All Forum Posts by: Aaron Nelson

I have pondered the same question. I had this innate drive to scale up quickly and not buy into the philosophy that I would have to start small and work my way up for years. I just bought my first multi-family deal in May for $325,000. It is a 22-unit in Alabama, which is thousands of miles away from where I live in Northern California. It has taken a good amount of energy to actually acquire it, but honestly most of that was developing strategic relationships with the right people and manager that I could trust. I'm too early into it to know for sure exactly how it will turn out or what obstacles I will face, but I do feel that the quality of the deal I got will be able to cover up some potential hurdles or mishaps that will inevitably come my way for my first apartment. I spent much more time in preparation and analyzing markets than I have after actually acquiring it, since I have a good contractor and manager in place who absorb most of the stress on my behalf. I've heard that larger units (60+) get even easier from an owner's perspective simply because you can hit those desirable economies-of-scale and remove yourself even less from the equation with full-time managers and maintenance people. The caveat I should mention in this is that I have been a full-time agent/broker for the last 12 years, and I've had a bunch of recent experience with SFR flips and some small commercial deals in my area, so It's been an easier transition for me than it would be if you were just learning about real estate in general. I've already experienced a lot of the stresses and challenges that real estate has to offer, so moving to multi-family just felt like the logical next step to scale up quicker and begin investing for the long-term.

Thanks @J Benoit - I just might do that... let me know if you have anything interesting that you currently know of for smaller multi-family. Are you able to find many 2% rent/price deals in decent areas of Birmingham?

Hello, @Mark Lenox - Good questions you are asking. My experience in life has taught me that if you want something badly enough and have the fire in your belly, you'll figure out how to make it happen. There are always opportunities if you look hard enough in any market. But I agree with @Zoran M. that things have gotten more difficult and more competitive in the last few years. It will certainly take a ton of persistence to accomplish your goals. I would rather be in the uncomfortable position you are in now that requires a great deal of faith to pursue your dreams, versus the alternative of maintaining a stable J-O-B for countless years with the illusion of security. Cheers to carving out your own path!

Hello, all! Thanks for the interest and feedback here. I had gone to an apartment investing lab with someone named Darrin 'Mike' Ballard in 2010 when I started to become interested in multi-family. I didn't carve out the time for it back then to actually do anything since I have been doing about 25 residential flips a year and business has been really good. The past 12 months I've noticed a shift taking place in my market with more competition, higher prices, and tighter margins with flips. So I decided to turn my attention more toward some good multi-family markets in the Southeast U.S. I looked at some of the places Mike Ballard owned his apartments such as Huntsville, Birmingham, Macon, Columbia, Greenville, etc... and for some reason I liked the Huntsville area. The median income is relatively high, low unemployment, affordable houses, and just a nice clean city. Turns out when I mentioned to some of my colleagues back in Redding that I had been to Alabama that one of them had a best friend whose mom had moved to Huntsville and she had started a property management company. I found that a very interesting connection and pursued a phone call with her. After several phone conversations about what I was looking to find she mentioned that she was managing as asset for a bank that had just taken back a property through foreclosure. It was in Decatur just outside of Huntsville and she thought the bank would want to make a deal. It actually took a lot of persistence and follow-up to make it all happen, but after the property getting listed with an apartment brokerage and having to deal with multiple offers, the bank finally accepted my offer about 6 months after it all began. Here are the numbers for you @Minh L:

Built in 1990, 2 buildings, one is a 12-unit and the other is a 10- unit. About 60% occupied when acquired. They are all 1bed/1bath units and about 690 square feet. Some deferred maintenance but overall decent condition. Newer roofs on both buildings. I'd say they are B- to C+ units and area. I bought the package for $325,000, which ends up being about $14k per door. I've been rehabbing the down units slowly and have gotten 2 of the vacancies filled since my acquisition in May. The immediate area has occupancy of 94% so my goal is to have 90% occupancy and all the units rehabbed before the end of the year. My all in cost will be around $375,000 and the gross monthly rents will be about $9,000. With expenses the NOI will be about $60,000 annually, which should make it worth closer to $600,000 since stabilized units in the area are trading at a 10% CAP rate. I actually utilized a private investor who I've known and used a lot for funding flips. He funded the entire purchase of $325,000 at 10% interest with an 18-month balloon. I'm using my own money for the rehab and should be able to refi him out within 12 months from now with a conventional loan.

@Ricky A. the agent I used for the purchase is based out of Birmingham. They deal with properties all over the region. I don't really have or know of a local agent in Decatur yet, but I'll probably look at finding one since I like the dynamics there and have had a good experience so far. Yes, it would probably be worthwhile to view properties there especially since you have connections and family in town...

Greetings! I'm from a relatively small place in far Northern California called Redding. Been doing some things successfully here with real estate for 12 years, but finally waking up to the fact that geographic limitations are not what they used to be. Recently acquired a 22-unit REO apartment in Decatur, Alabama and it has whet my appetite to find more out of area deals where the numbers are exceptionally better than what I'm used to seeing here. I've listened to the BP podcasts and figured it was time to stop hiding out and start making new connections and finding opportunities- in places far and near.... looking forward to it