All Forum Posts by: Matt Popilek

I think we all struggle with the same question when we first start. Big Opportunity comes with Big Risk in most cases.

My 1st was a 14 plex I bought for $10, and am still renovating to this day all in around $600k...Risk, Stress, Learning, and Growth all lumped into that deal.

My 2nd a Duplex I am converting to a Triplex. AirBnB 1 unit that supports the entire property. I still run into issues with foundation, roof, and windows that need to be resolved. The difference is that with the Triplex I don't have as high of a future value as I do the 14 plex.

My 3rd a 22 unit - This has the highest return, This is my best deal to date, and I would say that is a result of my previous 2 deals in learning better planning. My plan going forward is to stay north of 20 units. Based on my current experience with this compared to #1 and #2.

There is an advantage to cutting your teeth on something easier up front...that being said I think you can buy bigger and do a Great Job focusing on inspections to cover your back side, and get best of both worlds. I don't think smaller necessarily means easier, based on my experience with the Triplex.

On partnering with experienced person is not a bad idea, make sure to cover your expectations on Exit...when you expect to sell when does your partner. That is a tricky part of JV...also expectations of quality finishes can be difficult to iron out.

This is a struggle for sure - I have been in the industry for 3 years now, and I have not found a perfect solution to the problem.  REIPro you can search and filter down to multifamily, but contact information costs a lot or you spend time skip tracing yourself.  We are currently reviewing Reonomy which appears to have everything you need, but we are always skeptical until we have proof. I am having a demo today at 10 am with Reonomy to see if they can actually perform.  Message me later today, and I can tell you how the demo went.

@nicholas novak - I responded to your email. Thanks for reaching out!

@Brian Kraft - I think the cap rate you purchase at is significantly just your method.  I think you have to come up with the % that makes most sense to you, and be willing to adjust if you have a really good opportunity come your way.  I never say never!

@Brian Kraft depending on age I use 50% to 55% on total cost to gross rent that is my rough in number. Then based on what type of renovation work I can work that number back down to 40% if everything will be new.

Mismanaged property is pretty much the only thing I buy.  I use generalizations on how I come up with the Future Value, and I use the actual numbers to come up with the current value.  In your negotiation using their numbers to show them why you are offering so low will be helpful.  Know the market is it a 10% cap rate market or a 7% cap rate market or lower? I would make sure they understand you are taking on the burden of fixing up the place, and I would be buying it now before they spent all their time and energy getting it fixed up...The more time and money they spend the more they will expect at the point of sale.   

I try to offer a price at a cap rate higher than the current market which just means a lower purchase price which I think 99% of people on here would do the same. We are all trying to get a Deal. I am usually offering 12% cap rate or higher on my troubled properties which in turn means future value should be 16% or higher. This gives you leverage to either sell for profit, or refinance for cash out to do another deal. Either way if you buy it at the right price you can come out on top.

You can be conservative on the future value, and if you buy it right you will still have a great return.

Expect higher maintenance expense than what is normal. Expect higher turn over than what is normal. That way when you have lower maintenance and turn over you will have a great asset.

@Lori Valene Thanks I will send you the CA on this one.

@Bryan Zuetel - Thanks for noting that issue! This is in Kansas City, Kansas near the speedway.

Someone is going to kill it with this property.

$3.9M purchase price, 8% cap rate off actual income and expense, $545/month Average Rent which is at least $200/month below market. This is 98% occupied, and is owner managed.  Currently cash flowing at $115k/year after debt service.

The Seller has been bitten by a couple Buyers that couldn't perform. 

They are requiring an LOI, proof of funds, and Asset Resume prior to agreeing to terms.

Please email me, and I will send a CA prior to the financials. 

[email protected]

Thanks - Matt Popilek

816-518-5641

My question would be how they guarantee the return? They may have systems in place to protect the return.

Also is it CoC, IRR, or Total Return? All these are calculated different and they have a different way of accomplishing the return.

Hope this helps,

Matt