All Forum Posts by: Guy Azta

Hello all,

I'm not a very active member here, which I intend on changing this year. I shared last year about my plan to sell 3 of my houses and exchange them into multi families. I have been looking to get into the apartment buildings world and now got my first deal under contract. It's part of a 1031, which doesn't really matter, but I'm very curious what other investors may thing about the underlying deal:

- 12 unit building in Cincinnati, OH

- Almost 100 years old ;-)

- Been renovated by seller. After extensive inspections it appears to be in pretty good condition. some units were fully rehabbed. some will need some rehab upon tenants move-out. I will not have to put in significant money in upfront renovations (expectation is at or under $5K)

- It was listed at 10% cap, but after factoring in new taxes & insurance, it is now at 9%

- Most units are efficiencies. The building is located in a decent part of town. It caters to low income tenants. Seems pretty stable with decent tenants

- Price is around $240K

- The cash flow calculated would be around $8K annually. It could be higher if taxes don't go up as much, as well as other factors, so could end up being $10K-11K annually, but for safety, let's stick to $8K. I will be taking a loan

- I'm going to put approx $100K in down payment

- The cash on cash return is now standing at 8%. The return on equity, factoring in depreciation, equity build and taxes, is around 20%

I have until tomorrow Friday 2/10 to either pull out or go for it. I haven't been able to see any deals that are significantly better, esp considering the building is already renovated.

Would love to hear what people think and if it's an ok deal or I should run for the hills...

Thanks

Guy

Thanks for the replies. Yeah, definitely a learning experience. Taxes will go up and if you buy a house with existing tenants paying low rent, it will be tough to bring it up higher later on. I'll update on how thing whole saga will transpire

Hi Adrian. I guess I'm replying late here. Just joined BP. Saw your post after doing a search under "Plant City". Would love to learn more about that area and seems like you have some experience. Let me know if you'd like to chat

Hi Chad, I found your post doing a search for "Plant City". I'm new to BP and have been investing in RE since 2013. I'm happy to share from my experience. Also, I'm interested to know more about Plant City, as I have been seeing some interesting properties there, but know little about it. I've bought in Orlando and Jacksonville. Out-of-state. Living in California. Would love to chat. Thanks

Hi everyone. I'm new to BP. Been listening to many of their podcasts in the last 2 months or so and finally signed up. I have a particular scenario and would love to get others opinion.

I'm an out-of-state buy and hold guy and most of my properties are SFRs (bee getting into 2-4 units with a goal of moving to apartments, just like many others). Been doing this for number of years and so far ,been pretty happy with how it's going. I have 3 properties in Greater Orlando that I bought with the original tenants, and the rent is $200-300 below market rate per house. A month ago or so the taxes went up on all of them, creating a near breakeven scenario for me. I was thinking of a few options (aside for fighting the tax authority to lower them back on the grounds of low rent):

1. Live with it. These are all nice houses and have appreciated more than expected since I bought them. These tenants will eventually move out, but who knows when.

2. Exchange each of them individually into nicer/better houses (using 1031, never done this before) where I have a much better cash flow

3. Exchange 2 or 3 of them to buy an apartment building. Apartments are my goal, but haven't bought any so far and still a beginner on that aspect

After multiple conversations with the property managers, I don't think doing a rent hike to market rate is realistic for these tenants (small increases yes), and I guess I'm not the type of person who wants to kick people out and mess with their lives (these are all families). Sure this option has its merits, but not for me.

I'd love to know if someone has been in a similar situation and what you've done to resolve it and how it went.

Many thanks!