All Forum Posts by: Toben B.

Found a foreclosure listed as a half duplex around 2009. Did my research and the entire duplex was on the lot. I hired a title attorney to verify it was a full duplex and closed the deal at $33K. Rented it out for $1300 a month. Hired a property manager.

There are a lot of other details but I cut them out to get under 50 words. So here are the highlights

1. Seller argued with me the whole time that they were only selling half a duplex when the county paperwork clearly showed both sides on the lot that was being sold.

2. It only needed $7K in repairs so my all in price was $40K or 30X the sales price.

3. Area is rough and one of my tenants was shot which prompted me to hire the property manger after a few years.

4. Lots of crazy tenant stories and I learned a lot about how not to manage rental properties.

5. This was my second deal and I am now up to 30 rentals including 5 houses, 5 duplexes and an apartment building.

1 Vote

I have been buying since 2008 with debt and no issues. However I bought a lot of foreclosures over the years where the previous buyer paid too much in the 2005-2007 years. Basically don't overleverage yourself and do not overpay. Daves advice is sort of one size fits all when reality is more nuanced.

1 Vote

Arvest did 75% cash out on 30. Security bank did 80% cash out on a 20 commercial loan with a balloon.

0 Votes

Tulsa, Oklahoma

Smaller town Oklahoma - labor is cheap.

Originally posted by @Matthew Paul:

Originally posted by @Toben B.:

Originally posted by @Matthew Paul:

I think you are underestimating repairs , $200K and 100 units is only 2 grand per unit . That doesnt go very far .

The goal would be to only rehab @ 50 units the first year.

Thats

Thats around 4 grand per unit , still thats cutting it very thin

0 Votes

Hi Mindy - I didn't realize I had someone who works at BP reading my post!

Originally posted by @Mindy Jensen:

What is current occupancy? What does the property need on the outside/common areas inside to make it attractive to tenants? What does each unit need? What is the neighborhood like? Occupancy @ 75% - Each unit needs flooring/paint/some need counters/appliances. 1 of 3 buildings needs roof repairs. All common areas need paint/flooring.

How long would it take to turn the units? Do you have someone who can do this work? I think 4-5 days to do make ready per unit once I have a crew in place. I have 30 units now and can probably find the right people in 1-2 weeks to get started. To fill them 1-2 weeks.

Syndicators are having a very difficult time finding properties. I find that they typically focus on larger than 100 units, but I'm wondering why this is still available with all the syndicators out there not being able to find deals. Make sure to look long and hard at this property and really look for warts. This property is covered in warts - that is why it is on the market. Also it is three buildings near each other that add up to 100 unitsno a true 100 unit complex.

How is the property heated? Boilers run forever, until they suddenly stop. Then they cost SO MUCH to replace. 2 of the 3 buildings have boilers that are regularly maintained. I am lining up an additional 300K line of credit to deal with these type of issues.

I can see how this would be an exciting proposition, but run your numbers very carefully. We've been at the top of a market cycle for a few years now, and I keep hearing talk of a recession. What's the minimum occupancy you would need to break even and how long can you sustain below that? Yep a recession is here - this deal is currently on hold however I am looking closely to jump back in as long as we dont get a resurgence in virus cases. Probably needs 70% to break even.

Can you go talk to the tenants and ask them why they think there's so much turnover? Tenants who are unhappy with management tend to trash talk them. Not every building is fixable. I plan on doing this if I get it under contract.

You said your phone rings off the hook with people looking for 1-bedrooms. What is the makeup of this building? (Studio, 1-bed, 2-bed) 50% studio / 50% 1 bedroom

What is your current financial situation? Are you employed? If so, how much time can you devote to this turnaround? If you are not, what are your reserves? I am gainfully employed which is a problem as I wont have as much time. I can quit my job after the turnaround, but if I quit before the turn I will be cashflow negative. Reserves are Good - but a lot is tied up in equity and retirement funds.

Grand slam home run hits are awesome, but make sure it truly is a grand slam home run hit.

1 Vote

Out of 30 units

1 lost their job and said they will pay when the stimulus money comes

1 didnt lose their job and are refusing to pay because they think they can get away with it. (This is the worst tenant I have had in years so no surprise)

1 didnt pay and wont communicate

2 were vacant already

25 paid all or partial and will be current by end of month with a late fee.

1 gave notice but are current on rent

So worse than normal but not a disaster yet. I average 92% rent collection over time but last year was closer to 95%.

0 Votes

Originally posted by @Matthew Paul:

I think you are underestimating repairs , $200K and 100 units is only 2 grand per unit . That doesnt go very far .

The goal would be to only rehab @ 50 units the first year.

0 Votes

Originally posted by @Peter Nikic:

What's the problem? same as 16 only larger? nervous? let me know, I'll come down we could do it together. message me. 50/50

No the 16 unit was in relatively good shape. The 100 units are in terrible shape, but @$12,000 per apartment. Rents are low @ $380, market is closer to $425.

I need a plan to survive the turnaround.

0 Votes

Short ask - I Need advise on a a massive 100 unit turnaround project.

Long ask - I bought a small 16 unit complex about 9 months ago and it has been going really well. In fact Im at 100% occupancy and my phone rings off the hook with potential tenants looking for 1 bedroom units. FYI this is a class C building and I have very low turnover.

There are 100 apartments for sale nearby, however the property is poorly maintained, poorly run, and appears to have extremely high turnover. I would not think twice about it except 1. My phone rings non stop with potential tenants and 2. The price is extremely low and my bank is willing to lend me an extra $150k-$200K for repairs and renovations. If I can buy it, fix the differed maintenance, improve the occupancy, and bring turnover back in line it will be a grand slam home run hit. However I need to survive the turnaround.

I have done the same thing on duplexes and a quadplex, but my 16 unit apartment was already in decent shape and fixing up 100 units and surviving the tenant churn until the property is stabilised is daunting.

Has anyone out there done something similar who I could talk to?

0 Votes

How did you find the land/mobile home deals? I am interested in purchasing these or a whole mobile home park.

0 Votes

All Forum Posts by: Toben B.

Toben B. has started 53 posts and replied 149 times.

Post: What's your best real estate deal EVER?

Post: Is Dave Ramsey correct? Anyone still around after 10 years?

Post: Financing Terms on a Flip - Is this possible?

Post: Need advice upgrading Class D to Class C Apartment Complex

Post: Need advice upgrading Class D to Class C Apartment Complex

Post: OK who has received all or most of their rent this month ?

Post: Need advice upgrading Class D to Class C Apartment Complex

Post: Need advice upgrading Class D to Class C Apartment Complex

Post: Need advice upgrading Class D to Class C Apartment Complex

Post: New Mortgage vs HELOC for cashing out equity