All Forum Posts by: Mark C

Irrelevant to the discussion I think (and I don't want to be too specific for privacy reasons since I explicitly listed the equity amount and part of my name)

As for how I know we did well and have a lot of equity, we have received multiple written offers from qualified buyers. It was a messy/complicated deal that we successfully navigated through and then spent more time/money on rehab.

That is an excellent point and is something I am very concerned with, which is why I came here looking for real-life experiences exactly like the one you just posted. I have heard plenty of horror stories of management companies ripping people off - and without being on-site it would be very hard to know exactly what's going on. The alternative is to try to get a manager on site and manage that person remotely but again very challenging. The answer might be that we are better off keeping the current property, but I not sure.

That is a great point. Unfortunately our current property is a special purpose commercial property and it's seemingly impossible to get fixed rate debt on it. That's one of the other reasons we were considering exchanging it for an apartment building where we could lever up much more and get fixed rate financing.

I would assume because of supply/demand - more demand in LA so people are willing to accept lower cap rates - presumably in the hopes of future appreciation. That's not a gamble I'd personally take right now, especially with interest rates at all-time lows and with nowhere to go but up. Once they rise, cap rates will have to rise and thus property values will drop.

The reason we are looking more for cash flow is so we can get regular monthly income out of the property and effectively retire off the income if we want to.

Not feasible with a 1031 exchange - have to identify the properties within 60-90 days (I forget exactly) and then close within 6 months. Would be nearly impossible to coordinate the sale of our property with the purchase of 5 different properties and not have any fall through and close on everything within 6 months.

Thanks for all of the replies everyone.

The private lending idea is interesting, but I don't think we can 1031 into that. We have to exchange for real property. Probably best to stick with that to avoid paying a huge amount ($300-400k+) in taxes, otherwise I do like the idea.

I would say our primary goal is cash flow, yes - but without a huge amount of work (pipe dream?). Basically would like to keep it as passive as possible. Willing to do work upfront to get a property stabilized (over the first year or two if necessary) but after that would like to minimize workload.

So yes the reason we are open to looking outside of LA is because there just aren't many properties here that cash flow as well as elsewhere it seems.

Any examples of out-of-state apartment deals that were done recently with real numbers that would be doable for us? Very curious to see some real deals and start narrowing down markets to focus on.

Thanks again!

Yea I understand the finance piece, I guess my question was more along the lines of asking if it's possible to find true 8-10 cap properties these days. I see plenty of properties out of state that are advertised at those cap rates but without having experience in multifamily properties, I don't know how realistic the numbers are. For example, maybe in a perfect year a property will work out to an 8 cap but then if a boiler or chiller or whatever dies (again not familiar with the inner workings yet) we could be out $50k. Especially when talking about something in the $3-4M range possibly with 100+ units, I imagine expenses add up quickly.

Has anyone done a deal recently that is a true 8-10 cap with the property in good condition and relatively low headache? I'm curious to see some examples and get some ideas for what areas to start looking in.

My partner and I did our first deal a few years ago which went really well and we have about 1-1.5M in equity, but the problem is that the cash flow it generates is not that great - partly because cap rates are so low here in Los Angeles.

We have the property listed for sale and are thinking of 1031ing into something that will hopefully provide a lot better cash flow - which probably means we will need to look out of state.

We were considering multi-family but are open to ideas.

My question is - with 1-1.5M cash, is it possible these days to get levered returns in the 10-15% range? Net 200k+? Seems like it should be doable if we can find an apt deal for around 3-4M at an 8-10 cap and get fixed rate financing and lever up, but I am wondering what all of you guys are seeing right now.

If it's possible, any suggestions for markets to look at? We have been eyeing TX but haven't found anything great there yet.

Thanks in advance!

I was once told to never make an offer you aren't embarrassed by. It's a numbers game, the more you make, the higher the probability of actually getting one accepted!

I've heard of other celebrities that do this too.. and they make more money than their day job.