All Forum Posts by: Ray Johnson

@Max McGuirk What is the best size for an Apartment complex purchase all depends on what your goals are, The size isn't the only metric of importance, you'll need to consider what category of Apartments you're going to invest in because each Apartment category will require different strategies and provide different types of revenue streams over the long-term.

In addition to size you'll need to consider things like the below Apartment categories to choose from:

• Student Housing – Off campus
• Senior Apartment community
• Class A, B, or C Market rate apartments
• Low Income Apartment community Class C-/D

In my opinion the best size is going to be an Institutional Grade Asset (IGA) containing 250 Units or more, Class B, or a Class C asset in a Class B area poised for repositioning the asset to a Class B product, and its a pure Market Rate Asset.

@Brad Warshaw If it's a good HOA that knows what they are doing, the first step they are going to do as the HOA is to place a Lien on the property, This will prevent the owner from selling the property without them getting paid all back dues, attorney fees, late fees, Interest, and any other cost associated with them getting the past due fees collected.

The next step is going to be for the HOA to foreclose on the property if they still don't get paid. If there's no mortgage on the property the HOA will get paid all monies due to the HOA as a part of the sale and the owner gets the remaining balance.

Basically the HOA will get paid one way or another, it's just a matter of how much more money the owner wants to give the HOA by delaying payments.

@Dominique Mickles @Alexander Felice I suggest doing what Alexander said, get the money into a bank account ASAP. The bank will ask what the source of the cash is and note it in the system, that's all there is and then when you purchase your property do the wire transfer. Like I and others have stated, no escrow company is going to take cash.

Best of luck with your investment.

@Dominique Mickles Regardless of the List price ($40k), if the agreed upon sale price is $20k, and you have $20k sitting at home in a Tupperware container, There is a regulatory requirement that says if the asset purchased is more than $10k and someone pays using actual cash bills on the asset and not some form of electronic payment leaving a paper trail, it must be reported to the Financial Crimes Enforcement Network (FinCen).

 This is the same regulatory requirement that triggers FinCen if you go to a car dealership to buy a car with a bag full of money, or if you deposit more than $10,000 cash in a bank account within a certain period of time, the reporting mechanism kicks-in. If you're buying a property, the Escrow company will have to report you for violating the FinCen, or they get in trouble if you are trying to pay with a bag full of actual bills and they don't report it, I don't know any escrow company that would accept the actual cash because it doesn't leave a paper trail on their end in case something goes wrong and they don't want to be complicit in money laundering. 

These regulations are in place to combat the laundering of money from criminal organization.

Like I said in my original post, there is no need to make it harder than it needs to be.  

@Dominique Mickles having it in your mattress will definitely not do you any good! Worse case scenario you should have your money sitting in a Savings account earning a least 2.35% (Which is what I currently get) until you're ready to use it on a purchase. Every day your money sits in your house it loses you money.

The bank underwriter will hold your deal up for 60 days from the deposit date until your money is seasoned for those 60 days. 

Additionally, If you're asked to provide a proof of funds, the best and fastest way is to get them an account statement printout with your name and other pertinent information on it.

I always tell new investors, the better prepared you are the easier things will be for you, there is no reason to make things harder than they need to be.

@Jeff Phillips I have Class A and Class B Assets, my minimum credit requirements are 680 worse case scenario, because of the price points and locations, all applicants are usually in the 700-800 range. For those that deal in the specialty Asset classes of Class C-, and Class D Assets, They aren't going to be able to set the bar that high, their tenants are most likely in the 500's and low 600's on the credit score.

Your Asset Class and location will determine what range of candidates you get applying.    

@Russell Brazil I forgot about the Montgomery County availability, that's definitely an option as well. If I recall their pitch talked about the available space to absorb the influx quickly. 

@Frank Boenzi While I have no crystal ball, I'm in major metropolitan markets that have had very aggressive run up over the last 8 years, I have individual properties that have gone up a minimum of $200K and more in the California properties, and nearly the same in the Washington, DC market, I'm anticipating some corrections in these markets at some point. I bought right so I'm not focused or thinking about the corrections, In fact I'm really hoping for market corrections so I can acquire more properties.

A friend asked me why does someone who invest in Real Estate want the market to tank so bad, I explained that I can grow and scale faster in a down market, especially in the major metropolitan markets where the up-and-down swings in prices are much bigger allotting for better long term growth. 

@Saj Johnson There are no plans to move forward with the third location now, They are only going with the Hub in Nashville, and the HQ office in Arlington, VA. If they're smart they'll just stick to the original plan of One expansion site and now that VA is selected go with the original plan and just expand the VA site plans.

I think Los Angeles would be a viable option since the Institutional REITS and foreign investors came in and overbuilt the office market, there may be an opportunity for them to get a good deal.   

I'm just wondering how many people have purchased or committed to purchasing real estate in the Long Island area speculating on great returns from the Amazon move.

@Steve Theobald I'm like @Account Closed This is on the buyers to be responsible.

You have to keep in mind most of the people that lost investment properties in the last downturn were risk takers and gamblers who lost that bet, Some blame the banks who gave them risky loans that they actually asked for, others had no idea what they were doing and shouldn't have been investing but did because it was the trendy thing to do.

We all see several post on BP every day with captions like "I have a deal under contract/or purchased, Is this a good deal?". If you're under contract and wondering whether it's a good deal or not, It's not a good deal, it may be an acceptable deal but definitely not a good deal. Then there's the common post of " I just closed on my first deal, an Owner Financed 20, 30, or 50 Unit Class C-/D Apartment deal, terms are 5 year Balloon, I'm going to rehab all of the units and raise rents before the 5 year term expires and refinance the property". People usually do overpaid Owner Financed deals because they don't have and can't get money, or the property won't qualify for financing, Not sure how they are going to fund those rehabbed units and raise rents within that window.

These are the people that are your competition bidding up the prices in the market. The upside is you will be able to purchase these properties at a cheaper price during a correction.