All Forum Posts by: Chris Bounds

Thanks @Jon Klaus . It's been load of work, but also a lot of fun to watch it near completion.

This isn't much of an update, but vacancy is 34% now. Interior rehab is 90% complete and exterior rehab is about 50% complete. Once exterior is finished and cleared by the city I'll finish up the last few interior units. It's almost time to start working on the refi!

@John Stover

That's a good start! I'd expand on it, but good start. E-Myth Revisited helped me tremendously on how to think about business planning. I can't recommend it enough.

I offer some caution on MF properties though, at least 5+ unit buildings. I bought my first one in April. They are appealing, but if you're trying to rehab a distressed MF property it will require a lot more precision. Your experience, team, and systems are vital with MF to take on the additional risks that accompany the potentially huge equity & cash flow returns. There was a big learning curve coming from SF home investing. Don't let this scare you though. It's just something to consider. Of course, buying a preforming property with a good management team in place is another option. It will cost more and usually have a lower yield, but the risks should be lower too.

@John Stover

Adding to what @Trenton Parks said, a clearly written business business plan with 1, 3, and 5 year goals should be defined before jumping in. First though, determine your end goal (E-Myth Revisited, highly recommended book). It seems to be cash flow related, but I'd put specifics to it.

With those things being defined and written then you can focus on strategy and production. Putting down 20-25% and using conventional financing is one way to do it, but its the biggest draw on your cash. If it were me, I'd go the creative route. You can do a lot more deals with creative financing than using your hard cash.

There are a lot of articles on creative financing on BP, but one easy way is to find a private or reputable hard money lender. Many will loan 100% of the purchase price up to 70% ARV minus repairs. If you buy your property 70% minus repairs (or cheaper!) then your out of pocket expenses are very minimal. Your cash can stay in the bank as reserves just in case things don't go as planned.

I have 1 full month's rent deposit on all my SF homes. But this apartment, the demographics are not having it. They'd rather pay $525/mo with no deposit than $490/mo with $100 deposit. Strange, but I'll take the increased income to pad the NOI.

I'll give a full recap once the project is finished, but here is a quick status update.

I did end up purchasing it. Self-managing for now until the rehab is finished. Interior rehab is about 60% complete. 3 completed units already leased, although it took a bit longer than I thought to price them right.

Like most big rehab projects, expenses are higher than estimated and it's taking longer than expected. There was plenty of spread for me to make the final call though.

On another note, message me if your interested in purchasing small cash flowing apartment complexes.

I didn't have enough activity with $520 only. I'm now advertising $495 rent w/ $150 deposit or an option of $520 rent with no deposit. I prefer $520, especially since it increases the NOI and thus increases the property's value.

I thought so! That's enough for me - thanks!

I know laws vary, but in general terms is it likely possible for me to offer different rent options to tenants for an apartment complex?

For instance:

Option 1: $100 deposit and $495/mo
Option 2: No deposit and $520/mo

I'd like to advertise the lower rent option, but have the second option for those that do not like putting down deposits. Normally I require deposits, but this area has other apartments that do not require one.

I like that font - thanks.