All Forum Posts by: Account Closed

Get another 20 rental units, achieve 20% returns, and start to transition towards remote landlording. Modest goals, but enough to see real estate take less of my time and give me more $$$.

I'm looking into the same thing, but one of the problems I've noticed in my stomping grounds is that the bigger, newer apartment buildings in the nicer areas, tend to sell at very low cap rates. Like, 5% and change.

The reason is that a lot of institutional investors are looking for places to park their money, earn institutional returns, and take advantage of the tax benefits that come from owning real estate. 

I'm sure there's still a lot of deals to be had out there, but just be aware that you might be competing with people who are looking for far lower returns than you are, if you're looking at really nice/new buildings.

@Lafontant Cherilus 

The truth is that I now live and work in Florida, however the rest of my team is firmly within Jersey.

As for Camden, there are some decent areas, I suppose, but in general, I don't feel safe in the city. I have driven through it several times and there are only a couple of areas that I feel okay with getting out of the car in. I'm still skeptical of investing here, because that a property is located in Camden is a huge red flag to many people in the SJ area. It's just got a huge stigma, even if the particular part of the city is okay.

I'm more than happy with sticking to the Jersey side of the greater Philadelphia metropolitan area. I've also looked into expanding into Philadelphia proper recently (lots of gentrification going on near Temple) so there are definitely possibilities in SJ and PHL itself.

As far as turning around communities go, I'm mostly in this game for the money, but I think there's a lot to be said for my strategy... buy somewhat neglected properties from somewhat neglectful owners, do some rehabilitation and rent increase, treat tenants with respect (but be firm with rules/late fees) and that's sure to do a lot for the general health of a community.

Hello Lafontant,

We have bought two multifamilies in southern NJ in the past year.

As you said, the market isn't very big, and a lot of that has to do with that current landlords don't want to let go of what they've got. Even if the rent is lower than market rates and they're not managing it properly, they tend to make money in the long run, especially if the mortgage is paid of. So that makes it harder for people like you and I, who want to buy smaller multifamilies.

But there are deals out there, and the best thing about buying in urban southern NJ is that you often get properties that have maintenance issues and have below market rent. That sends up red flags for most people, but I see deals.

For example, in our of our properties, we've raised rental income by about 20%. We accomplished this by raising rent on current tenants (it's still below market) and improving units as they became vacant. There's still room to go higher in rent, and we we able to get discounts for deferred maintenance. 

As for larger apartment complexes, those do come on sale as well. We've shied away from those until now, because southern NJ isn't always friendly to bigger landlords. There are tons of little fees and regulations that accumulate and drive up expenses/time commitments. It's not that it's a bad idea, you just need to have a pretty good team in place well before going into a deal like that, and smaller multifamilies is a great way to do that. In fact, Collingswood is a pretty good area for small multifams. Ours are about five minutes from Collingswood and are dramatically affected by goings-on there.

Browsing Zillow/Trulia is a reasonable way of finding small multifamilies, we found one of ours through Zillow and the other through our RE agent. If you want, I can send you his contact information.

In fact, if you do want to get into a bigger multifamily, perhaps we can work together. It would be great to have a professionally managed 20+ unit building that brings in money. It seems like being a slumlord is not something you're going to do, so it's great that we're on the same page with that.

By the way, be very, very careful about buying properties in Camden city. It's still a warzone. There is talk about gentrification in the area, and it might be starting to happen, but at the moment, the risk factor is off the charts, and we're not getting into it at all.

Thanks for the advice, gentlemen.

Anyway, I've decided to not make a move on these. The stakes are too high and although the numbers are great, it's risky and I don't know if I'm ready to actively manage 20+ units. I'll leave these deals out there for more experienced investors that know how to do these things and continue to expand at my own pace.

Thanks for all of the advice, everyone. Now that I have a good foundation in knowledge, it's time for me to get a deeper understanding of the local market. I've been tracking properties in the Washington Local school district for some time, and I think that the best possibilities are to buy properties that need some TLC, doing that TLC, and then renting them out. The nicer properties are just a little too expensive to get returns that can be had with properties in need of TLC.

Ideally I could find a package of properties being sold off and snap those up all at once, but these are tough to find! I'll have to keep trolling MLS until I'm read to make a move on my own terms.

Greetings everybody,

A few days ago, I got in contact with an apparently very competent RE player whose model is to buy and sell multifamilies. Basically, they find multifams in bad shape but in decent areas, fix them up, stabilize them, and then sell them about a year later.

Naturally, they're probably making 50%+ ROI on their money. But they seem to be selling them at a price where the resulting cap rate is about 12%+, and the cash on cash return will be about 15% for us in a relatively conservative case. So it could well be a win-win situation.

Here are my trepidations. One is that I have never dealt with properties quite as big as these before. I'm used to quads, duplexes, and maybe the occasional sixplex or so. The properties that I'm looking at now have 20+ units. They do come with managers and maintenance in place, so that's comforting, but I've never really worked so far removed from the day-to-day activities of landlording before. I'm going to be offsite for these investments, so I need to have my ducks in a row to deal with everything, vacancies, evictions, repairs, not to mention local and state regulations. The managers will take care of most of these things, but I can't help but think it's pretty much a necessity to retain a lawyer to let me know in case there's any paperwork I ought to be filling out, or licensing I need to stay on top of, just in case.

Another concern is that these buildings are not located in my immediate area, or any area that I'm yet familiar with. In my previous thread, I asked about the market in Toledo, Ohio, but now I need to know how to analyze areas on my own. The last thing I want is to buy an expensive investment--albeit at a reasonable price--and then see the area become a ghost town. So I need to figure out how to know whether or not the area will continue to provide decent tenants, going a few years into the future. 

I'm really excited about these deals, but very nervous too, as they're a definite step up from anything I have experience with in the past. They have the possibility to put my career and financial situation at a whole different standing, for better or for worse, so I greatly appreciate any advice or mentorship from the BiggerPockets community. 

@Ben Leybovich, @Engelo Rumora, I welcome cautions and warnings, so if you know of any pitfalls that I should look out for, please do let me know.

I'm okay with paying a surcharge if I buy stability and higher returns in the long run. 

This might be getting into the same age-old debate once again, but what do you gentlemen think about SFHs vs. multifamilies in Toledo? I'm thinking of doing a combined strategy, where I get one multifamily and several SFHs, but should I move the ticker more to one type or another? And if so, why?

Thanks again for all of the advice. The Ohio Cash Flow site seems interesting, can anyone vouch for them?

Thanks, everyone. @Ryan Pyle, I have heard from many people that WLS is good, but what do you think about the area around UToledo? The rents vs selling prices seem pretty good there. Are the student tenants out there very good? And is the area on average pretty good in terms of insurance and all that?

Also, is there a way to check if a house is in a flood zone online, or is that something I'll have to call experts in the area to ask about?