All Forum Posts by: Johnathan Norman

I've been investing for years in Texas and just did a multifamily deal through Holton Wise today. Although you could get into a deal with little money down the reality is that real estate is a capital intensive game. Repairs and random stuff will come up and if you don't have capital that can do more harm than good. 

Regardless of where you are make sure you have capital on hand. Yes you can do a 3% down deal but if you have that little to put down that raises quite a few alarms in my book.  You will make mistakes on your first deal, you will under estimate costs, keep that in mind before you purchase and good  luck.

I have a 6 unit multifamily property under contract and the owner is unable to provide me with existing lease agreements. I did manage to speak to some of the tenants and some have been there over 20 years.  The rents are all below market with plenty of opportunity to raise rates when they move. The plus side is that even if they stay my return is good given my existing purchase price. 

The question however is how do I handle things with the tenants? Should i simply have the property management company ask them to sign a new lease if/when i close? 

actually i think i found my first hurdle. The property only generates around 25k NOI a year if we assume a cap rate of 8% that is 300k, i suspect most banks will not want to touch a deal that is that small for commercial. I'll do some calling on Monday to see.

What about getting an appraisal for the property? 

So I am considering purchasing a small 6 unit apartment complex in Cleveland, OH all cash. The rents are below market and i feel with a little work the building could at minimum at market rates. Then after a year or so I'd like to cash out refinance the property to get capital for other investments later. 

My problem is i'm unsure how the banks will value the property. Cap rates in the area are all over the place (from 6% to 30%) so i'm unsure of what to use in my estimates. It is a class C property.  Any thoughts here? 

Also is there any potential for something preventing me from doing a cash out refinance later? assuming of course i'm able to keep the rents stable. 

My broker sent me a really good deal that includes a few houses, a quadplex and 1 office building. The numbers look good but i'm worried banks will shy away from doing loans on properties like this...  how do banks look at deals like this? I presume not the same way as a standard multifamily deal ?

Here is the deal, over the course of the next year or two I plan to purchase multiple small apartment complexes across the US. My original plan was to keep it "simple" and have 1 LLC for X apartment complexes until i got to lets say 1000 units.

My initial plan was to just get a Delaware LLC and pay the foreign entity fee for each state in which I did business. My hope was that I could simply do 1 tax return but a friend just told me I would have to do a separate tax return per state. Is that the case? While i dont mind paying fees etc.. filing yet another tax return seems like a pain and makes me question the value of simply having a single LLC. 

In Seattle... it is possible but you need to do all cash to get decent deals and a good network.  The market here is competitive but there are plenty of renters and I think betting on long term appreciation of prices in residential is a safe bet. I've never used these guys but you may want to check out http://vestus.com/  

 well living in Washington is great.. beautiful place. however there is an aggressive push to implement rent controls and there is a new law in Seattle to force landlords to accept the first applicant for an apartment. The intent is to stop renter discrimination, employers prefer to hire tech workers in Seattle for example.

Also the market here is way too hot. Chinese investors are buying up properties and both residential deals and commercial deals are a bit over priced from my perspective. 

http://www.seattletimes.com/opinion/first-come-first-served-renting-will-hurt-landlords-renters/

First some background...  I've done multiple single family homes in Texas which is where i grew up but I now live in Washington. Property management company manages my residential properties in Texas and I'm a passive investor on a few apartment deals. 

I am looking to do my own 10-20 unit apartment complex and the deals in Washington are not great. Also some new landlord rules up in Seattle are making it an unattractive market.  Texas  and a few other markets however seem more viable but i'm a tad concerned about distance. Ironically when I reflect on the fact that i have residental properties today on the other side of the country it isn't a problem at all. 

What is the view here about doing your first multifamily deal in another state? Obviously i can fly in periodically for due diligence  etc  but do you guys/girls think it is a bad idea?