All Forum Posts by: Account Closed

Good to see eveything is fixed. Count me in, $25 sent.

I have been looking at those markets as well. I recently had an investor contact me with a 20 unit building in Cincinnati they had under contract. The price they had it under contract for put this property at a 18% Cap and that is following the 50% rule. It seemed to good to be true so I backed off. I have found a lot of properties on the internet for sale in Cincinnati at similar Cap Rates. Does anyone know what is going on with the economy there because at first glance these properties would seem to be cash cows, I am just thinking if it looks to good to be true it is.

Lester,

Thanks for the update and I agree with Bryan. Initially it sounded like it would be a great deal, but after all the repairs needed it sounds very risky. I think you made a good call to pass this one up.

Everyone else has given good advice so far. My first larger property (12 units) is in Minnesota and I live in Denver now. However I used to live close to where I bought It and I know the area very well. It all depends on how well you know the Fresno area and if you feel comfortable investing there.

Also I have managed some of my single family houses myself before but I hired a professional management company to run my 12-unit, mostly because I knew I would be moving. After about 5 months of working with them I will never buy another property if I cant afford to have it professionaly managed. It has been well worth the money IMO and has saved me a ton of time. But like the others said you have to due just as much research on your mangement company as you do on the property itself. With this being your first apartment building they can either get you off to a great start for your investing career or make you regret it and stop investing completely.

Lester, What happened with this deal? Did you get it done? I am just curious as it sounds like it would of been a cash cow. Let me know. Thanks.

Sorry guys I just saw this post now. 108 and lets keep it rolling.

Rich, Thanks for the encouragement, I appreciate it.

I have done some investing, although I still consider myself pretty much a newbie since I am only 25. I bought my first rental, a sfh when I was 20 and in college. Since then I have flipped 4 houses and still hold 2 as rentals back in North Dakota where I am from.

Since I graduated college I have been working part time to pay the bills, and studying everything I can about commercial real estate. I bought my first apartment building (12-units) in April in Minnesota.

Since then my wife received a great job offer here in Denver (we always wanted to leave North Dakota, way too cold) and we have been living here for about a month. Now I am just trying to prettty much start over down here in Denver, networking all I can, going to REIC and every seminar I can find to try to pick up where I left off in North Dakota, and Minnesota.

So any other investors out there from the Denver are, if you have suggestions for investing clubs, seminars, meetings, etc... I would love to hear about them. Or if anyone would like to meet in person I would be more then happy to buy you lunch and discuss real estate.

Also I wish I would of found this website a few years ago. It has great information and would of saved me a ton of money on Amazon ordering all the "guru" books.

I appreciate all of you guys spending your time posting on here, helping newbies like myself get started and now that I am not so afraid of sounding stupid on here, I look forward to getting into some discussions and debates with you. Thanks guys.

Brady

Ill give it a try as well. Feel free to pick this apart. I dont mind being told that I am wrong as long as I learn from it.

I have read this over a few times and I think I would sell to the developer for the 700k and 1031 that into a larger investment.

This is my reasoning.

Lets say you can build it out in 3 years and get 1.5 million. Then you have to pay capital gains taxes on all of those profits (est. 25% of 1.5 million) leaves you with 1.125 million after 3 years.

If you have a qualified buyer and can sell quickly for 700k you can 1031 that into another investment. Using the 700k as 20% downpayment gives you a investment property worth 3.5 million. Assuming you can find a property that has at least a 10 Cap Rate ( Im sure with your experience this would be no problem) that gives you a NOI of 350k a year. Mortgage on 2.8 million at 6.5% 30 years is $212,376. This gives you a $137,624 a year of cashflow.

3 years of cashflow from this investment = $412,872
(Not to mention tax benifits)
Total equity in the property after 3 years = 1.015 million
3 years of appreciation (assuming a minimal 3%/yr) $315,000
Downpayment of $700,000

After a quick review and running these numbers I think that selling now and using a 1031 exchange into a profitable investment property would be the way to go. I also think that rolling your profits into a larger investment property would make for a much more passive investment then building out 50 or so lots. Escpecially since it seems like you enjoy traveling. Also if it took you 5 years to build out all the lots, the 1031 would put you much farther ahead. Just my opinion though.

Brady

Brian,

I figured the Net Operating Income on this building would be 95,000. That is including professional management. I have a management company that runs my other apartment building that I will use for this one as well.

Also rents are below market rate. My management company and I have discussed this building and we believe that would could bring the NOI up to 116,000 within a 3 year time frame.

The seller also agreed to hold her 20% for 7% on a 30 year amortization with a balloon in 15 years.

So if I can find a way to structure this deal and get a bank to finance it for a 30 year amortization for anywhere between 5.5% and 6.5% I will have good cash flow from the start and hopefully only increase it as time goes on.

Brady

I have a motivated seller who is willing to sell me their 24 unit apartment building. Sales price is 950,000 and the buildings value is just over 1,000,000. The seller is also willing to finance 20% of the purchase price.

Now this is my first time working a deal with seller financing and my local banks dont seem to understand or be too open to the idea. I basically thought that a bank would lend me a first mortgage for 80% and would consider the seller 2nd of 20% my downpayment.

However after talking with a few mortgage brokers they suggested it would be easier to get a better loan with better rates if I brought the seller on as an equity partner and the seller provides the downpayment of 190,000 and when we close she gets 950,000 and I owned 80% she would own 20%. Then I would slowly buy her out on the side for her 190,000 (20%) that she still has into the property.

Does anyone have experience with a situation like this? How could I structure this deal so that I can buy a great apartment building and only put a little of my own cash into the deal? Also if anyone knows of any good lenders who are open to this type of deal and offer competitive rates and terms please let me know.

Any help would be appreciated. Thanks

Brady