All Forum Posts by: David P.

James, it's like going to Vegas... doing a deal like this takes guts, but as they say "no guts, no glory!" Sometimes you have to go with your gut instinct, and if doing this deal makes you nervous then don't do it; it's probably a good indication that something is wrong. On the other hand, my wife and I purchased two properties in Arizona sight unseen, and we live in Colorado. Yes it was difficult getting through the process, and we trusted our real estate agent to send current photos of the property, but we were still gambling. It turned out for both properties and they are producing great cash flow.

If you can see the outside; peak in the windows and have some assurance that it has good bones then maybe it's not too bad of a deal. On the other hand if they are not allowing you in to the property it could be an indication that something major is wrong and they are hiding it from you. An investment firm wanting to get rid of a property??? I would keep asking for permission to access the property, if they are truly the owners of the property. I never take "NO" as the final answer; if you keep asking different people you eventually will get the answer you want to hear. If the answer is still No, then insist on them to provide current photos of the property so an honest evaluation can be completed.

I am no no means an expert on wholesaling, but no matter what deal I do I trust my gut! Last piece of advice; have different exit strategies for this property prior to making the final deal.

- good luck!

@Carole G. I am not having much success in finding apartment buildings that cashflow 20%+. At this time I am trying to be creative to make the numbers work along with figuring out the financing. My goal this week is to talk to some lenders that will look at my current portfolio and lend against it. As @Darrin Carey said lenders don't want the 2nd position and with their requirement of 30% equity it leaves little for leverage and with the higher interest rate leaves less for cashflow also. So I think at this time I have to stay with the smaller properties unless someone has better ideas. I want to keep my money moving and want to add at least one door to my portofolio this year!

Dave

Matthew, like @Brad T. says, it maybe a good deal. In some markets the housing supply is becoming tighter as it is here in the Denver metro area. While that is not the main reason to purchase the property you maybe able to increase the rents making it cash flow better. Sometimes with low vacancy rates rents tend to be under market value, so you are able to increase the rents as you have turn over or with your month-2-month tenants. Additionally, you maybe able to reduce expenses which will also increase your cash flow. The important thing is to value the property as it stands today not only based upon CAP, but also CoC and the market value.

I have a duplex that when I purchased it about 7 years ago, and have gradually raised the rents from $900 to $1150 and market is $1250. I have recently refinanced the property to also help the cash flow property by reducing the interest rate by almost 2%. My vacancy remains low because I am able to keep the rents under market and I offer discounts for well qualified renters if they sign longer term leases.

You need to know what is acceptable for you; this should be part of your business plan and exit strategies. Even though you expect to hold long term; when the time is right you may want to cash out (1031) and move to purchasing more properties or even get out altogether.

Good luck with the deal and let me know if you pass on this opportunity; I maybe interested;-) Remember successful people refuse to fail!

Thank you @Brandon Turner - This is great advice about managing people. While not the best at it, we have had some success with managing properties in another state, but that is due to having a good PM in place. We did an extensive search, and interview for our current PM. It has taken well over a year to become comfortable and confident with them, however it still requires guidance.

We just enlisted a commercial Realtor to help assist us in the process. They are doing some of the leg work with local banks to help find this type of financing. It was a referral from our residential Realtor so we trust that we are not going into it blindly and having good people who are smarter than us!

Thank you again for the feedback.

I have been an active investor in single family/duplex across two states for 7 years now and want to move into larger multi-unit 10+ apartment buildings. I have been reading many forum postings and listening to Podcast here on BP and have found a lot of great information but still have not found all the answers.

1. I am looking for advice/pit-falls of owning larger units - advice. This would be hands-off management as I would hire a property management company and most likely be living in another state.

2. With my current properties, I want to leverage this equity for a 10+ unit. I don't wish to re-finance due to the extremely low rates. The properties cash-flow nicely, but willing to look at 2nds/HELOC on these properties if possible. What type of commercial financing would be good to utilize this equity/cash flow from these properties?

3. Looking for mentors that deal with larger properties that I can bounce ideas off. As many post suggest offering something to mentors as well: I am currently in the IT industry and can offer advice; but is open for discussion.

Thank you in advance for your time and knowledge!

@Darren Sager has good advice in linked post, however not all properties get listed on the MLS so getting a Realtor to get run rent comps will minimal results.

I personally like to use several sources to determine rents for a specific area like Craigslist, Zillow and MLS. I would assume that RentoMeter obtains it's information like Zillow from sources such as MLS but lacks one important understanding; the area where and the condition of the property. The process of determining the fair market value of rent for a specific property is much like an appraiser doing their due diligence and viewing the property with an objective eye.

Remember, you want to make the rental property cash flow, but the renter may shy away from it due to financial constraints. I like to go a little higher in this market to reduce some of the less desirable candidates.

Thank you @Matt Devincenzo I have a call into them today.

I am purchasing properties in multiple states, and I currently have 2 in AZ, 2 in CO, and am covered with Liberty Mutual but I have reached their limit on writing up to 4 policies on rental properties. I have all of my personal insurance (car, home, umbrella) policies with them also. I will be purchasing in other states as well and would like advice on how to have them insured as I either have to find a new company for new properties or have to move them to receive multiple discounts.

Any and all advice is greatly appreciated!

I may try peer to peer lending; I don't want to stop the momentum! Thank you @Dawn A. for doing the "BP Podcast 029: Using Peer-to-Peer Lending to Finance Deals, Cash Flow, and Fix and Hold Investing" this was very interesting.

Thank you everyone who has responded. @Dawn A. can you please send me this also?