All Forum Posts by: Sean Dawson

Thank you all for your replies.  I get the fact that turnover would be lower in a better neighborhood.  That being said, I used 5% for vacancy (usually use 8% but went lower due to the facts you have all stated above) .  

The rest of the numbers came directly from the owners actuals.  Except for the higher taxes due to the sales price and the higher management fee due to not managing myself also I put in lawn care snow removal since that wasn't in the numbers I received.  

With those numbers adjusted the price I would have offered was much lower than the sellers list price.  Talking with the PM and broker the owner had rejected offers well over my maximum offer, and only 10-15k below list.  

The deal wasn't for me, but hope whomever purchased it does well.  

We had been in contact with a real estate agent in Cleveland, Ohio about a 20 unit.  Haven't heard back from him so I am assuming it is in contract at this point.  

Question I have though is the broker and property manager sent me a pm after I asked a few questions.  The agent answered my initial questions with good answers but I had some more including what the PM thought of the numbers stated by the seller and the numbers I had laid out.  

Deal was a 20 units of 1 br/ 1 bath on the borders of Lakewood.  Nice area and nice buildings.  Using the sellers numbers but adjusting them for higher taxes due to higher selling price,  insurance, PM, and lawn/ snow service I calculated that the buildings would not cash flow the $100 per door that we wanted.  

I asked for his opinion and he came back with: " Its hard to show the benefits on a strong neighborhood vs. a weak one on a spreadsheet. To often I see investors choose to buy properties in lessor neighborhoods because they look better on paper. Whatever you choose to do, don't be that guy."

Good advice but doing my research, reading and listening to podcasts here I keep coming back to @Brandon Turners advice " know what you want the deal to flow and stick with it. " (Or something like that!)

The building, neighborhood and rents were nice, but not what we needed.  So after all this, what is the benefit of a better property? Should you lower your per door "take" to make the deal, or perhaps the spreadsheet is not accurate?  

Thanks!

@Kyle Robinson why do they disagree?  

David Panzera of Panzera real estate is who we use.  Knowledgeable, and reachable.  

Join a local RIA group, then

my advice would be to listen to the podcast.

during the podcasts they always ask the "famous four"

Two of those questions are about books (real estate and buisness)

Read them and use the info in them and podcasts and anything else you find and make your first deal

May not be killer, but it's more than 90% of the people.  Move on after that.

Lol, yeah I thought the same thing!  By small multifamily though, are you meaning 4 and less?  I haven't been able to find and banks willing to do full term for commercial loans.  Highest I've gotten so far if 4.9% amortized out to 25 with a 7 year term.  That was for a 12 unit we purchased in the beginning of the year. 

If there is someone offering something better I would love to know.

@Joshua Dawson Are those loan numbers seeing fully amortized at 30 yrs?  How long are the terms you are seeing?  

This is a good meeting.  Lots of good free advice given out.  Always interesting to listen to others questions/problems/solutions.

i was thinking of a different "methy".  lol. guess problems are different in utah!

yeah, thats a tough questions sometimes. first property i bought i stopped the month to month lease so i could move in but kept the downstairs tenants. retrospect should have moved in downstairs and kept the upstairs. 

most recent purchase kept all the tenant until we were able to see whats what and started evictions on those that needed it. nothing for anything crazy just nonpayments. Our management company gave the tenants ample time to "get to know us" as it were. 

ymmv