Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
Is there any real difference when flipping muti-family units? I happened to come across a person selling 3 duplexes and I'm wondering, as I've never flipped or studied duplexes, if there's any special things to consider for duplexes? Especially if it relates to money!
Also, although I want to flip, if I wanted to rehab and hold these duplexes (if they generated cashflow), what financing options should I look at considering I'm currently getting funded through HML's for fix and flips. So you know... I don't have the credentials for a traditional loan for three (CHEAP) duplexes and I couldn't afford an HML loan on it as the terms are really short and the balloon payment at the end of 1 year, or even 5, would just result in a repossession of the duplexes...
Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
14y
I am not sure about smaller properties but I have several clients that are turn around experts for underperforming apartment complexes. They are problem solvers that will take a class C property in a good area with deferred maintenance, poor management and vacancy issues and they will upgrade the property and operations to significantly increase NOI and then sell. They turn a C class property with occupancy rates under 75% to a class B property with a low/mid 90's occupancy rate. I suspect the same would apply to smaller properties. Since they are not owner occupied it is not an emotional decision... you can either significantly improve the NOI or not.
Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
14y
I am not sure about smaller properties but I have several clients that are turn around experts for underperforming apartment complexes. They are problem solvers that will take a class C property in a good area with deferred maintenance, poor management and vacancy issues and they will upgrade the property and operations to significantly increase NOI and then sell. They turn a C class property with occupancy rates under 75% to a class B property with a low/mid 90's occupancy rate. I suspect the same would apply to smaller properties. Since they are not owner occupied it is not an emotional decision... you can either significantly improve the NOI or not.
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
14y
Manual,
If the units generate good cashflow, have you considered getting a partner, who has a job and can qualify for financing? Shared equity is better than no equity. Just a thought.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
14y
there is a huge difference...you can make great money flipping multifamiles..sometimes, its not even that much rehab or expense..it's more of fixing the management and getting the property to cashflow correctly..i bought a 10 unit that the city was about to condemn...i had to evict just about everyone, fix a bunch of code violations and get it re-rented and performing...it's not as fun as flipping a house (IE, no creativity, no pretty granite--just managing tenants and increasing the productivity and improving the books each month)...that said, make sure you buy it low enough to sell low..you'll be selling to investors and they all way a deal...if a buyer is getting financing, their bank is going to want to see months, sometimes a year or 2, of records, expenses, rent rolls, etc. if you decide to go cash, like i said, they'll expect a great deal bc cash is king as we all know right now..i listed a property that was 50k less than the closest comparable..i was going to make a profit on it, but the buyer told my agent "no way i'm gonna let that guy make that much money on this building"...so he bought the next property over for 50k MORE than i wanted...this is the attitude you'll have to face :)
Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
14y
Originally posted by Bryan A.:
i listed a property that was 50k less than the closest comparable..i was going to make a profit on it, but the buyer told my agent "no way i'm gonna let that guy make that much money on this building"...so he bought the next property over for 50k MORE than i wanted...this is the attitude you'll have to face :)
Damn, that's crazy! I see your point though, it's more performance building than building a really nice house. Thanks.
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
14y
Originally posted by Bryan A.:
there is a huge difference...you can make great money flipping multifamiles..sometimes, its not even that much rehab or expense..it's more of fixing the management and getting the property to cashflow correctly..i bought a 10 unit that the city was about to condemn...i had to evict just about everyone, fix a bunch of code violations and get it re-rented and performing...it's not as fun as flipping a house (IE, no creativity, no pretty granite--just managing tenants and increasing the productivity and improving the books each month)...that said, make sure you buy it low enough to sell low..you'll be selling to investors and they all way a deal...if a buyer is getting financing, their bank is going to want to see months, sometimes a year or 2, of records, expenses, rent rolls, etc. if you decide to go cash, like i said, they'll expect a great deal bc cash is king as we all know right now..i listed a property that was 50k less than the closest comparable..i was going to make a profit on it, but the buyer told my agent "no way i'm gonna let that guy make that much money on this building"...so he bought the next property over for 50k MORE than i wanted...this is the attitude you'll have to face :)
Bryan,
There must be more to the story. People just don't drop $50k more on an identical property next door when they can pay $50k less regardless of how much profit you make. With that said, I don't see the point that Manuel sees in your post. Hahaha.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
14y
Minh, do you routinely discredit peoples experiences in this business, and then in a passive aggressive manner, type "hahaha", in order to appear friendly?? Sorry if you didn't see the point, but I'm glad Manuel did.. Since he's the one who asked...btw the point was that buying and selling multifamily is like buying and selling a business.. It's about the numbers..much different than appealing to a retail buyer on a flip... And there are no more details for the other story.. Some guys see blood in the water and assume they're making money if someone else is losing which isn't always the truth... I've had a long day so I apologize if I misread your comments... Or perhaps you didn't mean to come off how you did.. Otherwise, Please don't post that again... It's rude and unprofessional of you
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
14y
Bryan,
There are many angles to a RE transaction. I don't know if the excuse that the buyer gave to your listing agent was true or not. I was taught that "buyers are liars, and sellers are story tellers." I've been involved in many RE transactions, and in some transactions, it's not what it seems from outside looking in. You're just reading too much into it.
My short seller just accepted an all cash offer for $340k. The comparables are $345k-$355k. Our market has been hot, and we received 7 all cash offers with the highest offer at $380k. Five financing offers came in as high as $397k. The reason the seller picked the $340k offer was because the buyer offered rent back for 1 year at $2,000/month. Fair market rent is $2,400-$2,600. This is exactly what the seller was looking for. I know 11 buyers will be pissed off at me when we close this transaction at $340k-$345k. What can I say? Buyers are liars, and sellers are story tellers. Well, at least that's what my broker taught me. :)