All Forum Posts by: Marc C.

First off, "Fix and Flip" doesn't lead to long-term wealth, so you are right to look at buy-and-hold (Buy, Fix, and Rent is the best strategy of all). Fix and Flip is more of a job than an investment. You don't need a job...you need an investment. Smart flippers build up their cash through Fix and Flip, then invest it in Buy and Hold. 

With multifamily, earning $4000/mo. passively in, say, 3-5 years is DEFINITELY POSSIBLE and even probable. It's a "get rich slow" game that has worked forever. The hardest part is just getting started. 

I really don't think a business plan is necessary, but writing down goals and the strategy to reach those IS important. And being able to work spreadsheets is important. 

But look, this isn't a complicated business compared to most I've owned. It's the "Oldest Business In The World," even older than prostitution, so there is TONS of information in books and online and people to talk to who will help you. Lots of people with less intelligence and training than you have been successful at it. 

You have the right ingredients to start: Cash, credit, and W-2 income, but low knowledge and little time. I have the first three, but no time. So I partnered with two sharp "mentees" who have time but no cash/credit. Together, we're making a great team. Our agreement is they do 80% of the work and I put up all the money, then we split the profits equally. So maybe you could partner with others who can make up for the areas in which you are weakest. LOTS of folks around are interested in real estate but don't have money/credit. 

Where do you meet them? Here on BP, plus the Real Estate Investment Association (REIA) meetings in Albuquerque and Santa Fe. There are at least 4, including one in Santa Fe. Search Meetup.com to find the others or send me an email. There is one meeting tonight (Thursday): Albq. Congress on Real Estate. Great places to network and learn. They have a speaker talking about USDA loans. There is time to network before/after the meeting.

You are on the right track...keep going. Keep posting. Keep asking questions. 

Hi, Petr: Are you driving to Los Alamos every day? Just curious, as we have another investor who drives from Albuquerque to LA every day! Talk about time to listen to podcasts! 

I have a hard time making the "numbers" work for properties in Santa Fe when compared to Albuquerque. On the other hand, there is insane rental demand in Santa Fe; occupancy is over 97%. 

I tried all summer in 2015 to find a rental house (foreclosures) that would "pencil" in Santa Fe. Finally gave up and went with Albuquerque and bought 3 rentals. I could never get 2 of them rented. I was looking for 1% per month in rent, with a $400/mo/house cash flow; both of which turned out to be unrealistic in ABQ for the $140,000-$170,000 4BR properties I bought. (I thought 4BR might be a niche for attracting Section 8 tenants, but the Housing Authority wouldn't authorize over $1325 for one of my properties, which I recently sold for $155,000. By the time I paid a property manager, the cash flow wasn't worth it. So I tried selling it on a lease w/option, but found people couldn't qualify...if they could, it was cheaper to buy.) For ABQ, if you want 1% a month, I NOW think the correct niche is 3BR properties priced under $110,000 that rent for $1000-$1100. They're out there, but the neighborhoods aren't great, and the cash flow is too low for the trouble, in my opinion. But one has to be affordable to the quality of tenants that are available. And people in ABQ are POOR compared to Santa Fe...most folks earn $10-12/hr. 

From there, I've turned my attention to multifamily properties, where my experience lies: Better overall returns, lots of upside, more cash flow, but more work all around. I took on two young "mentees" to handle much of the workload and because I love teaching (flight instructor for 30 years). 

There are few multifamily properties in Santa Fe, but tons in Albq. Working a deal for a 24-unit right now. We'll be looking for investors if you want to joint-venture and learn how we do things. Projected returns will average 15%/year over a 5-year hold. 

Lesson learned: I should have stuck with multifamily from the beginning. I used to own a 20-unit building and I was an apartment broker for several years, so multifamily comes naturally. But it's gotten so overpriced that buying on-market deals just don't meet my financial goals right now...so we're concentrating on finding off-market deals. 

Podcasts: BP (excellent) is just one, but search (exactly) for the following: 

• Apartment Building Investing with Michael Blank Podcast (weekly)
• Best Real Estate Investing Advice Ever with Joe Fairless (daily; Excellent)
• The Lifetime Cash Flow Through Real Estate Investing Podcast (1-2x/week)
• Old Capital Real Estate Investing Podcast (weekly; focused on apartments. Excellent.)
• Real Estate Investing For Cash Flow Hosted by Kevin Bupp (weekly; EXCELLENT)
• Rental Income Podcast With Dan Lane (weekly; off until Sept.)
• Rental Property Owner & Real Estate Investor Podcast

Sent you an email. Let's get together when you can. 

Hi, Preston, 

Welcome aboard! There are a lot of us in ABQ real estate investing who are happy to help. Sean Glover posted a link to our Mastermind group; we'd love to have you attend. If you're into multifamily, we are posting multifamily news (including reports on local occupancy and rent trends and economic data) at Multifamily Partners. We also call the major local apartment brokers, appraisers, lenders, etc. every month to get their news and listings and post them. We welcome new investors and partners. 

Hope to meet you soon!

Marc

I'd consider interviewing new property managers. What about T and C (Chuck Sheldon?) 

They are supposedly getting $600 for 2BR's in this nearby complex

http://waltarnold.catylist.com/listing/29622586/12...

Can you post the address so we can drive by and compare with other properties in the area?

I think your rents are too low. We should be over $600/mo. for 2BR's anywhere in town that isn't in the "war zone," and even then, upgrades can help you get there. 

Interestingly, I had a leading apt. broker last week tell us that banks are lately most interested in financing complete rehabs right now, taking the properties from C to A, not C+ to B, etc. Changes my business model a lot, as I was in the latter camp: Buy a C, upgrade the exteriors/landscaping, slightly modernize 1970s building to get it to a B-. He said banks were a lot less interested in financing modest upgrades these days. Working on verifying that. 

I was referring to the fact that there are so many crowdfunding sites now for accredited investors (and so much money looking for yield). THAT is what is making it easier than ever before. Yes, I have raised funds for businesses, and you're right...it's a pain. Hence my comment that one becomes an Investor Manager rather than a Business Manager, which may not be a good thing. But, by using one of the crowdfunding sites like RealtyMogul, they put all the investors in one LLC which THEY manage, so the sponsor doesn't have to. Makes a lot of sense, although I have yet to use it.

The important thing is: Find the deals and the money is out there. Finding the deal is harder than the money, in my experience. 

Hi, Don. The Jobs Act has several parts. Regulation A+, which is like a mini-IPO for mid-size companies, Regulation D Rule 506b and 506c, which are for accredited investors, and Title III, which is the new (as of May 2016) part that lets sponsors raise up to $1M a year from non-accredited investors. Rule 506b and 506c are the foundation of the real estate crowdfunding sites that have become so popular over the last 3 years. RealtyMogul.com, RealtyShares.com, and Fundrise.com are examples. 

So far, I haven't seen any real estate companies use Title III. I imagine because of the restrictions on investors' maximum contributions: If either the investor's annual income or net worth is less than $100,000, then they can only invest the greater of $2,000 or 5% of their annual income or net worth (whichever is less) on an annual basis in crowdfunding investments. If their income and net worth is $100,000 or more, then they can invest 10% of their income or net worth. In addition, Title III sponsors have to use a registered crowdfunding platform.

The "problem" with using other people's money to provide equity for real estate deals is that your #1 job can become investor management instead of company or property management. With hundreds of investors who've invested $2000 each, you'd almost need a full time investor manager...all that for $1M or less. 

Meanwhile, it's never been easier to raise money from accredited investors. EVERYONE with $1M in assets is looking for returns better than "safe" investments like CD's can provide. And it's never been easier for those folks to find decent real estate investments, even if there is a $50,000 minimum, via the RE crowdfunding sites. 

So, I just don't see how Title III is "worth it" for RE syndication sponsors. However, using your state's inTRAstate exemption from SEC registration, as I am suggesting above for New Mexicans, you might be able to raise funds from your state's public at a much lower cost than Title III, with less regulation and no required intermediary. Just depends on your state's laws and whether it has adopted a method of complying with the Rule 147 exemption from SEC registration for small local companies. Visit your state securities regulation division's web site for details. 

Did you know that New Mexico has one of the most accommodating securities laws in the country? Under the 202X exemption, investors can raise up to $2.5M from non-accredited New Mexican investors if the funds will be invested mostly in New Mexico. So, once the offering is approved by the state securities division, one could sell, say, $10,000 interests in a project to the general public, and ADVERTISE IT. This would allow the general public, instead of just rich people, to participate as passive investors in earning above-bank returns and all of the other benefits of RE ownership. That's very exciting. Legal costs for preparing the offering have been estimated to run about $10,000. 

What's interesting is I found only one example of someone in the state doing this recently for real estate (a debt offering, where the sponsor was selling debt securities which he was going to use to pay down his commercial mortgages). 

I'd really like to explore this as a way to democratize ownership of larger investment properties. 

From: http://www.rld.state.nm.us/uploads/files/Small%20O...

The 202X is a state exemption (Statute 58-13C- 202X) that permits general solicitation. The total offering, including interest on installment payments does not exceed $2.5 million. There is no limit on the number of purchasers; however the following conditions apply: The issuer’s principal office, or principal place of business or a majority of its employees or assets must be located in New Mexico. More than one-half of the offering proceeds must be used in New Mexico. An offering document must be delivered to each prospective purchaser prior to sale, disclosing such information as the Director requires; and Notice and the payment of $350 fee must be filed with the Director ten (10) days prior to the first offer. Because there is no corresponding provision in federal securities law, 202X offerings are usually limited to New Mexico residents. 202X offerings do not have to meet the substantive standards that are applied to registered offerings; however, resale of such securities is restricted.

Keywords: Albuquerque, Santa Fe, Roswell, Clovis, Las Cruces