All Forum Posts by: John Brees

John, I debated some of this before I bought my first apartment building in May '18.  I did my second deal in November and I can tell you what I have learned in the last 8-9 months of actually owning the buildings was worth any offset of future price pressures.  My thought process was I would be in better position when a down turn did hit because I owned and brokers/sellers would take me more seriously.  I saw owners with apartments in a stronger position when a correction hits because they will be the first to hear about new properties available.

@Jen W. My full time job is in underwriting on the home and auto side. I agree with checking your policy but the other concern is their underlying tenant policy. Many carriers have exclusions for certain breeds and breed mixes. The part many do not understand is that certain carriers (believe State Farm) caps bite payouts at 25k. Pit bulls are undesirable for their severity more than their frequency of bite. I would want to be an apartment owner sitting with $1-$2,000,000 in liability coverage and have a tenant with a 25k capped limit and folks looking for deeper pockets. Moving on may hurt January’s cash flow but one of these gone wrong can do far more damage. Best of luck.

Appreciate the feedback, they are very happy, and it has built some good will.  I did a second deal this last fall and that was the first question I asked!  And yes, it has helped with communications.  It was not ideal but an expectation of any property.

My first deal was a 16-unit and one thing I missed in the due diligence process was that no mail boxes existed.  I paid to have these added as I felt this was a "general expectation".  The USPS has to do this, they are free standing, and much more than I thought (over $3,000).  Based on feedback, improved communication, etc I believe this was the right move.  Anyone else dealt with this and how do folks draw a line on what is a nice to have versus an expectation?  I just did not feel it was right to have to have a PO Box to get mail especially in an Amazon world.

Hey Andrew, I went straight to MF May 2018.  I wrestled with single family but with a full time job, kids stuff, etc I just knew I needed to make a bigger splash day one to feel like my time was being values.  I bought a 16-unit for about 800K.  Down payment was a combination of savings, selling land I owned, and borrowing on 401K.  The tipping point for me was I wanted to be on the strategy side, not the property management side so I wanted a deal that could justify hiring a property manager.  That could keep more of my time on my family, job, and future deals.  I also felt going straight to MF helped me develop broker relationships that will benefit me down the road and not being working with residential realtors on single family or duplexes.

@Brandon Hall, great stuff. I really appreciate it.

I should add that he is saying this because real estate is not our primary source of income, we still earn more from our day jobs.

Our CPA is telling us we can't depreciate our two multifamily properties (purchased both this year) because our household income (married-filing jointly) exceeds $165,000.  I'm hopeful a CPA on here or more experience investor can validate this or share experiences.  I have read several articles and do not view it that way, help is welcome!  Thanks!

@Al Pat, 5 years. I’d have to double check but I believe closing costs were around $7,500.

@Richard Sherman, 5 year term, sorry.