Seeking Vermont Multifamily investing advice!

[An Duong]

I am thinking of investing in a multifamily 10+ units in Vermont. Looking to network with other investors with experience in that market. How are landlord tenant laws (How long and how much does it take to evict a bad tenant). How are the cap rates? Would you recommend Vermont for a first larger mulitfam (Largest multifam I investing in is a 3fam).

THX!!!

[Mark H. Porter]

@Benjamin F DeCarlo good morning, Ben.  We’re fortunate that property taxes are a pass-through here in Burlington.  I simply divide the increase across each unit proportionate to number of bedrooms.  I also let the tenants know why and if they have an issue then they should call their state representative.

I found cap rates are almost exactly the same as they were 10 years ago.  You’ll pay 6’s near downtown or the college/hospital and 7’s in the old north end.  Of course, that’s staying within the same class of asset.

The trick, as in any market, is truly knowing how to increase cash flows.  If you buy a turnkey property the value is in the appreciation.  If you buy a property where rents are 10%+ under market, either due to a landlord complacency or needing lipstick, those are the gems and they’re out there.  Those are the ones where you need to spend $5k per apartment in order to raise the rent $125 per month.  That’s a little over a three year payback!

Burlington will always be a good place to be a landlord.  No matter how many apartments get built in the outside areas you’ll always own apartments where everyone can walk to work or Church Street.  I still get dozens of calls per vacancy and they’re gone in days.

You’re on the money in suggesting the pay attention to your numbers.  Cap rate is merely a cut-line that will get you interested.  From there it should be about either appreciation (class A asset) or cash flow (class B or C).