each unit ~960 s.f.
  • Lot = 9114 s.f.  
  • Built 1987
  • N: 214-37-060
  • Taxes:  $926/yr. (2012) 
Features/Amenities: 
  • Turn-key Rental - fully rented and instant cash flow.
  • Use Other People's Money (OPM) & get 14% Cash on Cash Return!
  • Click here for Cap Rate Analysis
  • Large, 2 story units with baths on each floor
  • Private Patios on each unit
  • Fireplaces & Refrigerators in each Unit
  • Stacked Washers & Dryers in each Unit
  • Stucco/Tile with A/C in each unit
  • Nice Courtyard with mature shade trees
  • No HOA
Price = $197K Cash/Hard Money or Lease-Purchase with $29.5k down & $1274/mo "piti" ($170k due in 4 yrs)
Cash on Cash Return = 14% under Lease-Purchase program.  See
 Cap Rate Analysis.
 
Deal Structure -   Lease-Purchase or Cash/Private Money. 
Access... 
All units rented - please strictly observe TENANTS' RIGHTS. 
A short inspection period to view the units will be granted
once a contract is accepted. 

              
Pictures - Click Here for PICTURES of 30th St 4-Plex
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Featured Property: Off-Market Gilbert Home with SELLER FINANCING -- Perfect for your Owner Occupied Buyer!
 
1315 S Riata St., Gilbert 85296

Price: $210k with $35k down and $175k seller financing at 6.25% on 30 yr amortization (monthly P&I payment $1077.51)

Move-In Ready Home in Gilbert 
3/2/2cg, 1,648 sf; Off-Market.

Traditional Sale 
Price = $210k with SELLER FINANCING
$3k Non-Refundable Earnest Money to secure it 
 
Cross-streets: Lindsay & Ray Rd.
  • 3/2/2 car Garage 
  • 1,648 s.f. 
  • Lot = 5,419 s.f.  
  • Built 1996
  • APN: 304-24-249
  • Taxes:  $1,284.34/yr. (2013) 
Features/Amenities: 
  • Move-In Ready
  • New Winter Rye just Planted
  • Good Rental Grade; make a few improvements to obtain top retail level
  • Fireplace
  • Vaulted Ceilings
  • Park and Greenbelt just 1 block away
  • Mature Shade Trees
  • Great Split Floor Plan 
  • Open Kitchen/Living Room Area
  • Excellent neighborhood
Price = $210k with $35k down and $175k seller financing at 6.25% on 30 yr amortization (monthly P&I payment $1077.51)
 
Deal Structure - Off-Market. Traditional Sale. 
Access - Vacant - Call or email for access
              
Pictures - Click Here for PICTURES of 1315 S Riata St.
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Remodeled Property: Fabulous REMODELED 3/2 plus 1/1 Casita Home located in Phoenix. Home on a Huge Lot Perfect for your Owner Occupied Buyer!
 
1720 W Berridge Lane, Phoenix 85015 -- $269.8k for Bank Financing or $255k Cash/Hard Money  

Phoenix Location on 17th Ave & Bethany Home Rd.  
3/2/1cg plus 1/1 Casita, 1,302 sf + casita; Perfect for Owner Occupied Buyer
Price = $269.8k for Bank Financing or $255k Cash/Hard Money
 
Front of Home Kitchen
Backyard Casita
Cross-streets: 17th Ave & Bethany Home
  • 3/2/1 car garage plus 1/1 Casita
  • 1,302 s.f.
  • Lot = 9,470 s.f.  
  • Built 1950
  • APN: 156-19-039
  • Taxes:  $1,125.02/yr. (2012) 
Features/Amenities: 
  • Huge Lot
  • Well Kept Home!
  • Main house has 3/2 - Casita has 1/1
  • Newer Roof
  • Upgraded Bath
  • Pool in Great Condition
Price = $269.8k for Bank Financing, or $255k Cash/Hard Money
 
Access - VACANT - Call or email for appt.
              
Pictures - Click Here for PICTURES of 1720 W Berridge Ln.
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Click the link below to view other homes that are available. 
      
 
-Mike Lima

Freedom Achievers, LLC
True Freedom Achievers, LLC
cell 602.538.7331
fax 602.801.2694

Mike@MikeLima.com
www.TrueFreedomAchievers.com


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-- Freedom Achievers & True Freedom Achievers are in the business of acquiring properties and wholesaling to investors or end buyers.  We acquire the properties through a variety of sources.
-- All prices are net to Seller;  Buyer pays all closing costs. Prices are based on quick closing of 7 days or less, unless otherwise indicated. 
-- Buyers are responsible for their own due diligence.
-- Properties are sold As-Is condition. 
-- Freedom Achievers & True Freedom Achievers do not own all of the properties that it offers.  Some of the properties it has an equitable interest in, and in such cases it is offering to sell such interest so that the Buyer can purchase the property.

-- Transactions are closed through a Title/Escrow Company, with Buyer receiving a title insurance policy.

 
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