All Forum Posts by: Marlon Messer

Insurers are also adjusting premiums to take into consideration the rising cost of replacement.  Recently started a new policy and was told 2 weeks later the premium was incorrect because property values had been reassessed as prices of materials had escalated.

Another insurer canceled my policy on a newly purchased apartment complex after 5 months of premium payments when they realized the property was not within 1000' of a fire hydrant.  Of course cancellation was July, and I am on the gulf coast where hurricanes season starts in Augusy. In my opinion the insurer basically collected 5 months of risk free premiums and avoided the highest season for claims. In the end it worked out nicely because we found another insurer for $7000 less.  

Keep shopping and you may a lower premium and a "quality" insurer.

No it's straight P&I on 20 yr amortization, 5 yr balloon. Its a good deal so there was no reason to make it more complicated plus property cash flows anyhow so I might as well start paying down principle. He laughs when I drop a check off because every payment has been more than the note. Increased payment may not be the best decision on my part purely from a financial standpoint but it's how I prefer to operate. Once the property is fully renovated, thus increasing revenue the monthly payments will not increase and at that point I will begin saving the increased NOI for the next purchase.

I closed on a 44 unit apartment complex Feb 1 this year with seller financing, and the seller is the president of a local chain of banks.  Traditional financing was available but I decided to save it for another deal.  Seller required a sizable down payment, with 6% interest rate and 5 year balloon.  Terms could have been better but it cash flows from day one and will be a great deal after renovating the property.  At the end of 5 years I would not be surprised if the seller decides to continue carrying the note.  All I did was ask and the seller obliged.  

It is easy to get excited about purchasing your an investment, but the fact that you are taking action to purchase your first rental is a step in the right direction, even if you don't buy.  All the above comments are great regarding the inspection.  

It appears you are relying heavily on your agent and that you have not personally visited the property.  What experience does your agent have with rental property and how well do you know the agent?  An experienced agent should be able to recommend an inspector or GC to walk the property.  Also, where did you get the rent data?

A video is nice to see the exterior but it could be lipstick on a pig with lots of expensive issues hidden beneath the service.  In my opinion your first deal needs to be within driving distance so you can get 1st hand experience in the entire process of buying, renovating, renting your first rental.

Again, you are definitely moving in the right direction in trying to take down your first property. Good luck

Lots of great information and analysis of different investments and locations. To keep things as simple as possible the question you need to answer is how much time and energy do you want to put into the investment? And what kind of financial return are you seeking, whether cash flow, appreciation, etc, and at what risk. The answer will help direct you to the type of asset or invesment you should begin researching.

Then focus on locations with economic growth and a growing population.  You will be well on your way to taking action and buying your first real estate invesment.

Hello BP community, I have been a longtime lurker since 2012 but decided I needed to meet people outside my regular circle who are just as passionate about real estate. Although I never post I have been an active buy and hold investor for many years.  I am determined to be an active contributor to the forums. I live in Los Angeles and Southeast Tx and will be arriving in NOLA Saturday, staying at the Sheraton. Its a short drive back to Southeast TX so my return date has not been determined.  Look forward to meeting many of you

 $ is not an issue for the seller. I believe she lost the drive or desire to own a c- class property and is more interested in putting her design ideas into flipping homes. 

Investment Info:

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

Purchase price: $1,500,000
Cash invested: $400,000

44 unit apartment complex built in late 70's and early 80's with (24) 1 bedroom and (20) 2 bedroom units purchased as a value add opportunity. The 2 bedroom units are very large and include 2 full baths. Rents were 200-300 below market. Almost all the units needed updating with the exception a 4-5 units, and even those rents were under market. The property cash flows from day one, but bringing all rents to market and continuing with improvements will make this a great long term investment.

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

From experience as an owner of other apartment complexes in the area I know the numbers for this type of property and could see the opportunity. Also, I already have full time maintenance and property managers on staff so scaling makes sense.

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

My bank informed me the seller, an executive at another bank, may be interested in selling the apartment complex after 20 years of ownership. The seller's wife was more interested in flipping homes than managing apartments. Both parties are long time established residents with solid reputations so negotiating was short and sweet. I knew exactly what the numbers could be, and the price/unit was great so I did not need to negotiate a lower price, although I did try to lower the down payment.

How did you finance this deal?

$400k with owner financing for 5 years on 20 year amortization schedule at 6% interest at which time I will need to get bank financing. But I have a feeling the seller may seriously consider extending the terms beyond 5 years considering I have been paying more than the note requires. Or I may decide to get bank financing anyway with lower interest after I have all the units upgraded and at market rent. Down payment came from cash on hand and cash out refi of a free and clear rental home.

How did you add value to the deal?

We are updating/upgrading all outdated units as the leases are turned over. Upon transfer of ownership we inherited 6 vacancies which we immediately updated or rented for market rate.

What was the outcome?

I am a long term buy and hold investor and rarely sell, even though I should with a few properties. This property will be no different and will continue to provide excellent cash flow for years to come, especially with the strong economic activity and construction projects in the area.

Lessons learned? Challenges?

It never hurts to ask. Even though I was dealing a Bank executive, and was not sure he would be interested in owner financing, he saw the value in it as well. The main challenge has been dealing with the state and other governing bodies in regards to the water well and sewer treatment plant.

Investment Info:

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

Purchase price: $1,500,000
Cash invested: $400,000

44 unit apartment complex built in late 70's and early 80's with (24) 1 bedroom and (20) 2 bedroom units purchased as a value add opportunity. The 2 bedroom units are very large and include 2 full baths. Rents were 200-300 below market. Almost all the units needed updating with the exception a 4-5 units, and even those rents were under market. The property cash flows from day one, but bringing all rents to market and continuing with improvements will make this a great long term investment.

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

From experience as an owner of other apartment complexes in the area I know the numbers for this type of property and could see the opportunity. Also, I already have full time maintenance and property managers on staff so scaling makes sense.

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

My bank informed me the seller, an executive at another bank, may be interested in selling the apartment complex after 20 years of ownership. The seller's wife was more interested in flipping homes than managing apartments. Both parties are long time established residents with solid reputations so negotiating was short and sweet. I knew exactly what the numbers could be, and the price/unit was great so I did not need to negotiate a lower price, although I did try to lower the down payment.

How did you finance this deal?

$400k with owner financing for 5 years on 20 year amortization schedule at 6% interest at which time I will need to get bank financing. But I have a feeling the seller may seriously consider extending the terms beyond 5 years considering I have been paying more than the note requires. Or I may decide to get bank financing anyway with lower interest after I have all the units upgraded and at market rent. Down payment came from cash on hand and cash out refi of a free and clear rental home.

How did you add value to the deal?

We are updating/upgrading all outdated units as the leases are turned over. Upon transfer of ownership we inherited 6 vacancies which we immediately updated or rented for market rate.

What was the outcome?

I am a long term buy and hold investor and rarely sell, even though I should with a few properties. This property will be no different and will continue to provide excellent cash flow for years to come, especially with the strong economic activity and construction projects in the area.

Lessons learned? Challenges?

It never hurts to ask. Even though I was dealing a Bank executive, and was not sure he would be interested in owner financing, he saw the value in it as well. The main challenge has been dealing with the state and other governing bodies in regards to the water well and sewer treatment plant.

Investment Info:

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

Purchase price: $1,500,000
Cash invested: $400,000

44 unit apartment complex built in late 70's and early 80's with (24) 1 bedroom and (20) 2 bedroom units purchased as a value add opportunity. Upon meeting the seller I was quoted a price per unit and at this point I knew the property could be a great deal thru my experience of owning several other apartment complexes nearby. The 2 bedroom units are very large and include 2 full baths. As a result of owner other 2/1 units nearby I knew rents were $200-$300 below market. Almost all the units needed updating with the exception a 4-5 units, and even those rents were under market. I began due diligence which had a few interesting issues to deal with as a result of a water well system and sewer treatment plant which services the property and requires a state licensed operator. I am currently trying to have the city provide water/sewer so I do not have to continue dealing with the state and the additional costs associated with operating the systems. This will be a major costs to get city water/sewer but could be a great capex investment and avoid the costly expense of operating the systems. After completing due diligence the seller, a bank executive, was willing to owner finance the deal. I could have received traditional bank financing but decided the terms offered were good even though a bank would have offered a lower interest rate. The owner financing is only for 5 years at which point I will refi with a bank, unless the seller decides to extend the terms. Owner financing was also the better route for both parties as a result of dealing with the state in transferring permits and operating rights on the water well and sewer system, which is a slow and arduous process. We began meeting with the seller during March 2020, the beginning of Covid, and were set to close the end of August 2020 but that was further delayed 5 months as a result of hurricane damage to the property. We did get new roofs on all the buildings through the seller's insurance. The property cash flow from day one, but bringing all rents to market and continuing with improvements this will be a great long term investment.

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

From experience I know the numbers for this type of property and could see the opportunity for immediate cash flow. Also, I already have full time maintenance and property managers on staff so scaling makes sense.

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

My bank informed me the seller, an executive at another bank, may be interested in selling the apartment complex after 20 years of ownership. The seller's wife was more interested in flipping homes than managing apartments. Both parties are long time established residents with solid reputations so negotiating was short and sweet. I knew exactly what the numbers could be, and the price/unit was great so I did not need to negotiate a lower price, although I did try to lower the down payment.

How did you finance this deal?

$400k with owner financing for 5 years on 20 year amortization schedule at 6% interest at which time I will need to get bank financing. But I have a feeling the seller may seriously consider extending the terms beyond 5 years considering I have been paying more than the note requires. Or I may decide to get bank financing anyway with lower interest after I have all the units upgraded and at market rent. Down payment came from cash on hand and cash out refi of a free and clear rental home.

How did you add value to the deal?

We are updating/upgrading all outdated units as the leases are turned over. Upon transfer of ownership we inherited 6 vacancies which we immediately updated or rented for market rate.

What was the outcome?

I am a long term buy and hold investor and rarely sell, even though I should with a few properties. This property will be no different and will continue to provide excellent cash flow for years to come, especially with the strong economic activity and construction projects in the area.

Lessons learned? Challenges?

It never hurts to ask. Even though I was dealing a Bank executive, and was not sure he would be interested in owner financing, he saw the value in it as well. The main challenge has been dealing with the state and other governing bodies in regards to the water well and sewer treatment plant.