Experienced investor from Scottsdale, AZ

[Steve Olafson]

Hello All,

I have been an apartment investor for many years.  I have made millions and lost millions and made them again.  It is a tough business if you want to take it personally.  :)

I had built up to over 900 units at one point.  About half of those were mine and the other half were with investor money.  I lost the majority of them during the economic crash.  All of my own units were foreclosed on.  I lost one building with investors after a long hard battle. but the remainder of the investor units were able to be salvaged and were actually given decent returns in the end.

I had 500 units of my own that I had refinanced with decent rates at the time. They were leveraged at about 80% LTV which proved to be too high when the downturn happened.

We were hit hard here in AZ.  My rent collections dropped by more than 40% in a short period of time.  Apartment vacancies were much higher than reported at the time.  We went from about 6% vacant to about 25%.  On top of that, many others just were not paying.  The 40% drop was very real across all three of my properties.  I probably could have saved 125 units or so if I would have initially focused on just one property.  I burned through all my reserves real fast and went into a deep vortex.

Anyway, properties got real cheap around here.  I was able to convince a few investors that we needed to buy up some of these zero cap rate deals based on the price per unit.  I was able to buy up about 100 units. 

Prices and rents have not only rebounded but have surpassed the earlier heights in the market.  I have been selling off units recently and have dropped from 170 down to about 75. 

I recently purchased a retail strip mall in one of the very prime locations of our city.  It is difficult to buy multi-family at the prices being asked of them these days.  I can't even find fixers at a decent price.

Anyway, that is my introduction.  It is good to see so many knowledgeable people around a forum.