YOUR biggest hurdle to buying an APARTMENT COMPLEX in 2019 is...

Multi-Family and Apartment Investing
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YOUR biggest hurdle to buying an APARTMENT COMPLEX in 2019 is...

Scott Morongell
Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes

There are so many powerful, motivated, and driven investors on BP. This platform is amazing to connect, inspire, and help others. The goal of this is to help people jump over their hurdles and take action in 2019. 

So the question stands... What is your biggest hurdle? Finding investors, deal flow, underwriting properly, stuck in analysis paralysis, credibility, or something else. 

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Brian Ellis
Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
7y

Networking and trusting others. Im a pretty independent, introverted guy so I don't like small talk or going to these networking groups. But, I understand how important it is to form relationships with like-minded people. Has always been my biggest hurdle.

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  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    Networking and trusting others. Im a pretty independent, introverted guy so I don't like small talk or going to these networking groups. But, I understand how important it is to form relationships with like-minded people. Has always been my biggest hurdle.

    50Reply
  • Scott Morongell
    OP
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y
    Originally posted by @Brian Ellis:

    Networking and trusting others. Im a pretty independent, introverted guy so I don't like small talk or going to these networking groups. But, I understand how important it is to form relationships with like-minded people. Has always been my biggest hurdle.

     I agree, trusting someone is only attainable over time. 

    4Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    7y

    Too much money chasing too little property. I have plenty of deal flow, a robust and growing investor base, and a senior team with over 100,000 units of experience.

    But despite all of that, in real estate you are only as good as your worst competitor. And there are plenty of buyers playing like there is no tomorrow, bidding prices to the stratosphere. 

    There are deals to be found, but it’s like 1 out of 200 and almost never in the first round.

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    47Reply
  • Curtis Rouse Jr
    Realtor · Atlanta, GA · Member since 2015 · 266 posts · 182 votes
    7y

    As others have mentioned, I would definitely say deal flow with the market being so hot these days. I'm mainly looking at all off market deals via postcards, cold calling and having my team driving for dollars, but that has even started to somewhat slow down with sellers asking for ridiculous prices.  Just have to keep getting creative and most imporantly is to open up that pipeline and stick with your numbers not making emotional decisions.

    8Reply
  • Scott Morongell
    OP
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y
    Originally posted by @Brian Burke:

    Too much money chasing too little property. I have plenty of deal flow, a robust and growing investor base, and a senior team with over 100,000 units of experience.

    But despite all of that, in real estate you are only as good as your worst competitor. And there are plenty of buyers playing like there is no tomorrow, bidding prices to the stratosphere. 

    There are deals to be found, but it’s like 1 out of 200 and almost never in the first round.

     I would agree completely. Many competitors continue to keep their blindfolds on and driving prices sky high. In your opinion, how many of these competitors do you feel are buying deals at a premium because:

    A. 1031 money running out

    B. Foreign money chasing yield with no faith in their own currency

    C. Syndicators who are blindfolded or put on rosy red shades "making it work on paper" to make a quick $$

    3Reply
  • Scott Morongell
    OP
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y
    Originally posted by @Curtis Rouse Jr:

    As others have mentioned, I would definitely say deal flow with the market being so hot these days. I'm mainly looking at all off market deals via postcards, cold calling and having my team driving for dollars, but that has even started to somewhat slow down with sellers asking for ridiculous prices.  Just have to keep getting creative and most imporantly is to open up that pipeline and stick with your numbers not making emotional decisions.

     Thanks Curits, are you using these strategies you've mentioned for multifamily apartments? 

    1Reply
  • Roland Osage
    Realtor · Martinez, CA · Member since 2017 · 28 posts · 6 votes
    7y

    @Scott Morongell hope your doing well! Mine is definitely underwriting properly, which I'm practicing, just gotta get my reps in until it gets comfortable. I'm mainly looking to Jv my first couple of deals to build credibility and then get into syndications. At first networking and meetups were something I hated, but now I don't mind it all. I feel like once you really start educating yourself the networking aspect gets a lot easier

    2Reply
  • Scott Morongell
    OP
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y
    Originally posted by @Roland Osage:

    @Scott Morongell hope your doing well! Mine is definitely underwriting properly, which I'm practicing, just gotta get my reps in until it gets comfortable. I'm mainly looking to Jv my first couple of deals to build credibility and then get into syndications. At first networking and meetups were something I hated, but now I don't mind it all. I feel like once you really start educating yourself the networking aspect gets a lot easier

     @Roland Osage I believe, whether or not investors want to admit it, most struggle with underwriting and assumptions. JV and partnering are great strategies to implement when starting out. I would suggest whoever you do choose to work with that they have a strong track record, experience, and integrity.

    4Reply
  • Curtis Rouse Jr
    Realtor · Atlanta, GA · Member since 2015 · 266 posts · 182 votes
    7y
    Originally posted by @Scott Morongell:
    Originally posted by @Curtis Rouse Jr:

    As others have mentioned, I would definitely say deal flow with the market being so hot these days. I'm mainly looking at all off market deals via postcards, cold calling and having my team driving for dollars, but that has even started to somewhat slow down with sellers asking for ridiculous prices.  Just have to keep getting creative and most imporantly is to open up that pipeline and stick with your numbers not making emotional decisions.

     Thanks Curits, are you using these strategies you've mentioned for multifamily apartments? 

    Exactly, for both a MFR in the range of 20 - 50 units I'm targeting to personally invest in and SFR's that I'm wholesaling to build up capital for larger deals. I've been steadily pushing my team to increase our pipeline because I target motivation then a good deal "IF" it makes sense buy/hold, flip or wholesale it away

    1Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Scott Morongell

    I think most of us are pretty much in the same boat these days as @Brian Burke. There are way too many offerings  that come across my desk. But finding that rare gem among many rocks is a challenge.  Unfortunately that still entails going through all theses other so called "deals" to find such "gem" or "diamond" or whatever you want to call this one in a million great deal. 

    5Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    7y

    I can't risk my savings on one large community at current cap rates.  In the meantime, I'm hitting singles and doubles.

    15Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    7y

    @Scott Morongell Thanks for the thread. The MF market is only getting crazier, so much hype and so many organizations jumping on the bandwagon. The secondary markets, where I am playing, are dried up or sellers are looking for totally unrealistic numbers. Opportunities are few if any, and those that do appear you can't make any money and people buy them anyway. I know there are properties in other states but I don't want my stuff to be a day away.

    7Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Scott Morongell:
    Originally posted by @Brian Ellis:

    Networking and trusting others. Im a pretty independent, introverted guy so I don't like small talk or going to these networking groups. But, I understand how important it is to form relationships with like-minded people. Has always been my biggest hurdle.

     I agree, trusting someone is only attainable over time. 

     I mis-read your title, I didn't see the apartment complex. Im nowhere near purchasing a complex! I have a lot more hurdles then trust alone if I want to obtain that lol. 

    2Reply
  • Oleg Shalumov
    Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
    7y

    @Scott Morongell I have no problem with going over deals as I enjoy looking at the numbers and seeing how I can make them work without going overboard. My goal for this year is to find more investors to find my deals. 

    I am sure this is something that comes with time, networking and trust. 

    2Reply
  • Josh Oaten
    Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
    7y
    @Scott Morongell I would say for me it is getting over the line with that first big deal and gaining some much need knowledge and experience from that in all areas!!
    5Reply
  • Theo Hicks
    Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
    7y

    Sellers with realistic expectations on the value of their property. So many deals in a 6 cap market with a 4 to 5 cap list price/whisper price.

    9Reply
  • Matt Millard
    Lewisville, TX · Member since 2015 · 343 posts · 264 votes
    7y

    I’m fully invested already. Focused on mobile home syndications & don’t like the market at its peak in cycle.

    1Reply
  • Tim Lovell
    Plymouth, MA · Member since 2018 · 23 posts · 7 votes
    7y

    @Brian Ellis

    Hi Brian

    I am the same way can’t get myself to go to meet ups. I am still looking for my first deal. I have put offers in on duplexes in N Adams, Springfield, and 2 in Syracuse NY.

    Anytime you would like to talk Realestate and trade some ideas don’t hesitate to reach out.

    Tim

    5Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    7y
    Originally posted by @Scott Morongell:

    A. 1031 money running out

    B. Foreign money chasing yield with no faith in their own currency

    C. Syndicators who are blindfolded or put on rosy red shades "making it work on paper" to make a quick $$

    I think it's mostly C and partly A.  Not so much B.

    So many syndicators with bad underwriting tools/skills intentionally stretching just to get a deal, or unintentionally stretching because they don't know what they don't know...but they'll learn after the fact.  But by then, the deal is already wasted. 

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    2Reply
  • Mike Alt
    Rental Property Investor · Santa Monica, CA · Member since 2017 · 40 posts · 27 votes
    7y
    Originally posted by @Tim Lovell:

    @Brian Ellis

    Hi Brian

    I am the same way can’t get myself to go to meet ups. I am still looking for my first deal. I have put offers in on duplexes in N Adams, Springfield, and 2 in Syracuse NY.

    Anytime you would like to talk Realestate and trade some ideas don’t hesitate to reach out.

    Tim

    Hi Tim, I own several properties in Syracuse, NY and currently doing a BRRRR there. Would love to connect and talk and share experiences

    1Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    7y

    Good question, @Account Closed.  I’ve always just been disciplined so I just wait for the right deal and 99.5% don’t make it. Most deals I’ve bought were rebound deals (first buyer failed to perform) or off-market acquisitions.  My hit rate on marketed deals is really low. But neither of those things are adaptations, it’s always been true for me, so that doesn’t answer your question.

    But I have made changes over the last few years. Because of my low hit rate I need more product going into the funnel in order to have more acquisitions coming out of the funnel.  So I expanded my team.  I now have four people (I’m one of them) dedicated to acquisitions.  This team is highly experienced and each has over 20 years and 20,000 units of experience (two over 40,000 units).  This allowed me to broaden my geographical footprint to cover more markets, it brought decades-long broker and seller relationships, and it brought capacity to underwrite, tour and analyze a LOT of opportunities.  

    This resume also goes a long way when sellers are deciding whether to pick a lesser-experienced buyer at a higher price, or us at a lower price.  For example, we were recently outbid by more than $700K but still got picked.

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    8Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    7y

    Multifamily is tough right now. Highly overvalued across the country. Developers are building class A like crazy as that is almost the only thing that pencils for brand new builds with rents you need per door. I have seen lately more assisted living and senior communities being built as booming demand and rents per door are very high. 

    I saw in the last downturn class A was pummeled as more renters moved to older class A with less rent or B type properties to save money. That can cause class A to flatline for rents or even decline and vacancy to rise. Buyers are purchasing on bubble numbers that do not match decades of data for historical norms.

    I do almost all commercial retail these days. I still have a few large clients looking for multifamily value add with almost no limit on price. Its tough out there for those deals. Lot's of sellers pushing junk pro-forma's and saying value add rents could go up 100 more per door but 90% of the value is already extracted and that last 100 is the hardest to make happen. Sellers know that and leave some scraps on the bone but take most of the value out of the deal already.  

    There are some syndicators that buy 4 caps and hope to blend up. I like cap rate deals where cap rate has decent yield already and you can blend it up further. Sadly a lot of syndicators out there wanting to sell marginal deals to investors so they can stack up acqusiition fees on the front end. I see more so called syndicators for multifamily these days than flippers on houses! Seriously I run across almost hundreds a month trying this now. The real deals for multifamily are 1 in thousands now. The rest is overpriced junk. The great properties most sellers do not want to sell. They keep raising rents and even if they could sell they cannot replace with a similar property for a 1031 exchange so they hold their current property instead.

    I still look for my clients for the big stuff as It's worth my time. The smaller multifamily ( under 10 million) I tend to not work on that anymore for clients. Retail I work on smaller deals as they could be buying a Starbucks for 2 million and I have one lease to go through. Smaller multifamily sellers books are generally a mess and a ton of hair on the deal. 

    There can be some deals still for a 1031 buyer buying a stabilized property if it's in a good area. For instance buying a true 6's to 7's cap in a B area stabilized and put debt on it in the 4's. I see a lot of junk being sold in marginal areas though that I would never touch. The areas are doing okay now with the economy pumping at full capacity but as soon as the slowdown happens those properties are going to get crushed.  

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    14Reply
  • Michael Glaspie
    Real Estate Consultant · Fayetteville, NC · Member since 2017 · 151 posts · 144 votes
    7y

    Biggest hurdle currently is the fact we have out of state investors from a high cost of living areas that are not afraid to "overpay" to secure a 6-8% return. Whereas most of our investors that we service locally are still looking for the 12-16% return. The increased competition is good from a broker standpoint but for my personal investments and local investors, it has caused some hesitation in portfolio growth. 

    7Reply
  • Chase Louderback
    Real Estate Agent · Luray, VA · Member since 2016 · 459 posts · 293 votes
    7y

    A little bit of Finding Investors but mostly deal flow.  It's pretty crazy seeing so many 6.5% cap offerings that are actually 5% cap or less at current pricing because they are missing a lot of expenses or trying to get by with half the payroll necessary to run a property of a decent size.  

    It seems like Credibility isn't really the issue anymore either, it's that there are so many buyers in the market that the brokers really just don't care.   Someone else will pick up this property for what they are asking and there are plenty of people who have closed deals in this market.

    4Reply
  • Damian Seguen
    Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
    7y

    @Scott Morongell I’m closing a Refinance now and jumping into apartment complexes this year! Biggest hurdle for me is going to be pulling the trigger and purchasing. I’m so obsessed with analyzing the deal and matching up the numbers that I often let good deals go because I’m looking for a GREAT one. .

    3Reply
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