All Forum Posts by: Erich Rasch

Thank you for the responses @Mike Dymski and @Jay Hinrichs. I hear your reminder that we should only pay for a property based on its NOI and not go over its market value too much. Based on the NOI and cap rate in my area, the property is valued around ~$400,000. The current offer we received is $650,000 and are trying to go lower of course. Unfortunately, the seller got an appraisal on the property and it came out to $800,000, so the negotiations aren't going as smoothly as we would like since the seller's lawyer keeps bringing up the valuation based on the appraisal and not the NOI.

Hello Everyone!

I am a full-time engineer originally from Fenton, MI moving to Atlanta, GA in July 2018 from Wilmington, NC. I am interested in multi-family properties, 2-4 units for my second deal and 10+ unit properties after that. I am currently in the middle of making my first deal with a business partner back in Michigan on a 24 unit apartment complex. I am saving to buy a 2-4 unit property in the Atlanta area in early 2019 to house hack. I am looking to get involved in a REIA, somewhere near Buckhead where I will be living. Any insight into this new city of mine and suggestions for REIA's would be greatly appreciated!

I am currently looking at purchasing a 24-unit apartment complex with a business partner. I would like some feedback on our strategy to raise rental rates since this property is only a deal for us if we can successfully raise the rents to market value. 

I'll preface that our goal is to pay down the loan on this property within 6 years, so we desire to pay more than the minimum loan payment each month. The current owner has the rental rates at $440 on average per unit and the market rate is around $600. If we purchased this property, it would cash flow ~$100 per unit per month at the current rate of $440 with the minimum loan payment. Since we aren't satisfied with this net income while not paying down the loan that quickly, we plan to raise rent three times over a 1.5 year period to get rents up to $575-600 (market value). At $600 per unit per month while paying the higher loan payments to pay it off within 6 years, each unit would cash flow $140 per unit per month for the 4.5 years after the last rent raise. After the loan is paid off in 6 years, each unit will cash flow ~$300 per unit per month.

Is it unwise to rely on raising rents to market value in order to make it a deal that satisfies our acceptance criteria? Any feedback on this strategy/situation would be greatly appreciated!

I was recently listening to one of the older BP podcasts (~ episode 46) and the guest stated that he has historically stayed away from all properties with lead-based paint due to the high cost for clean-up. With that being said there are likely varying state and municipal laws, like with most things in RE, on clean-up of lead-based paint, so I would recommend doing research on what it exactly takes in your area.