All Forum Posts by: Ryan P.

Hi All, 

My current property manager is completely ripping me off - they are overcharging for most things. They also are simply not performing. For example, I have a tenant on a month to month who has not paid rent since February and their lease has not been terminated, despite multiple proddings from me. I am charged outlandish amounts by the PM's in house contracting company for repairs and unit turn overs. I am losing money hand over fist. I don't have time to babysit PMs, I own quite a few properties nationwide, but these Cleveland ones have always lost money. It is because of the PM.

Is anyone here a good PM for the West Side? Does anyone know a good PM? I have one unit on W98th, one in old Brooklyn and one near Metrohealth.

Please help!

It seems like everyone suggests experienced syndicators. 

So what, do I just, like "google" them? Any good recommendations? How do I vet them?

Yes.

@Cody L. and @Frank Wolter I see both of your points. The market does seem to be high. For both equities and real estate.

That is my concern, and why I asked the question. So right now, for a leveraged deal, I am seeing rates no lower than the high fives for something like a Fannie Mae multifamily loan. Assuming 25% down at a 5.75% interest (which seems extremely optimistic), and a 30 year mortgage (and I am not even sure you can get a straight 30 year - you all tell me) you'd need a true cap rate of something like 5.25% just to break even every month, and 8.25% to get a COC return of 12%. And from what I can tell the residential places you can get with TRUE 8+ caps here in Florida (once you factor in the deferred maintenance) on the market are riskier than Venezuelan government bonds. So you're paying a risk premium there. Maybe I am wrong. I am risk tolerant, but like all of us, I am seeking "alpha". While I don't mind higher risk if there are higher rewards, I don't want to just buy lottery tickets either.

Nick this is a fantastic idea. I already thought about doing this in the keys - there are a bunch of tax deed sales that happen in the keys, and I am sure I could sell the stuff for ROGO points. Something worth looking into, but it does require some work on my part, just like tax lien certificates. That would have to come with a pretty high reward to be work my time.

Ian - Can you let me know what you mean by "core versus core plus versus value-added versus opportunistic"? Is there a book or something that explains the risks, rewards, and so on? 

Alina - I am not disagreeing, but why is it a bad idea to say how much money I want to invest? I would rent my house but it won't cashflow as it is on a 15 year mortgage in a high end Miami neighborhood with low cap rates, but I don't want to refi it, because it is  on a 3.25% mortgage, plus there is a lot of deferred maintenance. Needs a new roof. I just want to get rid of it to a retail buyer and take out what I have in it and put it in a better investment. I am already overweight in high end real estate that I have myself. Plus I have lived in the Miami house for more than 2 of the last 5, so there needn't be a 1031. The money is MINE ALL MINE. 

Brett- Regarding notes - I am not sure I want to do that, what sort of returns can I get? I see hard money people advertising 10% - and I expect even the equities to do that over the next 10-18 months before a plateau or correction. I'd rather keep it relatively liquid unless the returns are better than that. 

Dave - When I said I was getting into real estate I meant as an investment. The real estate I own now is all for my personal use and any money I make is incidental. I don't need the cashflow, everything will be reinvested. The syndication idea seems like a good one. If you all have ideas of syndications, let me know!

Syndications sound good. I did not mean to limit myself to 10 year+ holds, I only brought that up to suggest that I do not need a cash-out strategy right away. I can afford to long term hold. I follow Warren Buffet's stock advice - the best time to sell is never. So I have no problem with long term holds. I am also a lawyer so secured notes don't scare me either as long as they are local, because I can foreclose on my own liens and I'll end up making more money in attorney fees than my original payout. I tried the whole tax certificate thing, but it takes too much due diligence (which I can do, but my time is money and it is better spent elsewhere). 

The deal is I have a big stock portfolio, and I have a lot of personal real estate. Too much personal, actually. I have land out west that I am going to develop into a summer home, I have a house in the Florida Keys that I built as an owner builder in cash over a period of two years, as well as a house in Miami. I am also closing on a condo in Brickell, Miami this month, so I want to sell my house in Miami over the next few months, and when I do I will have a quarter mil to invest in some real estate. I've always wanted to dip my toe into real estate, but until now it has just been easier to put my savings into a mix of stocks (I am overweight stocks because I don't mind risk as I have the capacity to generate high income), a few bonds, and an REIT ETF. I want to further diversify, and I'd hope that I can beat the historical returns of the stock market using leverage, and get tax savings from depreciation, and so forth.

Anyway, where do I find syndications? I do not really want to deal with crowdfunding and all of that. 

And what location would be best? I'd like to stay in the United States.

Also, I qualify as an accredited investor.

...and you wanted a true passive investment that would at least have some cashflow, for a long term (10 year plus) investment, what would you do? What type of investment, and where? And what would be the best way for me to find a deal there?

The key here is PASSIVE.  I do not have time to be a landlord. I am an investor, and I have  too much money in stocks (and some REITs) right now. I like the idea of the tax benefits of actually owning income producing real estate )as opposed to REITs), but if I have to screen tenants and answer calls about leaky toilets it does not make sense to me. 

Everyone indicates that it depends on what my goals are as to what my strategy will be. So here are my goals. I want to get cashflow, and I then want to reinvest it into more cashflow, and just keep reinvesting my gains. I'll be working for at least another 10-15 years whether it is as a shark in Miami or in a laid back real estate transaction firm in the Keys to feed my family, so I don't need the income until then. Everything I make will be re-invested. While I am a busy man, I am a hands on. I don't know if I could just sit there and take back notes on flips, or buy tax certificates.  I've read several posts here, and I like the idea of buying distressed income producing properties, rehabbing them, renting and holding them for a while, and then once they have appreciated a bit, selling them and using the gains for a down payment on a more valuable property, until I own several professionally managed apartment complexes. The more doors the better. I've taken risks with my career (left a stable defense job for a risky plaintiff's position) and I am young so I am very risk tolerant. 

As such after researching I think that I've decided I want to start out doing buying a distressed 20% discounted quad or three over the next year for $100-150k with 20% down, fixing them up, and renting them out.  I live in North Miami, I have a sister in Tampa, my dad is about to retire to Orlando this winter, and great friends (who are real estate professionals - an agent and a mortgage broker) in Jacksonville, so those areas are my focus.

My plan is to get quad properties that can, as has been suggested, realistically net $200/door after all operating expenses (including property management, maintenance, repairs, insurance, tax, and every other expense) and debt service with $20-30k down. Four unit, working class (but not war zone) neighborhoods with moderate cap rates. Is this feasible in these markets?

Furthermore, where do I start to look for deals? LoopNet? Craigslist? MLS? All of the above? I've been reading about how to evaluate, diligence, etc. Any good resources or books that will further educate me on evaluating properties and doing diligence to see if the claimed cap rate is accurate and that I'm not missing some hidden expense?

Thanks for the warning. I'll be careful out there.