All Forum Posts by: Glenn Clapp

@Miguel Caudillo I have some work I need done if you are available.

@Brittany Chesley is your dad still doing handyman work? I’d like to connect. I have several to-to items on my property.

Glenn

An agent I have worked with before has purchased an apartment building with the original owner. The owner retained 40% and my agent has purchased 60%. They have a partnership agreement.

My agent is seeking additional investors selling a part of his 60%.

I’m wondering what an agreement to invest this way would look. Does anyone have an example?

I've been to Cincinnati twice. My wife was born there. For some reason I can't explain, I have a bit of an interest in the city. Maybe I just know so many people "from" there. 

I'm amazed that the Over the Rhine area has gone from one of the most dangerous neighborhoods in the US to what it is today.  https://www.urbanadventures.com/blog/neighbourhood...

Holy cow, what a transformation in a short time.

Prices seem to still be low, and some of the are still looks a bit rough. For those who know the area, what are your thoughts? Is this transformation here to stay? Is it expanding?

First off, I do not own any apartment buildings and do not play an apartment building owner on TV. However, I've been starting to follow the apartment building investing popularity, listening to some of the the gurus, podcasts, and the like and find the whole idea fascinating. So, I thought I'd poke around some hypothetical (or real) properties from Loopnet and see what I could learn. I'm still very much new at real estate investing with one 4-plex and 2-single-family properties purchased in the last 12 months. 

I found this: http://www.loopnet.com/Listing/1764-Gowan-Dr-Memph...

I picked this one as an exercise because it needs a lot of work and is in a place I know nothing about. It is a significant learning exercise. It is 80% occupied. Some units are uninhabitable.  Fire, mold, damage.  Documents from the realtor are contradictory with the occupancy rate also being stated at 40%. OK, realtor which is it? Loopnet says this is a B-class property. I'm not so sure about that. 

I looked at crime reports. The area has some crime. I talked to the local police department precinct involved in the area and the officer thought the right owner could raise the bar for the neighborhood and that the crime they investigate are the usual domestic disturbances or the occasional car break-in and that the neighborhood is pretty good.  The city in general wants to see investors help turn the area around-- OK, does that mean the city is willing to help in some way? Maybe. The officer I spoke to had glowing things to say about Safeways http://safeways.org/

From City Data http://www.city-data.com/zips/38127.html the zip code has about 7600 apartments. 

Unemployment is high for those over 25 which is pretty amazing to me living in Utah were the unemployment rate is very low.  The area is below average for the state for income and many other metrics. 

Speaking with some property management companies, one response I've heard is "We do not manage any properties in that zip code."

According to https://www.bestplaces.net/economy/city/tennessee/... Memphis overall unemployment is above the national average. Expected job growth over the next 10 years is over 34% but that is below the national expected growth.  Population is declining in Memphis since 2013. http://worldpopulationreview.com/us-cities/memphis...

Rentometer says: median rent for a 2BR apartment in a 2-mil radius is $450 which puts this property right on the average. 

Top employers are FedEx, the school system, the government, and healthcare. 

IMHO, taxes are high for the sum of city and county taxes. Hey Memphis, think about that.

2017 "claimed" financials:

Total Income 376,572

Total Expenses: 227,348

Net Income: 249,223

Estimating a potential DSCR of 1.75 as-is.

The top expenses are management, taxes, and Utilities (gas, electric, water, sewer etc.) 

Listening to people on BP talk about distressed or under performing properties, it sounds like the approach would be to cut expenses by passing utilities on to the residents. Getting separate meters or other means would potentially make the biggest difference. Seeking some tax incentives as well to bring up the neighborhood may also be possible, and certainly getting the property occupied. However for the latter with the declining population especially of this zip code even with the new Nike distribution center nearby may be a real challenge. With the lower income, raising rents may be a slog. 

Now enough of that background and my opinions. 

From the experts in the community, what kinds of things about this property would make you want to seriously dig in further or even pull the trigger? What additional data would you gather remotely? 

What would cause you quickly pass this up? 

Would you agree with Loopnet that is is a B-class property, or would you think C or even D? According to the documentation provided by the realtor, the property is "valued as-is" at $2.757M and $3.3M after renovation. Can this property really be over $1M below market priced at 1.7M? for an 8.8% cap. 

From looking at what is published, what kind of renovation budget would you set aside for a property like this if all of the market forces were positive?

Anyway, thank you in advance for any thoughts anyone is willing to share. 

It isn't that loopnet doesn't count doesn't count (wasn't aware of costar), but loopnet are only listed properties. The point is to get a list of properties within a certain size range, say 10-20 units or 20-50, etc. and look for those that might be good candidates to reach out to the current owner.  Loopnet isn't going to help find that 24-unit tired-mom-and-pop-owned property in need of some TLC. 

It is work for single family and small multifamily, too but the volume is so different that "driving for dollars" and various online searches as discussed many times in BP and elsewhere work really well for mailings or phone calls. 

Since the volume ratios are so different, it is a bit harder to drive around though not futile. Maybe this sort of data exists and is available. I don't know, which is why I'm asking the community. 

Craigslist can sometimes identify these but the level of effort for return is pretty unbalanced. You know, that apartment that seems a bit shabby (or not) but has been listed for a while. But there may be one of those for every 300 huge complex ads that are replicated 50 times each and mixed in with the SFR ads.

Greetings all!

I did a few searches on BP, but didn't see this specific topic, so I thought I'd give it a try.

In this world of big data and the "interwebs" I am curious of anyone knows of a search that can list all-- say 20+ unit apartment buildings that exist in a city, or region.  I've seen lots of different ways to search generically, but not having much luck in finding addresses and owners of specific property types and sizes. 

No, loopnet doesn't count. 

Admittedly, I'm pretty new at searching for general property details in any shape or form, so it would not surprise me if a search like this is super obvious and I can slap myself in the head.  At the same time it wouldn't surprise me if such a search was entirely manual or doesn't exist (yet). 

Looks good and congrats! 

I can't tell from the pic what you did with the old drop ceiling. It looks pretty cool now. Can you describe what you did there?

I was following one in a pretty nice spot South of the college and just west of 13th. Driving around it looked like one of those pretty hot areas. A pretty rundown duplex was listed for 350K. It was an estate sale and they were taking offers until yesterday. From what I hear it may have gone for 450K or more. Driving by it and looking at the photos on the listing, you could easily see 80 to 100K in rehab. Heck, the listing even suggested a tear-down. 

Still based on and renting to say 12 students for $500 each and maybe. I just don't see $2.5K+ rents per unit though. 

Going prices for trendy areas in Salt Lake seem almost out-of-control. Avenues, Sugarhouse, downtown seem to be very hot with some pretty beat up properties listed and selling for some pretty rich sums.

I'd like to hear the experiences of others in the area about investing in these areas-- single family, duplex, and up to small apartments 6-8 units. Is it practical to invest in these areas anymore?