All Forum Posts by: Marc C.

DC is like NYC, LAX, SFO, SEA, PDX, DEN - Very little inventory, tons of investor interest. Thus high prices. You can do all the direct mail you want, but so is every apartment broker, and they are making cold calls to every owner at least quarterly. Can you compete? Maybe. Won't know unless you try. 

I like getting leads from management companies. But also, have you contacted the owners of expired listings? That is a mailing we're about to do here. 

Personally, I'd go with Bal'mor. Concentrate on grade C in the path of progress, owned by out-of-staters for at least 5 years. You can also reach farther into VA and MD...the farther from DC you get, the lower the prices and the less the competition.

1. Someone with $

2. Someone with experience in that sector of real estate

3. Someone who will look good to the bank

MOST IMPORTANTLY: Someone you know and trust and would like to be married to for 10 years. 

If you don't know them, then you have a whole lot of due diligence to do on them before you partner with them. I'd certainly spend $200 on a background check to make sure they are who they say they are. Even then, partnering with strangers is rarely recommended. 

Are they 1BR or 2BR units? What is the rent on each? 

What class of property is it? C grade or B grade?

What does the Bigger Pockets buy-and-hold calculator say? https://www.biggerpockets.com/buy-and-hold-calcula...

$350,000 / 8 = $43,500/unit. Is that typical for apartments in that part of the Detroit metro? 

Expenses seem to be averaging about 43% of rents received. Seems a bit low, but probably self-managed. Make sure to plug in 10% for third-party management in case something happens to you and you can't manage it yourself. 

Actual received rents average $545. What are the "asking" rents? That will show the effective vacancy rate. 

What are competing rents in the area for those size units? (on Zillow and Padmapper, for example)

What is the HUD Fair Market Rent for the Detroit Metro? If you wanted Section 8 tenants, what does the local housing authority say they would pay?

Get us some answers, and maybe we can help. 

It's going to be tough without an experienced partner who can be the "lead" signer on the note with the bank...AND provide you with the cash for the down. They do want previous experience. They also want good credit, good 3-year operating history of the property, and oh so much more. 

I am seeking a loan for $350K and you're right: The big boys won't touch it. But I have a list of the top 50 local banks in my area, and I'm going to call every one of them. You're looking for a "portfolio" lender who will keep the note on their books and not sell it. Credit unions are also possible sources, by the way. 

If you have a business and you register it with Dun and Bradstreet and are otherwise legit, you will receive lots of offers for lines of credit. Every day. Sometimes, these will not show on your personal credit report, which is nice. But, the size of the line will be under $100K, so buying a property with that is not likely. And the interest rate may be 8-10%, so it's better for a short-term (fix and flip) type deal. If you're going to combine it with traditional financing, remember that lenders don't want you borrowing your down payment, so you will need to still put down 20% or so of the purchase price IN CASH, with "seasoned" funds that have been borrowed or gifted in the past 6 mos. 

Other than for fix and flips, I don't see the advantage. 

Even if you're small-time, you should be putting your properties into LLCs to reduce your liability. Any commercial lender will understand and won't care. If they do, go to another lender who understands the way the world works.  

And therein lies the opportunity! We have a lot of rehabs of Class C to Class B going on here in Albuquerque, NM. Not the greatest numbers, though...you get a little more rent, and a lot lower vacancy than competitors, but property managers tell us you won't get enough of a rent bump to pay for the improvements over 36 mos., which is usually my goal. The problem is, all of the neighbors stay C-class, so you've got the nicest property in an average neighborhood...which doesn't allow for much rent growth. 

I'm looking to buy a small  5-12-unit C-class to try it out ($7500/unit upgrades) before I try it on something like a 60+ unit. 

Will you be buying additional properties in 2017, given the strength of your market? 

 This is the best advice I've seen posted on BP in 2017! Thanks, Brian.