All Forum Posts by: Mark Neiger

@Bryan Hancock I like apartments because I already have experience with my SFRs. I've learned a lot about managing and know how the system works at that level. I'd like to take my experience and scale it up into larger rental properties. I know nothing about retail, warehouse or storage. 

I do need a good place for my capital. I would love to learn more about developing but it seems a very daunting task. I know there is a lot of development going on here in Florida in all aspects of commercial but it seems like the big boys club to me.

I checked out your website. What type of developing do you focus on?

Also, @Joel Owens, developing sounds both awesome and very scary at the same time. How did your friends get into that? Seems like it would be another two years of learning something new and I've already put so much into learning to buy existing MF. 

@Joel Owens, I always value your opinion. You give level headed advice. Interesting because you're also a broker. I think that's the advice I've been looking for; confirmation that I'm not crazy and being too conservative. Many responses on this thread felt like "meh, lower your expectations and go for it, the market is awesome and will support it". I am not going to lose my arse! I know you broker but it seems to me that I should just not use them as a resource. You obviously do mail campaigns and contact owners directly to get your listing and then pick the best for yourself. Any advice to me on how to best get started down that path. Resources you'd recommend?

@William Hochstedler, That has been where my thinking is going recently. I've never done a mail campaign or contacted owners directly but that might be my best bet. Anything that a broker sends to me is being looked at by thousands of other eyes. I know my focus market very well and just did a drive around last week to write down addresses I was interested in. Now I just have to figure out how to look up the info I need to contact people. Do you have any experience with that? Any advice?

 That's kinda what I was trying to get at with my original post. I feel like the brokers are trying to convince me to buy high because they make more money. What do they care if I buy poorly and lose my shirt down the road.

Again, just following what the market and others are doing sounds like gambling , not investing.

It's a sellers market for sure. 

Yes, I'll continue to work my other rentals. They have been performing beautifully.

Wayne I lived in Orlando for 15 years so I know it well. Been here in PSL for 3 years. While houses are cheaper there isn't much in the way of multi-family. I'm trying to get away from SFR. You also have to be careful because there is a fine line between nice PSL and horrible Fort Pierce.

More info. 8 unit building, current market rents, 3 empty units. Sold for $800,000 / $100,000 per unit. C class unit in an up and coming B neighborhood. Needs some light upgrades to the units and a face lift to the exterior. This is just one example I've looked at. Market CAP comparables are selling between 5 and 7. Rent has been increasing 10% per year, I know because I have rentals in this area already. Appreciation is also rising here.

My statement about the mortgage guys was to make the point that I don't want to get too lax and just bet the farm that rents and appreciation will continue to rise so quickly. We all know what happened last time.

I want to be able to make a decent return and put down 20-25% of my own money. With the prices others are paying I don't feel there would be enough meat on the bone for me and I want to be conservative and have a buffer if and when rates increase and the market stagnates. It just seems too risky. 

I don't think I'm the smart investor in the area. That's why I'm on here. I just wonder if the other investors are the dumb ones.

Yes, I know how to calculate it! I purchased a very well written spreadsheet that I use to analyze with and of course I know all the formulas for NOI, CAP, value, and how to figure ROI and IRR. My mentor made me analyze 200 properties before he would work further with me. That's not the issue.

Those general rule of thumb numbers are just that; general. Those come from coaching from Dave Lindahl and Chris Urso at Multi-Family Partners as well as others on here like Michael Blank and Joe Fairless. They are the ones who are setting my expectations where they are. 

I just don't want to join the herd and do what everyone else is doing because maybe they're all wrong and just following each other off the cliff. I want to be conservative and safe. Maybe I should stay on the sidelines for now. Maybe I will have to take more risk to get in the game. Maybe a different market. 

I've put so much time and effort into learning this niche and I will succeed. I will not give up. I just wanted some other opinions. Thank you to all of you for your responses and please keep them coming.

So I've been painstakingly analyzing multi-family properties for over a year now. It's obviously difficult in this hot market to find anything worth giving a second look. The few properties that have seemed promising to me have sold so quickly and at such ridiculous prices that I wonder if I should even be spending my time in MF right now. The last building that I was recently interested in sold at a 5 CAP at full asking price, 25% vacant and had multiple offers at that price. I've seen hundreds of properties sell in my market and none of them have been anywhere close to my underwriting criteria. Who's buying these places and what returns are they looking for? How and how long can they hold on to these places? When I asked the listing broker why I can't compete with others he told me that my expectations were too high. "Mark, rents have been increasing 10% per year for the past 5 years." OK. How long can that continue and when will interest rates start to go up? How do I deal with that kind of mentality? He makes me feel like an idiot.

He's obviously loving life right now because he's making a killing on his commissions. I had friends in the previous market run-up who were mortgage brokers that were making tons of money too and were cocky about it. They all ended up unemployed and broke when the bubble burst. 

Maybe the MFR market is just too heated right now for a newbie like me. (I currently own SFR) Maybe my focus market is the problem. (Orlando and Central Florida) Many on these forums/blogs/podcasts suggest investing in your own back yard and that's the area I know well but maybe I need to look into other areas.

I've also been guided by many on here that there are certain benchmarks I should aim for; CAP rate 8%, ROI of 12% and DCR of 1.6. The only properties I can find in my market with those kinds of numbers are D class in bad neighborhoods and I don't see any exit strategy.

I really want to expand my portfolio and have the capital to do so but I'm really having a hard time finding anything. Should I try my own marketing rather than brokers? Or should I change focus back to SFR or maybe just hold off on buying anything right now. It just burns me up to have money sitting in mutual funds going nowhere right now and I'm feeling pressure in my 40's to get my financial situation in a better place.

Anyone have any words of encouragement or caution?

Karl, I'm open to any market if it makes sense. I'm also open to partnering. The general consensus I receive though is that the market is very thin. My biggest obstacles are time and experience. 

I've been absorbing as much info as humanly possible for the past year about multi-family. I've been looking and analyzing properties for 6 months. I don't have any experience in MFR; just SFR. The MFR market is crazy out there right now and the more people I speak with who know what they're talking about the more it seems that now is just not the right time for a guy like me to be looking for value-add buildings. I'm thinking my new strategy should be to look for a good starter property that a previous investor has already turned around and buy it as a turn-key MFR. I wouldn't realize any forced appreciation myself but could park some of my own money into it and effeciently run it for a few years until I have gained some experience and the market cools down (or bursts). I would need something that was secure and could at least give me a nice ROI where I could essentially protect my capital and have a nice cash flow to continue to build more. At the same time I could begin to find investors who would now see my track record and lenders would be more open to work with me as well. Everything I have been studying has been the value-add model and using investors to secure capital. I've never seen anyone on here talk of turn-key and not using outside investors. All my analyzers and courses have been this model so I'm not sure how I would go about looking for properties with this new strategy. Now I wouldn't have a 5-10 year exit strategy to refi or sell to pay back said investors. What might this new exit look like? I have about $150,000 tied up in mutual funds that I'd like to put to better use and I'm about to unload a single-family which should put around $75,000 in my pocket. I work a full time job and overtime with my family so I don't have nearly enough time to devote to the value-add/investor model that I've been trying to work with. I see lots of adds for turn-key SFR all the time but prefer to focus on MFR for economies of scale and time compression. I'm assuming I'd look at GRM for du/tri/quads and still look at CAP for anything bigger but now these numbers would be in a much different range for a place that needs no work and has solid tenants and management. Does anyone know what these numbers might look like, where I might start to look and if it's even a viable option?