All Forum Posts by: Todd Jones

Thanks, Chris.  I am interested in apartment complexes, but haven't been able to find anything that is suitable in my area.  They are either in bad locations, have significant deferred maintenance, or are overpriced and I can't seem to make the numbers work.  Additionally, my thinking relative to this particular set of duplexes is that they are all clustered together in the same cul-da-sac, which functions more like an apartment complex, yet you have the flexibility at some point to sell them individually, a few at a time, or as a package deal.  It is also easier for buyers to get financing on a single family (1-4 unit) than it is on an apartment building, so I thought that would increase my audience when planning my exit strategy.  I'm trying to get a full set of numbers (operating expenses) from the seller and might take you up on your offer once in hand.

I do not have any previous direct landlord/property management experience, but also don't intend to manage the properties myself.  

All great points.  Thank you.  Yes, they are all brick buildings clustered on the same street (cul-da-sac) that I believe was developed and named when he did the development.  The tenants pay all utilities and I have underwritten the expenses at 50%, thinking that would provide for adequate reserves over time.  I have requested the maintenance logs the last two years, leases (with move-in dates, current lease dates and terms), any capital improvements the last three years (to your point probably minimal given this is the time the useful life of things starts expiring), and any evictions/late pays the last two years.  Is there anything else you would ask for or look at when evaluating?  By the way, he is asking $1.6 MM, which I intend to negotiate down.  As I mentioned, the aggregate assessment is $1.85 MM, with an appraised value of $1.92 MM (don't yet have dates of appraisal, although I've requested).   

After I posted in the first forum, I realized that there were probably others where my question was probably better suited and wanted to ensure that I was maximizing coverage for feedback.  I'm sure viewers don't look at every forum, but instead choose to review those that are of most interest and pertinent to their expertise or knowledge base.

Why would select a logo for your business that looks like it has a wick in the chimney you could light and blow up? That's marketing brilliance. How about a name change: blowupmemphisnow.com lol 

Thanks for the thoughtful response, Aaron.  I have generally been subtracting 50% from Gross Rents immediately to ensure adequate coverage for operating expenses and reserves.  After accounting for these items, I evaluate whether that provides sufficient coverage for P&I and some form of cash flow (even if modest), which I would use to further enhance reserves or make additional principal payments, etc.  I earn sufficient income through my "day job," so I am approaching these investments as a long-term wealth building strategy.  I don't have equity in my company, so it's important for me to capitalize on my current earnings capacity by making investments that create a liquidity event of some sort or provide a substantial stream of cash flow in the future.  I like to think I have good business sense and generally use sound judgment when approaching transactions, but I am new to the game and trying to learn all I can to ensure I am properly evaluating deals and taking advantage of the many ways to structure and finance them.  Any and all insight is appreciated.   

I am currently evaluating a transaction to purchase 14 brick duplexes in a package deal for $1.6 MM. Eight of the 28 total units are 2 BR/1 1/2 BA and the remainder are 3 BR/1 1/2 BA, with rents ranging from $650 - $800 per month (gross rental income at 100% occupancy is $19k per month). The properties were developed by the owner approximately 12 years ago and have been well maintained. At an assessed value of $1.85 MM, the properties are paying about $38.5k in annual property taxes. Please advise as to whether you think this is a deal worthy of evaluating further. If so, any guidance or insight you can provide into how I should be approaching the due diligence and evaluation of the deal would be greatly appreciated. What questions and information should I ask for? What assumptions should I use in underwriting the economics? If the seller is open to creative financing, what are some possibilities I might consider proposing? If you have questions or need more info to accurately assess the situation and share your perspective, please feel free to ask. Many thanks!

I am currently evaluating a transaction to purchase 14 brick duplexes in a package deal for $1.6 MM. Eight of the 28 total units are 2 BR/1 1/2 BA and the remainder are 3 BR/1 1/2 BA, with rents ranging from $650 - $800 per month (gross rental income at 100% occupancy is $19k per month). The properties were developed by the owner approximately 12 years ago and have been well maintained. At an assessed value of $1.85 MM, the properties are paying about $38.5k in annual property taxes. Please advise as to whether you think this is a deal worthy of evaluating further. If so, any guidance or insight you can provide into how I should be approaching the due diligence and evaluation of the deal would be greatly appreciated. What questions and information should I ask for? What assumptions should I use in underwriting the economics? If the seller is open to creative financing, what are some possibilities I might consider proposing? If you have questions or need more info to accurately assess the situation and share your perspective, please feel free to ask. Many thanks!

I am currently evaluating a transaction to purchase 14 brick duplexes in a package deal for $1.6 MM. Eight of the 28 total units are 2 BR/1 1/2 BA and the remainder are 3 BR/1 1/2 BA, with rents ranging from $650 - $800 per month (gross rental income at 100% occupancy is $19k per month). The properties were developed by the owner approximately 12 years ago and have been well maintained. At an assessed value of $1.85 MM, the properties are paying about $38.5k in annual property taxes. Please advise as to whether you think this is a deal worthy of evaluating further. If so, any guidance or insight you can provide into how I should be approaching the due diligence and evaluation of the deal would be greatly appreciated. What questions and information should I ask for? What assumptions should I use in underwriting the economics? If the seller is open to creative financing, what are some possibilities I might consider proposing? If you have questions or need more info to accurately assess the situation and share your perspective, please feel free to ask. Many thanks!

I am currently evaluating a transaction to purchase 14 brick duplexes in a package deal for $1.6 MM.  Eight of the 28 total units are 2 BR/1 1/2 BA and the remainder are 3 BR/1 1/2 BA, with rents ranging from $650 - $800 per month (gross rental income at 100% occupancy is $19k per month).  The properties were developed by the owner approximately 12 years ago and have been well maintained.  At an assessed value of $1.85 MM, the properties pay $38.5k annually in property taxes.  Please advise as to whether you think this is a deal worthy of evaluating further.  If so, any guidance or insight you can provide into how I should be approaching the due diligence and evaluation of the transaction would be greatly appreciated.  What questions and information should I ask for?  What assumptions should I use in underwriting the economics?  If the seller is open to creative financing, what are some possibilities I should consider proposing?  Should you have questions or need more info from me to accurately assess and share your perspective, please feel free to ask.  Many thanks.