All Forum Posts by: Chris Salerno

Hi BP Nation,

I found the latest market cycle report. See below:

The "y axis" is occupancy.  As it crosses the LT (Long Term) Average Occupancy, it's a good enough market to build new apartment buildings. Dr. Mueller (the researcher who developed this) divided the market cycles into 4 Main Phases/Cycles/Quadrants with 16 distinct points. 

Best time to buy/ build are points 8 to 11 (Expansion) as rents & occupancy are increasing the fastest. 

Points 12-13 are still good points to buy in because rents are still increasing but at a lower rate and occupancy is moving down to the long term average.

A city can actually move backward (not just forward) through the 4 Market Phases. So it can be in Hypersupply today but it does not mean it will go down to Recession stage. It can actually go back to Expansion stage.

So questions to experienced apartment syndicators/sponsors:

1. Do you use Dr Mueller's report in determining where to buy and when to buy?

2. I didn't find use for Dr Mueller's Market Cycle Report before BUT since now I can buy apartments nationwide, I am interested to know which cities I should focus on. Two cities keep on appearing in all the research my staff has done: Austin and Phoenix. What do you think of these 2 cities?

3. What other Market studies do you look at to evaluate/determine which cities/sub-market to buy in?

Calling on Ben Leybovich, Brian Burke, @Chris Salerno, @Grant Cardone, @Alina Trigub, @Ola Dantis, @John Casmon...

Since the graphic above is not very clear, below are the cities that are still in Expansion Phase:

Austin
Boston
Chicago
Columbus
Detroit
Houston
Jacksonville
Kansas City
Las Vegas
Los Angeles
Milwaukee
Minneapolis
New Orleans
New York
Norfolk
N. New Jersey
Orange County
Palm Beach
Philadelphia
Pittsburgh
Phoenix
Raleigh-Durham
Riverside
Sacramento
San Antonio
San Diego
Tampa
St Louis
Stamford

Where are we headed for 2020? What do you think the trends are? Where are the next new areas to invest in?

My thoughts and experiences. The trend of population migration into the south will continue. Southeast is starting to see lower returns. Most of Florida and Georgia I’m seeing very low returns. Northeast still high but might take a dip but I’m not sure if it will be enough. NY politics worry me.

Not too much knowledge on the west or mid west states. Maybe these are the next areas to get into?

@Chris Coleman and @Chris Salerno thanks for your replies, and your views on The One Thing.  I heard about this book so many times from people I want to learn from, I finally decided it needed to go on my reading list NOW!  The thoughts from the book will definitely be useful in building my business in 2020.  Wishing you both a great year, as well!

I love the inspiring stories of success on BP. Read this one this morning about a 19 yo who saw a niche, created a plan investors backed, took action, and made millions. (“How this Millennial Invested in Luxury Housing for Students and Built a $130M Real Estate Portfolio”) https://apple.news/AruG0DTPtRq... just finished reading Gary Keller’s “The One Thing” and like the focus and clarity by answering the question “What’s the ONE Thing I can do such that by doing it everything else will be easier or unnecessary?” He adds, “Your next step is easy. You are the first domino.”

As we start a new year and decade, what’s your first domino?

@Hai Loc @Chris Salerno thanks. Value-adds are my plan, I know what I'm looking for I'm just not sure where to look if I'm being honest. Where do you guys find your deals? Brokers? Dealing with owners? Any tips for getting started would really make my day.

@Hai Loc @Chris Salerno thanks. Value-adds are my plan, I know what I'm looking for I'm just not sure where to look if I'm being honest. Where do you guys find your deals? Brokers? Dealing with owners? Any tips for getting started would really make my day.

Hey guys,

Just had a question on multi family real estate investments. I’m just starting in the investment process and trying to gain more knowledge.

In a good investment, what’s the typical rate of returns in monthly cash flow and rate of return once you decide to sell a Multifamily property?

Also, if you invest in a property with other investors what is the typical divide of the cash flow between each investor and the break down of the profit each investor gets once you decide to sell? Do you divide it all depending on how much each person invested initially?

Thanks in advance guys.

Hey everyone,

I'm from Montreal, Canada and all the properties listed in the market have a very low cap, like 3-5. In my mind, a low cap can be a good opportunity for value-add deals, what do you think? Do you have any good tips on how to have success in markets like this? 

Any insight would be really appreciated :)

This is something I frequently see when reviewing opportunities:

Travel and inspection costs / Asset due diligence                         $200K $300K etc.

Now, if the entity is purchasing 1 or 2 assets, how much does travel, hotels, etc. cost? There is nothing to stop the syndication sponsor from traveling first class, staying at the Plaza 5* hotels, and eating lobster and champagne every meal. If there is a huge cushion in the budget, why not? I don't blame them. Its human nature. I probably would too.

When I think about it, I want my GP in a sense to get great accommodations and be as comfortable as possible. I'm a doctor and I definitely don't travel first class most of the time. This makes me think I am in the wrong business! There is so much lee way for a sponsor to do whatever they want, human nature will come into play. There is no one auditing their actions. And the budget is very generous for these things.

A high number isn't a big deal if the LLC is raising $50MM. If its a $10M property, I'm not so sure. That said, I am considering to change careers ;)