All Forum Posts by: Darwin Crawford

@Gino Barbaro - awesome thread, and your book has helped me a LOT.  I've got my first (difficult) purchase on the table now, in Texas, and its been a hustle to try and even get a look at the place.  I found it through a wholesaler, and he has been...lets say politely.....less than professional.  

In my local market of phoenix/scottsdale, the prices have just soared in the past 12 months, and right around my immediate neighborhood, they are building class-A like crazy.  250 units just south of my house, and more just east of me.  

I *think* I have cracked the financing nut, but I would take any, all, and even some coaching on remote management.  The first building is a value-add class C in TX, 6 units, and in a good rental area.  Needs some TLC on the outside, which is no big deal.  

Almost exactly as you state in your book, the local brokers won't really deal with me, as I have "3 measly rentals" under my belt, and no prior MFR experience. However, as we say at my quasi-psycho gym..."In Grind We trust".

If you have the time, can you maybe put a number on a good "starter complex"?  6 units?  30?  or do you do more deal-based analysis?  Nothing about maintenance or construction scares me, was in that industry in some form since high school.  

Every morning, I drive past what I would consider my "dream asset".  Its a lovingly maintained, mid-century modern apartment complex with green lawns and palm trees in my south scottsdale neighborhood.  Based on my count, I think its about 100 units, and sold this past april for.....$14.6 Million.  Based on my educated guesstimate math, this place might have a 5-cap if they are lucky.  

So in a nutshell - what is stopping me?  Right now its a lousy wholesaler, an overpriced local market, or maybe just my own fear of landing flat on my keyster...

I'm with @Jay Hinrichs on this.  We buy a lot of subprime RE from people who probably had no business owning in the first place.  Their world has no extra capacity, and as soon as something breaks, it goes into a vicious cycle that winds them up on my or some other investors desk.  

Whereas if they stuck with renting, at least the costs are fixed.  

REI isn't for everyone, and I know some pretty successful people who have done some pretty dumb stuff with RE and lost a boatload of money in the process.

The CFD/LC stuff is great in theory, but yes, the people who actually pull it off are pretty rare birds.

Just a thought, but I've done something similar to this, and we solved it by placing everything into a family trust, with me (son) as the manager, but my parent as the trustee. That way the home is protected, stays within the family, and allows the older generation to control and benefit from the REI business, and the younger generation to do the legwork with the surety of it being theirs one day.

Re: financing - looks like a good spot for a HELOC or something similar, or a private lending deal.

@Brad Stuteville - I could use a little help/advice for sure!  I'm working on a 6-unit building near Corpus Christi, and trying to figure out what will get this done.  

I've got about $75K in cash, and need to do about $15-18K in repairs to the building, which will cashflow really well, and be in the $200K range after rehab.  

I'm a buy and hold investor, have 3 properties, and a day job (1099 unfortunately) in the RE biz that nets a pretty decent income.  

I'd like to find commercial money for this, put down 25-30% and finance the rest, keeping my cash reserves for debt service and repairs.  

Does this sound at all workable?  

Cameras.  They are cheap and available on amazon.  Fine your tenants, and back it up with video, escalating charges for repeat offenses.  

Not a ton of special language needed here in AZ, but in tenant-crazy CA, I'd talk to a lawyer.  First couple fines will clear this up.  In AZ you can classify a lot of things as a "lease violation" and its helpful in enforcing them.  Not sure on CA as i don't ever plan on owning rentals there.  

I have a special place in my world for irresponsible pet owners, and show them no mercy.  I am also a pet owner just for the record.  

Camera ALL the sewer lines.  I cannot stress this enough.  Many properties in phx were built in the post-war boom and have cast iron or worse, orangeburg pipe.  Missing this can cost you $10K+ in a skinny minute.  

Any plumber can do it, going rate is $180-$220.  

@Daniel Dietz - not to be pessimistic, but I have done a lot of analyzing recently on MF deals, and have found a lot of inconsistencies in what the owner says the numbers are, and what they actually are in this place called "reality"......

If it looks thin, either do enough homework where you know you can fatten it up, or kill the deal. The more of these I analyze, and the more data I aggregate from my current rentals, the more confident I am walking into deals.  Totally cliche, but knowledge is power.   

That being said, I cannot think of much that might be "cooler" to own than a brewery converted into apartments!  I WISH we had that kind of stuff in Arizona!

@Jesse Brewer - I hear ya brother.  The dog thing is a sticky wicket.  Not sure if you are posing a question or just sharing, but I'll throw in my $0.02

In my (limited) experience, I have solved the dog thing by raising the rent.  Its been mostly (not entirely) true that responsible pet owners will pay more for a dog friendly place.  It seems like the majority of renters in AZ have pets, so it would kinda kill my tenant pool to not allow them.  

I refuse to allow cats, but that's a different story.  

Example: I have a SFR in arizona that I put out as "no pets" at $1285/month, or "dogs allowed subject to breed restrictions" at $1365. It rented for $1365.

The deposit also almost doubled.  No complaints.  

The lease states that yard and house have "keep it clean" clauses, so I reserve the right to charge sloppy tenants for a maid, or dog-poop-remover, or they can move out.  It has solved a lot of problems right off the bat, as it allows me to classify all slob behavior as a "lease violation", which pretty much guarantees me a win in court here in AZ.  

Don't know your locale or laws, but it might be worth a look. In MFR, I know some folks who have cameras on the common areas, and ticket their tenants with video clips to prove it, for leaving dog***t laying around. Fines escalate for repeat offenders.

I remember being in court in GA one time, and watching a "dog lady" go in front of the judge for not licensing her pit bulls.  After cutting her sob story off about how she spent so much time, money, etc on her dogs, the judge said simply "licenses are $25/each, you can clearly afford them.  Here is your fine.  Get them licensed."  To me, there is a lot of information  in that statement.  

Bottom line is, to each their own.  

darwin dot crawford at gmail dott com 

send it over please.  

Randy, I talk to 40 people a day and routinely offer them 50% of asking price. Yeah, some get offended, but it also works well enough to keep me in the game. Work on a thick skin, this is business. Deals in AZ are hard to come by right now so persistence and negotiating skills are key. Good luck!