All Forum Posts by: Benjamin Pekarek

@Account Closed,

Current listings in various markets: 

The below is a link to a MHP currently listed at a 10.8% CAP.

Lutz MHP

Next is a link to a frame multifamily in Lake Wales, FL that sold in 2012, was listed at an 8% CAP earlier this year, and failed to sell.

Seven Chimneys Portfolio

Here is a currently listed MHP, again in Lake Wales, currently 338 DOM on the market due to lack of demand - 20.5% stated CAP.

Lake Buffum MHP

Class D, AGAIN Lake Wales listed at a 17% CAP - 202 DOM, under contract 5 times.

Bullard - 11 units

Sold waterfront, Sarasota, 5% CAP 0 DOM.

Avenida Venecchia

38 units, St. Pete 6.5% CAP

Ave S

12 units, 6.69% CAP

Gulf Winds

7 units ghetto, Lake Wales, 18% CAP 668 DOM

N 1st St.

This again ties back to what I've been saying. Depending on the SPECIFIC market, there are different CAP rates. I'm one more time reiterating that we have multiple markets, and submarkets here in Florida.

Remind me why I wasted 30 minutes pulling specific examples to prove my point just for you?

@Account Closed, 

Rather than reading my detailed post above to answer your question, you've simply continued your attack on my credibility...not too sure what I did to you to cause you to make an *** of yourself...but that's not my problem. To AGAIN answer your question. Depending on the specific market (Tampa, central FL, Sarasota, etc.), and the class of property (A-D), there is a market CAP rate, and therefore anticipated NOI. This is Real Estate 101! If you're buying a class D property at 5% and expecting appreciation like a class A, you will be in for one hell of a shock when you go to sell! THAT is the overpaying "worst" investor you're speaking of above. To again attempt to educate you on my markets :

For central Fl, Class C & D properties/MHPs, the current CAP rate is 11%-13%.

For Tampa, Class C & D properties, the current CAP rate is 9%-10%.

For Sarasota B properties, the current CAP rate is 4%-5%. For C & D, 7%-9%.

For Leon county (Tallahassee), B class apartment complexes are trading for 8%-9% due to the demand for student housing.

Again, assuming you know what you're talking about (3.3K posts, you shouldn't always be such a hard headed individual), you should be aware that you can beat the market, or lose depending on the current demand (CAP rates shifting due to increased/decreased demand), or a distressed seller/buyer purchasing on emotion.

The above rates are pulled directly from the various Realtor sold metrics, specifically GTAR (Greater Tampa Association of Realtors), RASM (Realtor Association of Sarasota and Manatee), and EPCAR (East Polk County Association of Realtors).  

Does THIS post now answer your question?

Bob,

Been doing this for 10 years, manage 200 units, and live off of my personal rental cash flow. Think I know a thing or two about REI.

Most recent personal acquisition was in Polk County, FL : February 2016. 

Small six unit complex for $135,000. 100% occupied, 17% delinquency rate.

Gross rents of $4,000/mo. (5 @ $650, 1 @ $750), all units separately metered for utilities. 

$48,000.00 gross income.

Taxes of $1,800/yr. 

Insurance at $1,200/yr. 

Landscaping $2,400/yr.

Management $4,800/yr.

10% reserves (5% CapEx, and 5% maintenance) $4,800/yr.

$15,000 estimated expenses

Assuming continued 17% delinquency (1 unit out of 6 every month), and Vacancy/Loss of 1 mo./6 units/yr. (8.5%) $4,000/yr.

Total estimated costs of $19,000 yr. for an NOI of $29,000.00, or 21.4%

This is a C- property with meth heads and SSI tenants. I'm constantly fielding phone calls from either the tenants, or the PD for the jurisdiction (primarily domestic violence). 

TINY acquisition in July last year in Sarasota County FL :

Vacant REO Duplex needing full rehab for $139,000

2/2 each side, $40,000 renovation each side ($80,000 total) for total investment of $219,000 out the door.

Both sides rented for $1,500/mo,, separately metered for utilities, no delinquency, no vacancy.

$36,000.00 gross income.

Taxes of $2,049.99/yr.

Insurance at $3,600.00/yr. (flood zone)

Landscaping $600.00/yr. 

Management $3,600.00/yr.

10% Reserves (5% CapEx & 5% Maintenance) $3,600.00/yr.

$13,450.00 estimated expenses

Assuming no delinquency (different market, different tenants), and Vacancy/Loss of 1/mo./2 units/yr. (8.5%) $3,600.00/yr.

Total cost of $17,050/yr. NOI of $18,950.00, or 8.6%

This is a B class asset (one tenant is a bank teller, other is an LPN (nurse)). I never deal with them - they pay their rent electronically. Since we just replaced EVERYTHING, there's almost never any issues with the maintenance, and we're just building up the reserves.

The biggest difference is the appreciation - Polk Ave (Polk County) just had an appraisal at $350,000 (8% CAP rate), while Marcia St. (Sarasota County) had an appraisal at $425,000 (4.5% CAP rate).

I wouldn't expect to purchase Marcia for 20%, nor would I look in Sarasota FOR a 20% CAP property (though if I found it, I would snap it up in a heartbeat!). Nor would I be happy with an 8%-9% ROI dealing with the quality of tenants I have at Polk Ave.

Every property is different, as is their CAP.

@Account Closed, 

If you're evaluating a property solely based on CAP, you're doing yourself a disservice. You should know that as well as I do based off of your number of posts.

For me personally, a property needs to generate a gross income of 25-30% of purchase price, less 10% management paid to my company just like anyone else, CapEx of 5%, & maintenance reserves of 5%, for an NOI of 5-10%. Assuming the listing agent did their job, that puts me roughly at a 5-10% CAP.

I'm not saying that a 20% CAP property is any better than a 10% CAP property - it will 100% depend on the individual purchasing the property and their risk assessment. For me personally, as I'm the manager, I have no problem purchasing management intensive properties, and attaining the higher ROI. For a truly passive investor an A class asset trading at 5% might be more desirable for the liquidity factor (A's sell better than C's and D's), along with the quality of tenant.

Personally, I'd rather deal with the meth heads and hookers and make 10-20%, then the CPAs and JDs renting lofts and making 4-6%. That being said, as a manager I gravitate towards the middle of the road, and the higher end - if I'm going to make a flat 10% whether I'm dealing with the scum of the earth, or the cream of the crop, I'd rather deal with the easygoing CPA paying $2,000($200) at that point, than having a knife pulled on me when I show up for your $500($50) cash payment. 

 Bob, 

Depending on the location, small (20-50 space) MHPs are trading in the 13-15% CAP range, as well, small CBS construction multifamily (10-30 units) is trading in the 8-12% CAP range depending on class grade.

I don't manage, nor facilitate purchases in LIHTC, Section 8, or Section 42 housing, but those types of properties are trading in the 13-20% CAP range at this time.

-Ben

@Eric Griemsmann, 

Shot you an e-mail, I'll be in Tampa tomorrow afternoon (July 5th), let me know if you'd like me to swing by. 

-Ben

@Oyane Jacques, 

Depending on your specific requirements, there are multiple avenues here in Florida open to you. I DM'ed you, but for the public forum I'd recommend some of the Florida college towns (Tallahassee, Gainesville, Jacksonville), the "heartland" - Polk, Highlands, DeSoto, and Hardee counties, & greater Tampa. 

Your 10% CAP can be met, or exceeded in MHPs, and small C-D multifamily complexes, but again, if you're looking for prime (A-B) class properties, you'll be looking for awhile - they're A.) In high demand right now, and B.) Few and far between. When they do hit the market, if they're priced in the 10% or better market, they're snapped up in a matter of HOURS, not days!

-Ben

Broker here - What price point are you looking at? 10% CAP is easily doable depending on the class in greater Tampa. However, if you're also anticipating prime class (A-B), I'd suggest the deep south -Alabama, Tennessee, Georgia, etc., or the midwest cities - Indianapolis, Chicagoland, Kansas City, St. Louis, etc.

Jenn,

When you begin vetting realtors, throw the property addresses through Trulia - very quick way to take a looksie at the neighborhoods and see if said realtor is sending you a quality property, or a crock to sucker you into a quick commission.

Take a look at All Property to vet property management companies in the areas you're looking at investing - any serious property management group will be there, and be more than happy to discuss their rates, etc. While I'm no longer a part of the franchise Tim Davis above can vouch for the fact that just about every All County franchise in the country has reputable managers in their offices.

-Ben

 Zac,

Investor & broker here, what are you looking for exactly?

-Ben