All Forum Posts by: Joshua Watts

@Julio Gonzalez thanks for your comment. I looked at your profile and looks like you know a thing or two about cost segregation to say the least!

Investment Info:

Other buy & hold investment.

Purchase price: $3,000,000
Cash invested: $34,000

Bought 300 unit self storage facility for 3 million. Down payment was $34,000 and equity from another property. 3.5% interest only 1st two years. Gross rents per month was $22,000 when I bought it. I raised rents to $35,000 per month the day I bought the property. I own other self storage facilities in the area so we have also reduced our expenses with our synergies. It was a very good deal, on top of it all we are in process of cost segregation. Which we will get to write off about $9000,000

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

We have history of investing in self storage

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

Cold call, there was not much negotiation I payed asking because I believed there was huge value add with 50% increase in rents.

How did you finance this deal?

Bank that I have been working with for a long time. They understood what I was trying to do and had finance other self storage facilities for me. Also they had finance a self storage facility that I owned in the same town. They believed i was going to be able to push rents due to the fact that I already had units in the area for much higher pricing and was 95% full.

How did you add value to the deal?

Increased rents by 50% and decreased expenses with our synergies in the area.

What was the outcome?

Added around 2.2 million in equity at a 6 cap. 35,000 (rent) *12 (months)=420,000 (year)*.75 (expenses)=315,000/.06 (cap rate)=5,250,000- 3,000,000 (purchase price)=$2,250,000

Lessons learned? Challenges?

I would say focus on one or two aspects of real estate and get really good at it. We focus on apartment and self storage. Focusing on self storage helped me understand this was a really good deal even though if you just looked at the numbers it did not look that good at first.

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

No, cold call. Off market

I would take a look at The American Insurance Company @Keith Rocha and @Jack Smith. I have one commercial umbrella policy for single family homes, duplex, triplex, quadplex, apartments, and self storage. It is for 5 million if I remember correctly 

I feel the same. You intended to live there but things changed. Sorry for your loss.

I have been in self storage for a long time now and this is the 1st time I have seen something like that. For me in the South East I can't see it. I can see it in Los Angeles or where prices are really high.

@Ujwal Velagapudi

Your right about the (relatively simple) part. It is pretty cool to think something so simple could even work. I think the little nugget of information that I gave was what you are hitting on. That is, take a step back and use the K.I.S.S. (Keep It Simple Stupid) method and it can make you a lot of money. Find the mistakes others are making, fix them and you will make a lot of money. 

Investment Info:

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

Purchase price: $360,000
Cash invested: $36,000

Was able to purchase this 10 unit apartment building 2 bedrooms 1 bath, built in 2007, $360,000 all cash. The seller broke one of my oldest rules in owning rentals properties and that was not to pay for any tenant utilities. But we had a plan to fix the issue and that was to install water lines to each unit and have the tenants pay for their water.

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

We invest in apartment buildings and self storage so this apartment building folds right into our portfolio.

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

One of our real estate agents called while we were on vacation and we made the offer all cash while we were still on vacation. There was no negotiations the price was right we paid asking price.

How did you finance this deal?

All cash then cash out refinance

How did you add value to the deal?

Where the value was in this deal was the fact that the seller was paying for the water for the tenants. As soon as we purchased the apartment we had 10 meters installed by the city and had water lines ran to each unit. After installing the water lines the bank appraisal came in right at $600,000 which means we were able to add $200,000 in valve by seeing that this complex would be better off having water ran to each apartment unit.

What was the outcome?

Now we have increased net income removing the water bill, over the next 12 months we will start pushing rent up being the rents are below market.

Lessons learned? Challenges?

We have learned that we can increase value of properties by finding mistakes that other sellers have made. In the last 5 to 7 years this has been our go to reason for buying a property. We find mistakes that sellers are making and correct them in turn adding value. This way of adding value seems (for us) much more profitable than just rehabbing buildings or houses.

Investment Info:

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

Purchase price: $360,000
Cash invested: $36,000

Was able to purchase this 10 unit apartment building, 2 bedroom 1 bath, built in 2007 for $360,000 all cash. (We had to close the deal fast or the seller was going to sell to someone else) The seller broke one of my oldest rules in owning rentals properties and that was not to pay for any tenant utilities. We were able to add value by installing water lines to each apartment building for the cost of $26,000.00, in turn saving us $1,500.00/$1,800.00 per month on the monthly water bills. With this new increased net income we refinanced our capital back out of the property. The bank appraisal came in right at $600,000 which means we were able to add $200,000 in valve by seeing that this complex would be better off having water ran to each apartment unit.

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

We invest in apartment buildings and self storage so this apartment building folds right into our portfolio.

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

One of our real estate agents called while we were on vacation and we made the offer all cash while we were still on vacation. There was no negotiations the price was right we paid asking price.

How did you finance this deal?

All cash then cash out refinance

How did you add value to the deal?

Where the value was in this deal was the fact that the seller was paying for the water for the tenants. As soon as we purchased the apartment we had 10 meters installed buy the city and had water lines ran to each unit.

What was the outcome?

Now we have increased net income removing the water bill, over time the next 12 months we will start pushing rent up being the rents are below market.

Lessons learned? Challenges?

We have learned that we can increase value of properties by finding mistakes that other sellers have made. In the last 5 to 7 years this has been our go to reason for buying a property. We find mistakes that sellers are making and correct them in tun adding value.

If the gym was not rented then one would have to make an educated guess on what it could rent for. But one needs to be correct because this is where one can end up overpaying.