Going for 140 unit apartment complex

[Jeff Plair]

It been a while since I've been on bp. When I first started I had one house October 2014, since then we've bought 20 single family house and an 18 units of duplexes. Im ready to move toward buying a 140-150 unit apartment complex. I have $500,000 in Equity to use to go towards a bigger apartment complex. I just need a little direction on the process and major thing to look for when searching. Anyone out there that has experience with buying a large complex?? Little help please!! Lol

[Joel Owens]

Just remember it's not just the number of units but rents per door.

You could have 100 units for low income at 400 a door. Due to the type of tenant and high turnover with damage to the unit and collections the scale might not be large enough.

You could have 50 units at 1,200 a door and possibly have a better quality asset and more stable tenants that do not work 2 jobs to get by and rely on charity and government type assistance. The lower income tenants the money they make highly fluctuates and any blip in their lives tends to derail everything. Higher income tenants usually have more reserves to fall back on. Not always but it helps.

Buying at lower prices per door tends to be older buildings requiring constant repairs which is why scale is needed. About 80 doors is the break even point having a full time repair person. Doesn't make sense to own far away with a low income asset on a small scale. Either have quality from afar or run a more problem property locally for increased cash flow yield.

Constant traveling far away to a lower class asset on continual basis will suck away a lot of your time and cash and you have to build that in to see if the extra risk is worth it for the upside.

Investors like to keep problem properties close to home and re-cycle capital. When they move to areas away and issues come up they do not have the time to handle things on an intensive basis. A higher end property you will have some minor blips but they tend to be manageable from afar.