All Forum Posts by: Derek Harris

I own a few fourplexes in Killeen. The numbers make sense from a cash flow perspective. However, ensure you properly account for maintenance, vacancies, prop mgmt, and make-ready costs. Fourplexes are getting more expensive lately; sellers have definitely noticed this trend and are taking full advantage of it. Make sure you buy your property at the right price. It's hard to bid against an out-of-state investor that is willing to overpay and that are not investor-savvy.

Killeen has very high CAP rates. If cash flow is what you are looking for, Killeen is the way to go. As stated above, Killeen has high tenant turnover and evictions. Recently, I am seeing a disturbing trend with people overpaying for multifamily units. Fourplexes are selling for $265-275k. Insane! I own multiple properties in this area and vowed to never buy anything here again. The juice is not worth the squeeze... at least for me.

Ensure you do a proper due diligence. I found the book The Due Diligence Handbook for Commercial Real Estate by Brian Hennessey to be very insightful. Just keep in mind that some deals sound too good to be true for a reason. I am very familiar with the Killeen market. I was in the same situation as you and found a killer deal for an apartment complex with 100% occupancy. On the surface, everything looked great. However, after further investigation and digging into the actual numbers (by linking up with the prop mgmt company), most of the numbers were false. Although it was 100% occupied, about 30% of the tenants consistently did not pay rents. Again, due diligence is key!

It depends. Are you seeking cash flow or appreciation? 

Congrats! What is your plan for this property? Buy and hold for cash flow or appreciation?

My advice is to use an insurance broker to shop around for you.

Please explain your scenario? Is your landlord selling their property? Is it seller financing?

You have to run the numbers and only you can decide if it makes sense to you from a financial perspective.

Upgrades for a rental are a lot different than for a sale (from a price perspective). For a future rental, always remember the following when upgrading - "it's just a rental." So don't overspend and don't get super fancy features that won't increase the ROI. You want to ensure it is tenant proof. Look at comparables and match them; don't outdo them unless you know without a doubt that it will bring more rent or sell for a higher price.

The best way to find a mentor is networking. Join your local REIA. Search for local investors using BP's search tool.

I would tell my 20 year old self to start sooner and house hack right away. Learn as much as you can now and start networking.  

Use a site like FIVERR and find a VA that meets your criteria. Give them very specific instructions on what you want (make it dummy proof).