All Forum Posts by: Josh Rich

Hey Fellow BP'ers, I need some advice from all of those brilliant seasoned minds out there! Who can give me some tips on C-class apartment multifamily residential (MFR) investing, and section 8 requirements?

Right now I'm looking at a deal that is on the other side of the country (West Charlotte, NC just east of the airport) where I have no real market knowledge and very few connections, so I will be an out-of-state investor in need of a great property manager.

Dangers to avoid? Pitfalls to watch for? Problems and headaches to anticipate? Upside?

Here's the run down: asking price is $2.2M.

-56 units (28 3/1 and 28 4/1.5); 5 are section 8 approved.

-Tenants pay water (on sub-meters) and electric, there is no gas.

-Each unit has washer hook ups, no dryer outlets (clothes-lines)

-GMR $500 and $600/unit and seller claims $350k/yr gross with $150k expenses ($200k NOI); I will put 10% down w/seller financing 15%.

-My $200k+ investment is about 60% of total available capital.

-Seller says he could help mentor me a little and has a "well experienced, wonderful" woman running all of his tenant screening, leasing, evictions, county code issues, etc.

Come on now fellow entrepreneurs and investors, you haven't failed me yet! If you're thinking you have anything to contribute at all to this post...please do! No comment is too small, or insignificant and I appreciate each post.

Thanks in advance!

Haven't invested in either, so consider the source. From my research though, for me it comes down to Landlording vs Business owner. Motels are businesses that require employees, and all the ramifications that are related including tax implications, payroll, etc. Apartments essentially need one "employee" so to speak which is the PM company, typically a known expense (% of gross rents) and reduces taxable income. Just my 2 cents.

Joel, sorry for the late reply. Once looking into it more, I decided it wasn't worth it. It would have been a pretty straightforward 70% LTV. Do you know of better ways to finance for the long-term?

Chase, welcome to the community! Houston is a great area to be for real estate. Several years ago I bought my first investment property in Sugar Land and love the area. Let me know if you ever are interested in teaming up. It's difficult to be an out-of-state investor without eyes on the ground.

As part of sourcing your deals, I have a contact you should connect with, his name is Lyall Storandt and he is also a BP member. He finds great deals and pitches them out to investors. Let me know how I can help.

Jeff thanks for your feedback, still trying to find out rents and Gross Inc. Just doesn't feel good having such little control.

Joel thanks for the reassurance that the gut feeling is probably right here.

Jeremy totally makes sense. Sorry for the mix up, I should have been more clear. The $7k-$10k montly cash flow is what I want to eventually build up to before "retiring" and investing full-time. Of course this will take some time, I'm hoping with 5-10 years. Right now I know I need to build my capital/equity to about a million before seriously seeking that level of NOI cash flow returns. That is what I am hoping to do as quickly as possible, with manageable risk.

What about running the audio through some inexpensive dictation software such as Dragon, then hiring a VA at $10-$20/episode (as discussed in 4 Hour Work Week) to piece together any missed translations? Shouldn't cost more than $1k-$2k. Once transcribed, you could probably leverage it as an online resource to attract more members and more donations, to cover the capital outlay. Just a thought.

Justin B. thank for your insight, I have heard of accelerated depreciation and will need to do some homework on the cost segmentation. It's always nice to learn something new, or at least being made aware of something new that I didn't know that I didn't know, haha!

Jeremy Roll syndication is an interesting concept and something to consider. Not sure where I said I was looking for a 30% return, perhaps I mispoke. I understand the risk/return concept and I'm willing to take on some risk to get a decent return. It seems when there is an opportunity with over 15% returns I question the amount of risk involved and typically shy away, unless I can manage the risk. Just got a message from an old friend about syndication and want to learn more about what opportunities exist. PM me and tell me what you have going on. [email protected]

Hey BP Friends, would you mind helping a low experienced apartment investor out?

This year I am wanting to start investing in apartments and this deal came to me today, after my inquiry, and it is 18 of 70-80 units to sell in a complex. The market is strong, good job outlook, and sound economy.

My concern is that with so many other units in the complex that I lose control of the condition and pricing on those competing units. If one owner decides to reduce rates to lower vacancy, it can become a race to the bottom to stay competitive. The details are as follows:

DETAILS: (From Owner) I have decided to sell my 17 condominiums and one 1st mortgage note against the 18th unit (73K is owed to me now unit is worth 40k .)

After deductions for management of 5% (seems low), vacancy rate of 6% (100% occupied now), 14% for maintenance to units, $195 monthly HOA condominium fee for all exterior grounds, parking and h20, sewer, insurance, pool, trash etc. plus annual property taxes $900 a year (also seems low) I net net net just over $71 k now.

Rents are about 3 to 7% below market depending on unit too. Putting rents at market at this time would be your upside as all owners are currently full it would meet with little resistance and put income to a net 80k approximately. At present price $795k and rents you enjoy a 9% cap rate you could take it up to 10% quickly

I am open to selling some or all units. I am able to take trades but do not have any need to 1031 these properties.

Thoughts? Dangers to watch for? Questions I should ask the owner? Other?

Thanks in advance for any and all advice!

Just got hit up by a New Wealth recruiter and was contemplating attending their "by invitation only" meeting coming up next week. Sooooo glad I leaned on my BP family to post information like this, love you guys!!! Thank you, thank you, thank you for saving me time, money, and resources.