All Forum Posts by: Mike Henkel

Investment Info:

Large multi-family (5+ units) buy & hold investment in Mount Pleasant.

70 unit newly constructed apartment complex

What made you interested in investing in this type of deal?

Wanted newest nicest apartments in area to attract the better clientele.

How did you find this deal and how did you negotiate it?

Cold called (like most deals I’ve done) lane owner

How did you finance this deal?

Profit from Sale of 60 unit older apartments/condos. Bank loan for rest.

How did you add value to the deal?

Built property on vacant land.

What was the outcome?

Working out well so far! Have low LTV from principal of previous sale so that helps.

Lessons learned? Challenges?

Building is tough, price increases, deadlines, funds, making them cash flow. Low risk, low maintenance, but lower cash flow vs a value add.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Myself! Commercial Multifamily real estate broker

Hey I have done 6 land contracts, send me your email address and I can forward you a free blank one. My lawyer drafted it for my first one in 2010 and I swapped out owner names, addresses, amounts, etc multiple times.

Let me know!

Just received word that my 60 unit apartment complex construction is approved! Have been meeting with the city planning commission since about December. City approved it a few weeks back and my bank approved loans TODAY! Numbers aren't as good as my other deals (I currently have 60 other units). But it still cash flow's about 150k per year. Of my 60 units that I currently own I have 27 units that are condos with roughly 50% LTV from a combination of paying them down with 15 year loans, market going up, putting 15k per unit into updates, and raising rents. Bank is using these 27 units as collateral in a sort of line of credit so I won't have to put the full 20 or 25% down.

New construction is 7 buildings of 8 units each and 1 building with 4 units. Bank is requiring 100k in cash from me per building, so I have some skin in the game, and is not letting me start the next building until I am 100% filled with the buildings I have already built. Assuming it will take 4-5 years to finish project.

Land Cost 200k

8 unit building cost 695k

4 unit building cost 350k

Total Project cost 5.415 Million

These numbers will be adjusted 60 days before each building (exact bids) but are based on builders previous builds of exact same buildings recently.

I try to look at investments more with Cash on Cash return versus cap rates. So if a building costs me 100k out of pocket and cash flowing 20k. Assuming the buildings cost increasing some over 5 yearish project, interest rates going up, and some "oh sh*t's". I should still be good to recoup my cash within 10 years (my other deals I shot for 5 years, but have not been purchasing much lately, simply not finding good deals in my area).

Bought the land off market, cold call :), and is with 1/4 mile of my other 60 units. Each unit will be 2 bed 2bath. Which I need more of. Of my 60 units I only have 3 two bedrooms, mostly being 4-5 bedroom college rentals.

My town has a 25k population and has a university with about 25k (undergrad, grad school, and other programs). My other units are geared towards college students but the new construction will be geared towards grad students, general population or college students that want to be away from the noise. Land where they will be build is next to a nicer apartment complex geared towards non college renters.

For every one call I get for a 4-5 bedroom I get 4 calls for 2 bedrooms so I am in desperate need for two bedrooms!

Haven't posted in a while (mostly because I haven't had any deals!) Tried to give hard numbers.

Thanks all!

Just received word that my 60 unit apartment complex construction is approved! Have been meeting with the city planning commission since about December. City approved it a few weeks back and my bank approved loans TODAY! Numbers aren't as good as my other deals (I currently have 60 other units). But it still cash flow's about 150k per year. Of my 60 units that I currently own I have 27 units that are condos with roughly 50% LTV from a combination of paying them down with 15 year loans, market going up, putting 15k per unit into updates, and raising rents. Bank is using these 27 units as collateral in a sort of line of credit so I won't have to put the full 20 or 25% down.

New construction is 7 buildings of 8 units each and 1 building with 4 units. Bank is requiring 100k in cash from me per building, so I have some skin in the game, and is not letting me start the next building until I am 100% filled with the buildings I have already built. Assuming it will take 4-5 years to finish project.

Land Cost 200k

8 unit building cost 695k

4 unit building cost 350k

Total Project cost 5.415 Million

These numbers will be adjusted 60 days before each building (exact bids) but are based on builders previous builds of exact same buildings recently.

I try to look at investments more with Cash on Cash return versus cap rates. So if a building costs me 100k out of pocket and cash flowing 20k. Assuming the buildings cost increasing some over 5 yearish project, interest rates going up, and some "oh sh*t's". I should still be good to recoup my cash within 10 years (my other deals I shot for 5 years, but have not been purchasing much lately, simply not finding good deals in my area).

Bought the land off market, cold call :), and is with 1/4 mile of my other 60 units. Each unit will be 2 bed 2bath. Which I need more of. Of my 60 units I only have 3 two bedrooms, mostly being 4-5 bedroom college rentals. 

My town has a 25k population and has a university with about 25k (undergrad, grad school, and other programs). My other units are geared towards college students but the new construction will be geared towards grad students, general population or college students that want to be away from the noise. Land where they will be build is next to a nicer apartment complex geared towards non college renters.

For every one call I get for a 4-5 bedroom I get 4 calls for 2 bedrooms so I am in desperate need for two bedrooms!

Haven't posted in a while (mostly because I haven't had any deals!) Tried to give hard numbers.

Thanks all!

Hi all!

Little background on me. I own 60 apartments most of which are 4-5 person college rentals. Recently I purchased a 4.61 acre parcel of land in prime location a block away from my 60 current units that is already zoned for an apartment complex with 15 units per acre. With the zoning I can only rent to 2 unrelated people per unit. My plan is to do 8-8 unit buildings with 2 bedrooms per unit then maybe do a building with a few units and a leasing office after the 64 units are completed. Have a builder working on plans now (he has built a few apartment complexes in town with same layout).  I have a 14 unit building with around 600k in equity. My plan is to refinance the 14 unit building to put the down payment on the construction. Just curious if any other apartment owners that have built apartments have any suggestions to building (doing all 8 buildings at once using 800k in down payments (400k from refinance of 14 unit building, 200k cash, 200k in land value), doing one building a year to try and cash flow during construction and spread out the cost (probably not take out any refinance just use cash and land value as down payment), or any other ideas? Waiting on builders final cost breakdown but was told by another landlord it will be 60-75k per unit. 

Any thoughts or suggestions are helpful!

Haven't been on BP lately but I've closed on 9 new units in the past 4 months which puts me at 60 total units!

9 units consisted of:

4- 5 bed units from an owner out of the country. been trying to buy his units for years. Keep in contact with him every few months to see if he wants to sell (usually politely says he doesn't want to sell). He finally was to the point where he wanted to sell and knew who to call to buy them! Purchase price 340,000 but needs 40-60k in updates to attract higher rent and better tenants. Currently rented for 3,500 a month (3 units under rented and one vacant)but I can get up wards of 6,000 a month. after a year of fixing up and finding better tenants.

4 unit building of 4 bedrooms that is in serious need of repair. tiny bedrooms tiny living room dated apartments in a decent location. purchased for 378,000. Not the best deal but the location is right next to all my units and it was listed on market with 3-4 other landlords bidding on it so I pounced. bringing in 3,600 in rent but needs 75k in work. Also changed 4 bedrooms to 3 bedroom apartments with a giant living space. Never heard of getting rid of a bedroom but living space was too small and I like to have the "wow" factor when walking in. Should be able to get 4,200+ in rent after I remodel it.

Last deal was a 3 bedroom 2 bath house in prime location. for closure and needs a lot of work. Purchase 80k. Needs 40k in work. I am going to live in this one for a few years and flip or rent it after. I am currently taking up a 2 bedroom apartment of mine that I already have rented out for January for 700/month in extra income. Looked at other deals in area for the market price of house after fixed up and seems to be around 150k too.

I usually find most deals off the market but my last 9 units 5 have been on the market. Definitely harder to get really good deals in this market when everyone in town knows they are for sale.

!

Happy buying everyone!

 Thanks! I'd like to get on the podcast I've been speaking with BP PR director... I listen to their podcast everyday when I work out (re runs are on YouTube)

Maintenance right now I could use the system but I have the tenants just text me for those. Anything I can do I do and I have a general contractor that comes usually once a week for anything I can't handle. And if he still can't get it I'll call a vendor (heating company, plumber, appliance repair, etc).

I have the tenants text me right now just to have a faster service for them. I also live within a block of all my apartments and at this point no family or job so I don't have a problem running over to fix things because my schedule is pretty free.

I've been listening to the podcasts lately and actually been in contact with BP pr director to possibly get on the podcast.

rent manager/pay lease is what really helps me. I have everyone pay their rent online. It gets automatically accounted for and deposited in my bank account without me have to do anything. I have emails that go out to everyone with a balance 8 times a month and I can sort my tenant list by who owes more than 500. And I focus on calling and court on those people. I still self manage 51 units I own now. I have a leasing office and all my properties are a block or 2 apart right now.

watch out with vinyl plank, i used it and it scratched for me very easily.... I put it in about 15 units and after the first year 5 looked bad from scratches. All though I am renting to college students. I switched to wood grain looking tile at 2.50 a square foot. It's done awesome so far!