All Forum Posts by: Kyle Kieke

OK BiggerPockets, I've selected my target area and have spent the last two weekends driving for dollars and surprisingly enough, I found about three times the potential properties in this area than what I initially thought were there.   That being said, I've compiled all of the information and have pulled all of the pertinent information from the county tax appraiser's website so I can market to these property owners.

My target properties are small multi-family properties that are in various states of disrepair or have significant deferred maintenance.   Many properties were obviously unoccupied as well.   These properties are all in older sections of a town with a population of around 50K.  

Does anyone have any examples of yellow letters they would send to these types of property owners?   I've got 35 properties on my list and would be happy to just land one of them.   I understand that this is a numbers game and that my list isn't very large, but this is my target area and I believe it has tons upon tons of potential.  

So let's see what you've got BP.  Any help would be much appreciated.   Feel free to ask additional questions if you believe this would help answer my question.

Thanks in advance.

Good afternoon Bigger Pockets,

So in continuing on the journey of trying to figure out how to break into real estate investing, I came across some interesting information regarding foreclosures.   I have an associate who works for a large national bank and his primary job responsibility is analyzing data on foreclosures.

Before I continue, let me caveat this by saying that I haven't asked for or been provided any illegal information regarding individual properties or the current owners (I've consulted two attorneys and one other friend in the banking business).

What I do have is essentially information on SFR properties that are going through the foreclosure process OR have been foreclosed on that are awaiting sale at auction. I have been told that it is perfectly legal to purchase these properties IF the bank and/or trustee (re: law firm) is willing to sell, and that I can negotiate directly with those entities with the ultimate goal of purchasing these properties at a discounted rate. Many of these properties have substantial "meat on the bone" regarding the foreclosure amounts versus what the property is worth. It appears as if I can cherry pick the deals that have the most room in them provided I can negotiate the sale from the bank with the goal here of purchasing properties that have an ARV of >200K because they're easier to move quickly.

Now I've mentioned this situation to a few people that I know who are real estate investors, and these people have all expressed interest in purchasing some of these properties.   My questions are as follows:

1). Where do I start with the bank and/or law firm acting as the trustee for these properties?  I'm pretty busy with my day job for the time being with no intention of leaving anytime soon, so my time is limited on how much I can devote to negotiating these deals.   My initial plan would be to wholesale these deals or even put them on the open market if there isn't enough room for a wholesale deal.  That being said....

2). Is it possible to do an assignment wholesale deal in a case like this?   These properties would have to be purchased with cash, something I'm short on at the moment.   Doing deals like these would allow me to build up my war chest to go after larger deals in the future provided I can keep the deal stream flowing, but some of the potential buyers I've discussed this with could buy a few deals a year, and they all know people who could buy more.   My first contact I discussed this with (a family member who owns a few rental properties) has expressed interest in a partnership to purchase some of these properties.

3). Does anyone else out there have ANY experience with a situation like this?  If so and you're willing to share your experiences please post here on this thread or message me.   I'm trying to formulate a solid plan so that when I approach the bank I can appear somewhat credible.   I know I'm not going in there tomorrow and buying 50 properties off of their books, but I feel that putting together 5 deals this year is possible.   I want to represent myself in the most credible way possible and not burn any potential bridges or future leads, i.e. I don't want to look like a complete idiot.

The intention here is to try and get a competitive edge buy buying these properties before auction so I have less competition from others driving up the price.   My end game strategy on working these foreclosures would be to establish a relationship with several banks as a reputable buyer with regular access to these types of deals, then I can move on to bigger and better things.

Thanks in advance,

Kyle

@Ramon Cuevas

San Antonio has always had a pretty solid real estate market.   I'm trying to learn the rental side of the market as my previous experience was in new residential construction and now commercial construction.

From what I've seen, the 183 corridor keeps growing north.   I noticed several new neighborhoods along 29 and 183 when I was up there this past weekend.

@Brad Larsen

Brad,

Appreciate your insight as a property manager on my forum post.   Really agree with you on your points about having quality tenants.  I've actually read up on your company somewhat before you posted on here so I think it's pretty cool you reached out and responded to my post.

- I'm considering house-hacking for my first MF deal and have slowly been trying to win my wife's vote on this. It's a process, but she understands the benefits of this method and knows that it would be a short term deal for us to live there. I am a veteran and am aware that the VA benefits do scale up when buying a MF property which would likely be the route I choose to finance the deal.

- You're right about the part on me not having $1M to put down on a $5M complex.   I understand that investing is a process that takes a lot of time to build up your portfolio, but one day I will buy a $5M complex, just won't be today.

- I haven't ruled out SFRs at all, and the $125K-$175K range is what I believe to be a great place to invest as they're more easily affordable which means a wider pool of potential tenants.  If I can get deals on SFRs that net me $200 per month cash flow then I'll look at them.   The long term appreciation play would just be another way to leverage for more deals.

I know you're busy running a property management company and I'm not sure how many new investors come knocking on your door, but I would be open to discussing this further with you in the future.  I'm not looking to waste anyone's time, just looking for some genuine insight into this business.

Good luck in 2017

- Kyle

@Ross K.

Ross,

I've been looking in the blue collar areas of San Antonio right now.   Inside 1604, mainly in from the NW side (Bandera Rd) over to the NE side (Converse/Selma/Universal City).   I don't want to compete in the higher end areas of town mainly because of the cost associated, but I'll snag a deal there if I can take one.

- I like your point on valuation being different for different people as I've seen this in the commercial construction world for my day job. I was actually listening to BP podcast 206 yesterday and the guest stated that "If you're not embarrassed by your offer, it's too high." That really stuck with me, and I'm only going to get into something if my numbers work on the deal and I'm figuring very conservatively. I too am looking for BRRRR opportunities for my entry point into investing. I've talked to a few colleagues about flipping, but right now I don't believe that is a good fit for me.

By the way, I work in Boerne.  I'd be very interested in talking with you about your experiences with your duplexes that you've purchased and how those deals are working out for you.   If you'd be willing to sit down for lunch sometime in the next couple of weeks please PM me.   I really want to connect with more people locally when possible.   You've obviously been doing this longer than I have, but if there is anything I could do to help you out let me know.

Good luck in 2017

- Kyle

@Ramon Cuevas

Thanks for responding Ramon.   I'll actually be in Liberty Hill for New Year's as it's my buddy's birthday and we're going to be staying at his place, small world.

- I've been reading/hearing about other investors finding good brokers on LoopNet as a way to get to their better deals.   I also agree with you that a property manager would likely give you better information concerning the rents because they aren't trying to sell you the property.

- Are you looking for deals in San Antonio?   I know you're further north than I am but I'm considering the Austin area for deals as well since the drive isn't that far.   I also have a ton of work in Houston as my day job takes me there every week so I'd consider just about anything in between.

Good luck in 2017

- Kyle

Good morning everyone.

Thank you to everyone who took the time to reply to my post, really appreciate it.  Just adds to my confidence that BP is a real community filled with real people looking to help others.   Great comments and advice from everyone in here.   Apologize for disappearing for the past couple days, but Christmas was pretty busy for my family.   I'll be on vacation for the rest of this week with no internet access (actually looking forward to that one), but I'll be back after the 1st of the year.

@Sam LLoyd

- Great point about not believing what the seller is trying to sell.   That is a reoccurring theme that I hear time and time again.   I need to get better at doing my own analysis when looking at these deals and I'll admit, my first barometer is usually rent-o-meter just to get a quick overview of what the area rents are going for, but even then I feel that rent-o-meter is giving inflated numbers.  I know my city fairly well and have a hard time believing some of the numbers I'm seeing.

- As far as checking sales prices, again, I have a hard time believing what I find on the open internet from all the websites like Zillow, etc.   In my own neighborhood I'm much more confident in the sales numbers, but getting into other parts of town it seems like these websites are pushing out bad "guesses".   I haven't started working with an investor-friendly realtor, but would like to sit down with some if they'd spare the time.   I'm going to write a "San Antonio Investor Dream Team" post to see if I can get some referrals for realtors, CPAs, property managers, attorneys, etc. because I need every one of these for my team.

- ROI is obviously important and I'm playing pretty conservatively right now on the few deals I've looked at. I also want $200 cash flow per unit as my goal getting into the deal, but don't mind if I have to perform some forced appreciation to get there as I'm going to be a long-term buy/hold investor.

Thanks again for responding and good luck in 2017.

- Kyle

OK Bigger Pockets,

First real post so here it goes...

I'm a rookie.  Completely new to real estate investing but I've spent the last couple of months listening to BP podcasts, attended some webinars, and getting in some reading when I can to help educate myself.   I'm still trying to determine my investing niche, however I'm extremely interested in small multi-family deals because I feel they're somewhat less risky than single family and have potential for better cash flow (if I'm wrong, someone please speak up).

So far I've been using open source websites to get to know this niche in San Antonio, TX (Realtor.com, Redfin, Loopnet, etc).   I realize that what I'm finding on these sites are not going to be the better deals that are out there, but my real question is that when I look up previously sold prices on some of these properties, I'm finding that most of these properties sold back when the market was beginning to come back (2010-2012), however they're selling for 75%-100% more today than when they were sold 5 years ago.  

I understand forced and natural appreciation, but honestly some of these properties still look like dumps.   Many others I look at I feel are overvalued from what they list the rent rolls at.   When I go to check rents, it seems that many of these properties aren't even pulling in the average rent for that zip code.   Is this the trend now?  To list markets for what their potential for rents can be?  I'm no expert but this doesn't make sense.   Again, I am new to this so there is a good chance I'm not even digesting all of the information correctly.   How does a guy like me look at a deal and know how much I can rent it for when analyzing a deal.

Until then, I'm going to keep drinking from the BP firehose and try to understand everything as best as I can.   If anyone out there in San Antonio is already a genius when it comes to the small multis, please let me know who you are, I would love to pick your brain about this stuff.

Nicolas,

Curious as to why the CAP rate is at 8% on this property. My company just finished a new self storage facility in the Houston area and the owner is considering selling because the CAP rate for that property is between 4.5% - 5%. I'd also be interested to see what the actual issues are between seller and buyer other than price.

I'm currently working for one of the largest general contractors in Texas that builds self storage almost exclusively.  Let me know if there is any way I can help.

Vijay,

Thanks for the reading list and other information, will be checking this out.   Appreciate the feedback.