@Drew Cheezum Re: Listing Criteria:
-- 8%+ cap rate and 10%+ on the pro forma cap rate.
-- Distance from my home (the apartments I bought are within 10 minutes of home)
-- I actually appreciated higher maintenance expenses because high NOI decreases NOI and lower NOI equals lower sales point. Since I do 95% of the maintenance, I'm paying myself (a dollar saved is a dollar made) additional income. Not surprisingly, this led me to class C properties.
-- For this buy, I wanted 90%+ occupancy rates. This won't be as big a factor next time.
-- Price point: I wanted to put x dollars to work for me without having my efforts spread out among multiple property locations around town.
-- Upside: The building I purchased has a 7,000 sqft basement with several partially built out units and a laundry room. I plan to complete those units at a fraction of what new or purchased units would cost me. At that point, I will refinance the property to pull that additional equity out of it.
@Joe S. Depending on the criteria you're using, I suppose so. I've also invested in my 401k for a couple decades, bought/sold cars for profit, etc.
@Bill B.: After reading your post last night, I pulled over to the side of the road to consider it. In hindsight, I believe you're absolutely right. That stinks... Won't make that mistake a second time.
@Jillian Dior: I'm unsure I'm qualified to offer that kind of advice. Investment decisions are based on an individual's criteria. The perfect investment for me may be a horrible investment for my neighbor or you -- risk tolerance, expected IRR, control, diversification, etc all vary by individual preferences. To avoid dodging your question entirely, though, $50k is plenty of down payment for a home(s) or small multi-family (depending on where you're buying. Don't forget to leave yourself some working capital. I just finished the How to Invest in Real Estate book and enjoyed it tremendously. If you haven't read it already, you should consider doing so.
@Lesley Resnick: $45.6k / door is on the lower end of the spectrum for the OKC area, but not crazy low. The building had some deferred maintenance, many older HVAC units, etc, but also had 96% occupancy rates for the last couple years. As people move out, I'm raising the rents 15% - 20%. For the units with remodels, I'm going a bit higher than that. Unit rents are $525 - $800. The neighborhood is lower income working class, but not a 'high' crime rate. I've provided the tenants with several months of notice that rents will be going up with their upcoming lease renewals. 23 units * $75 average increase * 12 months * 90% occupancy = $18,630 / year additional NOI.
Have a great day!
Michael
