Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
Hey guys,
I'm a currently a rehabber that wants to buy and hold (and reposition) my first apartment complex. I've read about it ever since I was just in my teens and fell in love with the idea of economies of scale. I want to ask anyone that current owns or owned apartments HOW DID YOU BUY YOUR FIRST APARTMENT? I've crunched numbers for too long now and want to take the leap to Just Do It but want to hear what some of the more experienced ones have to say.
ANY advice would be appreciated. I look forward to hearing from you all!
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
You can read and study forever, but nothing beats getting your hands dirty. Here are some pieces of advice that I wish I had when I bought my first apartment complex:
1. Don't rely too much of pro formas and fancy models. Nothing beats actual data. Repositioning is great, but don't fall in love with your ability to increase things too much. Be conservative!
2. Don't buy in the ghetto...it isn't worth it
3. The financing is KEY. Don't finance something you intend to hold long-term with money that balloons, adjusts, bubbles, etc. in a few years
4. Work with someone you KNOW can close the loan. There are a lot of pretenders in the CRE finance market that will promise you a lot, but can't deliver
5. Interview competent property managers in the area to make sure the owner is distressed and the property isn't distressed due to the market. You can't really do much with the market!
Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
15y
Originally posted by Bryan Hancock:
I use a broker to find financing. BMC Capital in Houston is excellent and KC Capital in Austin is a close 2nd.
Bryan - Is there a specific person there that you use so that maybe I can give you credit for the referral? I plan on calling within the next few days in order to establish a relationship and proceed with a project.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
Greg Kunard at BMC Capital is great.
I would also give Darryl Dahlen in this thread a crack at your loan. Darryl, one of my partners, and I had a conversation several months ago about lending and he is a very experienced broker.
Kevin Yeats, another BP nation broker is also a great contact.
Maybe you can post the type of loan you are seeking in this thread or another so that the BP folks can help to advise you on the best product for your purchase.
Accountant · MN · Member since 2008 · 142 posts · 25 votes
15y
Ever thought of adding your own cap to the note with options? You can collar the rate to offset the cost of the calls most of the time getting $0 cost protection. Anyone ever used this strategy on your CRE loans?
Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
15y
Originally posted by Jon Klaus:
Tony, have you advanced in your quest of buying an apartment complex? What else have you learned?
Hey Jon, sorry I never saw this question. I actually do have an 8 unit under contract right now in Tampa. I'm buying it for 155k, down 40k, seller carrying 115k @ 4%, 15 year amort, due in 10. its grossing 43,300 right now and i of course plan on raising it after a few improvements.
Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
15y
Oh I had to go ghetto to get those numbers. The nice ones (my first choice was near Univ. of Central FL) were offering 5%-8% caps and that wasn't cutting it for me. I'm honestly perfectly comfortable with ghetto properties. I grew up in that type of environment so it's no big deal. I probably blend in just as well today!
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
I hope it works out for you Tony...we have an apartment complex in the ghetto and it is a constant problem. Half of it actually burned in a fire a few days ago...luckily nobody was hurt.
Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
15y
hearing about this reminded me of when i was living alone @ an apartment in southern ca. i was trying to deep fry some jumbo shrimp and out of no where, i looked back and there was fire from the pan on the stove caressing the ceiling. I grabbed the pan, turned to the sink, with the fire still going and poured it all down the drain. I'll never forget how i felt at that moment. Its unbelievable that i didn't burn the whole building down.