All Forum Posts by: Mike B.

@Todd Dexheimer

Patience will be my biggest test . I’m trying to soak in and learn what I can now so I hit the road running when this cycle comes back

@Greg Dickerson

Very true . Wise words to follow

@Greg Dickerson

Good point . I have considered reinvesting in my business and myself but I want to lower my taxes and be able to produce income while not working or minimal work ( maybe 20-25 hours a week ) . By no stretch will I force a deal and over leverage myself when it’s not a good deal .

All good points  , I will need to take those into effect. 

I figured the Subject line would catch  your attention lol so lets get to it 

26 Year old , Passive investor with a few retail commercial buildings ( $700K average price tag )  all rented out  and a couple business i run , all owned by me . 

What is my goal - Build Wealth but more importantly build an array of cash flowing properties that are recession proof . honestly , i want to reach a point where I can cash flow $100,000 Monthly from my properties by 45 , i know that may come off as unattainable or unrealistic but it is doable for sure  . I've taken into consideration 3-5 years for a recession or dip . And i would invest business income  and cash flowing properties back into the next one to try to achieve that goal quicker 

Resources - I have decent income yearly from personal businesses but i want to supplement it . 

Education - Ive remodeled some retail buildings and rented them out but nothing fancy like a 30-60  unit apartment complex or bigger . The resources i have , the team is what i would like to solidify 

What team members i need - Professional real estate Tax accountant , that knows how to reduce taxes to $ 0 little by little . ( tom wheelwright ) Mortgage brokers who can get loans for me at decent rates with good amortization . I have decent credit and i would put the loan in my name , i qualify . I could use another solid lawyer who knows the ins and outs . solid Plumber , Electrician and Engineer that are quick , reasonably priced , and do thorough  work . Of course , a few commercial brokers , property managers or mortgage brokers  who can find me the deals . Thats important . I don't want to do syndication , im trying to steer away from that unless thats the only option i have . 

This is the Preferred Property im looking for or similar  . And please comment or suggest i'm an idiot if you like or recommend something i may be missing . Either or works 

Well just use this as a simple example 

24 Unit apartment Complex ( B-  or C +  type  property 

Purchase Price - 1,920,000 ( $80k Per Unit ) may be low in this market 

Down payment - 25% = $480,000 

Rehab - $ 6,500 per Unit ( some units  more than others ) = $ 156,000

Common Rehab - Water Heater , laundry room if it has one , Paint of building , landscaping , windows , parking lot  , roof ( 10k - 70k ) This ranges a lot depending on the property 

Closing cost - 20-30k 

tax - 7,000 / year 

insurance - 12,000 ( wind n hail , general , fire  ) / per year 

Property Management ( 10 % ) = 2,160 / per month 

vacancy - 10 % = $ 2,160 per month 

Cap X ( fridge , window , curtains , doors , paint , roof , pavement ) - 1,080 / per month 

Landscaping - $ 800 per month 

simple repairs - $ 500 -900 per month 

common area electric - $ 300 per month 

Mortgage $ 7,500 ( 30 year amortization  , 4.75 % rate  ) 

Income - $900 per unit = $21,600 , this varies based on area . 

Total expense = roughly $ 16,000 

Profit - $ 5,550  X 12 = $68,000

ROI = Roughly 9-11 %

A lot of fat to trim here . on top of that , a refinance in 18-36 months down the line 

Thoughts , ideas ? help ? 

im ready to do deals like this . 

@Evan Polaski

Ahh , sorry , I understand now . Good question , yes , I would choose the first , and work on another project . But My goal is to buy and hold , refinance if the market appreciates the value and basically do the same as the first option without having to sell years . I would like to purchase a 1-2 properties every year if possible depending on market , hold and refinance down the line . I work so my other Income can help purchase my properties to help speed the process .

Your absolutely right , time should be measured in calculating ROI , if the difference between letting someone do the work ( syndication ) and me doing the work is a difference of 5-7 % then i should do the syndicator so i can focus on my business but i feel with the right deal and enough experience , i can make out better than a 8-14 % return that syndicators offer .

Yea , I agree . From what i read , most off market deals come from either property management groups , multi family commercial brokers and mortgage brokers . The issue is , being small and newer to the process make its harder . it may help or worsen that I have my goal set on a 24 -36 unit ( Preferably 60k-100k per unit ) . Maybe a B- C+ type property , $1,900,000 price point for 24 units , 25% down with $ 480,000 . $ 6,500 per unit rehab which could be a bit much since i don't expect all units to need that much and some will need more i'm sure . Closing cost of around $ 25k-40k along with inspections ( mechanical , plumbing , electrical , structural . Insurance around 12,000 a year give or take and taxes around 7,000 . Again , these are just rough numbers but from my investments , if i had to analyze and estimate , these would be the numbers . Property management at $ 2,160 , Cap X at $ 1,000 , landscaping at $600 , vacancy at 10 % for $ 2,160 . Simple repairs at $ 500 , Insurance at $500 and Insurance at $1,000 and a mortgage of $ 7,500 . 25 % down with 4.75 Interest rate on 30 amortz . With these numbers , you can have a solid ROI of 11 % with $ 675,000 all in of course a decent IRR . But these numbers have some fat that can be trimmed , but i try to be conservative . Income based on 24 units with 2bd 1 bth at $ 900 per unit , which will vary on neighborhood and units but i will use lower figures . Now these are cosmetic changes , if the complex needs roof replacement ( $ 30k ) and building needs paint ( $ 10k ) , asphalt is cracking ( $ 7k ) new hot water ( $ 5k ) , then that ROI % return will be shot . This would be my ideal scenario that id like to invest in because i know in reality , the property with better Property management will yield better , less vacancy , less repairs and just overall better care which will yield a higher ROI of 15%-20% especially with a refinance 18-36 months down the line .

Thats a little more manageable , any recommendations on syndications from your past experience or peers that have tried syndicators and have a good COC yield and lets you depreciate , money doesn't get tied up too long and if i'm able to learn from it , thats even better . Of course , my goal is to still find a nice size complex, make a decent ROI annually with the option to refinance after 24-36 months after , hold that asset and try it again . For me , i dont necessarily have to wait 2-3 years to pull out cash to buy another property , I can manage purchasing 1-2 per year if the right deal comes and with the right management team which is very important of course .

@Keeley Hubbard i don’t mind hearing more . It’s intriguing enough to want to educate myself further .