All Forum Posts by: Rick Petersen

 Thank you!  That makes a lot of sense!

 Steven (my nephew's name is Stephen Wilson, so I noticed your posts elsewhere), I would be glad to chat.  Doing a quick glance at the class definitions, my gut is that of 11 properties, at least 10 of them would be class C, potentially one would get to the Class B level.  They are in the Fort Wayne, IN area but most are in the more rural surrounding areas to the north.  

I'll send you a direct message just to discuss a bit further if you don't mind; work will take me often to Columbus this year and last time there I fell in love with the German area, so I'd be glad to talk a bit about what that market looks like as well!

 That makes a ton of sense!  I think that makes perfect sense and I should have thought of that.  I did not expect that this would be the sort of thing I would actually move on this early in my process, but I wanted to share a bit about the opportunity to find exactly that type of information.  I thought about it last night and came up with a few other concerns that did not hit me right at first:

* The properties are spread over a 7 or 8 town area, so finding a single management company that would want to span that much area would probably be a struggle

* Just trying to be brutally honest with myself; if the cash needed was ~$450k up front (most of which I would need someone else to provide), I was planning to use a property manager... what exactly am I bringing to the table?  I need to start smaller and a bit more within my means until I have at least some experience.

I really need to look more into what constitutes Class A/B/C as that wasn't even part of my criteria.

Okay, first of all, went through the free recorded session provided when you sign up, and it said you needed a plan to start with.  Before I share what I'm looking at property-wise, I thought I would share my plan... I'm so new, I'm still working on figuring out if properties and strategies fit my plan.

I want to not have to work high-income roles just to meet my family's spending expectations (working on fixing the expenses side of the equation too...)

   Because...

   I want more time with my family

   I want to be able to do leisure activities

   I want to not be so stressed all the time

I want to be wealthy

   Because...

   I want to be able to set up <special needs child> to be cared for well in the long term

   I want to travel

   I want to live where I want when I want

   I want to set my kids up, teach them and teach them to teach their kids

I hope to do this by setting up cash-flowing properties in the MidWest (Ohio, Michigan, Indiana, Kentucky, Missouri and Tennessee primarily). I am interested in either the BRRRR or just standard SF/MF rental strategies, understanding MF will cash flow better.

With that back-drop, I find an opportunity but it is a _big_ purchase and would be my very first. It includes many MF properties in a bundle. It looks to me, using the tax, insurance and current rent amounts provided, with 5% each cap expense savings, repair and vacancy planned in and 10% to a management company, that it would cashflow immediately. Small amount per unit, but at 40+ units, the cash flow would be around $2.7k/month. CoC looks to be low, 4.84% (predicted to hit 10.85% by year 10) and cap rate at 5.90%.

Now, I know the cash flow is super-low per unit, but if it's rare to find something that cash flows immediately, if it's diversified across a good number of properties and if we could be in for inflation and potential rent rate increases, does this sound like a good deal?  Would this be something that would be a good deal for someone with a lot of experience/big portfolio, or do the numbers on this just scream that it's an over-all bad deal?

Finally, if it sounds like an good deal (BP says the first one doesn't have to be a home run, you just gotta get on base), and know that I am local to all the properties so there's that at least, then... I'd love help working through what all would be needed in order to secure financing (not sure if that cash flow is enough to make it so that an investor would be 100% willing to dive in).  What would next steps be?  

 Thank you for the response!  Of note though, I believe the 196k was property-wide, so around $1100/mo for each unit which would map to the area pretty well.  That said, you answered my main question which was really just is it common to see a property bought and sold with such a drastic price increase in such a short time... I'd like to find out where I can get 250% on my money in less than 12 months for sure! :)

I am taking to heart the guidance I've heard many times to go analyze many deals (100 or even more) within your market both to figure out how to analyze deals but also in order to get a feel for the market.  I have done several lower end property analyses (think around $80k, 2bd, 1ba, lower-income area) and then I flipped the flag to multi-family, and I found a 15-unit opportunity.  There is something really odd to me about this one and I wonder if someone here can help me figure out what may be going on, or tell me if it's just someone hoping to sell high as interest rates are starting to climb.

15 units, total annual rent $196k (looks like about $1100/unit/mo), $6k annual expense in HOA and trash, tenants pay utilities.

Bought in September of 2021 for $1,300,000.

Selling now for $2,950,000.

There is a note that all units were updated in 2021, but I'm finding it hard to believe the value of the property has been 2.5x'd and also unlikely that $110k was invested into each unit in the last 10 months.  

In case anyone here happens to own said property, please don't take this as disparaging.  I am simply hoping someone can say something like "Oh, it's obvious, they have done XYZ and this is a good investment for someone in ABC situation."  All the scenarios I've run, this property shows a negative cash on cash return and, unless I really believe the property is now worth almost $3mill and will continue to appreciate at a decent rate, I cannot see how this asking price maps to reality at all.

Thank you so much in advance for teaching me!