All Forum Posts by: Michael Tempel

I unfortunately agree that the market is overheated right now. At the same time deals do exist, personally I am tired of sellers not even willing to share rent rolls or financials "due to the market". Yes, it is hot, but that doesn't mean anyone should buy without digging into info. Another scary thought is our 401k, IRAs and really other investment funds with RE as a focus are being managed poorly with upside down assets purchased to move cash by the managers that like to buy pretty buildings at a premium with OPM. I don't want to see a crash, but my money is ready and waiting.

I agree from a simple point of view based on cap rates....the A makes the most sense.  If you can buy a run down property in a good area and turn it into a B+, it is amazing how much value you can create that isn't usually possible with a class A.  

All of our properties with the exception of one are class C's that are renovated.  If curious you can see some examples at www.NexusApartmentLiving.com - basically very reasonable prices were paid for the properties usually 20,000 a unit less than other similar properties (that is really where you make your money) and on average we did about 10,000 or less per unit in renovations adding new flooring, granite countertops, new cabinets, stainless steel appliances and of course other common area upgrades based on the property.  It takes time and effort, but is amazing how much the value and monthly increases after the renovations are completed. 

Quick example...if you pay a total of 50,000 a unit for a class C and have better finishes (after renovation) in a good area than an A class property bought for 110,000, imagine how much more that class A has to produce in rent and how much more rent the class C can now charge with better finishes without owing and extra 60,000 per unit in debt.

I found some info on Linked in.  That is about right.  They basically make you think you are getting a large investment and somehow con you out of 450,000.00.  First off the website is in English and the calls come in from California using a magic jack line (very cheap phone service you can plug into the wall...mobile and not very traceable).   I will admit I was fooled for about 1 e-mail and they did really call etc.   I just research the heck out of anyone that I work with if possible....even if they were legitimate, I don't want to accidently help a terrorist etc. move money around.

Here is the website if curious:

www.cristalnaturalminerals.com

I have e-mails and calls from an individual that claims to own a mineral operation in Croatia. Anyone run into the same thing? Really cannot figure out the scam.

The best way to achieve economies of scale by maximizing unit numbers in the same property. I agree with all of the above, however if I had 1 million to investment I would focus on a 50 plus unit property and leverage the debt. One thing that wasn't mentioned is that it can be a pain in the butt to close on 40 duplexes vs. 1 building. I often see portfolios sell at a discount for this reason. Not to mention the acquisition process. To me less with more is better then more worth less (individual units vs. larger Multifamily).

We have been in business since 2007 and have a successful business that luckily has had a great track record.  This has attracted investor interest, but at the same time opens up potential liability and of course the task of property setting up investment structures that I iron clad and good for all parties involved.

We recently have been contacted by multiple interest from foreign countries.  Does anyone have good advice on how to proceed?  I want to make sure the sources are valid of course, but also not connected to anything that could negatively are company image as well.

Also, I have a few groups I work with that have put valid syndications together (about 25 million under management), but am looking for an individual that can help do the same for our company directly vs. an outside group we offer our services to.

If anyone can offer help in either area I thank you in advance.   We currently have about 15 million combined investment offers from multiple investors that reached out to us directly that we simply don't know how to proceed with.

First off....I am taking a short break from the Minneapolis, MN market. Outside investors are paying beyond a premium and I am seeing long term hold investors sell like crazy. I am not talking about single family portfolios, but 100-2000 unit portfolios.

That does not even consider development! My favorite is "222 Hennepin Apartments" they created an amazing space (great job, love the leadership in that company), but quickly realized they needed to move on. The numbers are extremely tight in new construction, especially downtown Minneapolis. It is obvious they wanted to exit quickly at a premium and I believe it is a superior product that should sell at an extremely high rate.

My point is....there are tons of funds that have excess capital and nothing to do with it. THEY SIMPLY WANT PROJECTS....THE COOLER THE BETTER.....but....THEY DONT MAKE GREAT RETURNS.

I like to make 15 to 30% returns....these Chicago, NY and other fund mangers are happy to make 8% on your money. God Bless them. I cannot wait to buy back these properties, it is obvious that they are taking the easy route now, but will be in a heap pile of crap when they realize they don't understand what they bought at a premium.

I use GPS Logbook.  You can find it on Amazon.com.  Basically you just plug it in your car cigarette lighter (or whatever they are called now) and it will track everything and include a detailed map.  I have one in each car and just have to sync it every 15 days or so online.

We normally redo the kitchens, flooring and lighting so it makes a lot of the regular items less important.  

Think of major items that will cost the most money.

Tile in the bathrooms, windows (overall), appliances, doors (sometimes they are not hung or in bad condition), bathtubs (do they need replacement or major repairs), plumbing (overall), air conditioners (do they work or are they outdated)......

We also rate each unit 1-10 based on all factors and list tenant issues if during due diligence so we know if we should consider non-renewing or addressing at the time of acquisition.  We normally do a unit by unit inspection 30 days or earlier before closing.

This sounds like it could be an underground leak.  I had the unfortunate issue myself where the main line was leaking after the meter (if it leaks prior to the meter the city takes the loss).   Use a leak detection service and unfortunately be ready to have a new main line installed on your side of the property (this is at least the case in the city I had it happen). 

Never a fun experience.   Another tell tail sign is if you see a lot of sediment coming from any of the faucets.  Usually a sign the line has a bad leak.