All Forum Posts by: Paul B.

 Funny, I tend to get colleague requests from random people who have no question at all. Why do they want to be my colleague? Is there something to be gained by having a lot of colleagues? I know there are people on Facebook and LinkedIn who try to connect with every Tom, Dick, and Harry, but I don't know what the benefit is on this site.

@Nagesh Pulipati

I don't know much about Newmark but I recently attended a multi-family conference in the area and they were one of the speakers on a broker's panel, which indicates they are also a player in the area.

Is there any truth to the idea that having significant equity in a rental property increases your risk for lawsuits? In other words, all other things being equal, does being highly leveraged give you any additional asset protection? 

I can imagine that a plaintiff's attorney will take a look at what you own before decided to proceed with a case, but is there any value to the tactic of showing large debt (on the assumption that mortgages would be public record)? 

I was also going to say Marcus and Millichap. Another one that does a lot of business in the DFW area is Greysteel.

Actually, I believe it is possible to look up what liens (e.g. mortgages) are on a property. The ease of doing so and the information available probably varies by state. 

Having said that, I wonder myself whether you are more of a lawsuit target if you own a property free and clear? Does anyone have first-hand knowledge? Are there lawsuit trolls who look for free and clear property, then find an excuse to sue? Maybe professional tenants who seek out landlords that have a lot of equity? Any horror stories?

A common practice when adding value to a multi-family is to only add some of the value that is possible. Maybe rehab a few units, raising the rent on those (thus increasing the value of the property), then selling to another investor who can do more rehab and also force more appreciation. The term I often hear is "leaving meat on the bone" for the next buyer. 

And, as a few have mentioned, not everyone wants to turn around a property. It can be challenging, and it's risky. Some want to buy a stable, performing property that will provide reliable cash flow, even if the ROI is lower.

Since all real estate is local, the average home price and the average rent growth nationwide doesn't tell you much. What matters is the numbers in the specific market where you are looking to buy. Along the same lines, the national unemployment rate is not very useful either when deciding to buy. The job market where you are looking to buy is way more important. If the unemployment rate is 2% where you are, and companies are continuing to hire, and the jobs are not solely based on one volatile industry (e.g. oil), I don't think it matters that the unemployment rate is 8% 1000 miles away. Of course, if you think the jobs are coming back in that 8% area, then you'll probably do better buying there than in the area with 2% unemployment. But I don't think it's necessarily risky to buy when times are good, as long as you have a cushion.

If I buy a class C apartment complex that makes good cash flow at 90% occupancy, OK cash flow at 75%, and can still cover the debt service at 50% occupancy, I don't think I am buying trouble, as long as I believe a downturn will only be temporary. 

For personal residence you'll want to be near your job. The traffic in Dallas is nowhere near as bad as So Cal, but it's pretty bad in Austin, and even in Dallas it seems to be getting worse by the week with all the people moving here.

For multi-family, Class B and C is a better investment opportunity than Class A (all the new construction, and perhaps the type of place you might want to live). The towns between Dallas and Fort Worth are one area to look - Arlington, Hurst, etc.

You can't time the market, but you could spend a small portion of your capital now and buy one property. Then when that one is stabilized and performing well, buy another, and repeat. If the crash happens in one year, hopefully your first property is in a position to get through it. If not, then at least you didn't lose all your capital. 

The method I am talking about is similar to dollar cost averaging when investing in the stock market.

You're better off networking with people in your area who are doing multi-family investing. Relationships are very important in the multi-family world.