All Forum Posts by: Ryan Dodge

Thank you very much for all the help!

Hi, I've bought quite a bit of single and multifamily properties but I'm looking to step things up toward apartment complexes. Are there any detailed posts or books you'd recommend for learning what I'm getting myself into? Key factors to look for? Red flags? Thanks!!!

The example was just theoretical, I've always just paid the % I just wanted to be sure I wasn't doing it in a stupid way.

Thanks for the input everyone!

Suppose this scenario:

Agent takes 75% broker takes 25% split

Agent is part of a deal where commission is 3% but foregoes it so it's factored into the asking price instead (like instead of offering $100k and taking a 3% fee they offer $97k and 0% fee, basically the same offer just structured differently)

Does the agent still owe the broker money? Thanks!

I don't think anyone can tell you if you should pull the trigger without really understanding that market and your financial situation, but we can probably give you input on what to do without the comps. If you're doing it as a rental investment the main things I'd be looking at are the ratio of expected rent vs sale price (for example, I'd rather get $2.5k/month from a $250k house than $3.8k/month from a $500k house) and how much potential growth the area has. Is there commercial construction in the area? Grocery stores, restaurants, etc? These could all help your place appreciate over the next few years.

As far as comps go, when if I don't have any available I generally look at what it would cost to rehab the place I'm looking at to where the comps are (if mine is worse than the market). It's a little more difficult in a case where yours is better than the market, because an excessive rehab in a neighborhood that doesn't demand it might not get a full return. In this case I'd look more at what I think I could rent it for and see if that value (compared to purchase price) beats the other options in the area.

I'm selling a house in Texas that's located in an HOA. My understanding of it is this:

When you sell a home that is part of an HOA in the state of Texas, Texas Property Code Chapter 207 requires an HOA to provide disclosure. This disclosure/information is called a “resale certificate." The HOA is allowed to charge a "reasonable fee" to produce this.

If I google it, I find tons of people disputing a) the legality of it and b) what is considered reasonable. Many people feel that getting charged over $300 is literally a scam.

Here's the breakdown of mine, none of which I'm familiar with:

To the HOA:

$275.81 regular assessments

$1000 Working Cap Assess.

To the HOA's management:

$275 Ownership Conveyance Processing Fee

$260 Resale Disclosure Fee

--------------------

TOTAL FEES: $1810.81

Am I misunderstanding something here? I'm totally unfamiliar with this but from anything I've been able to find with google these fees sound outright criminal.

Electric is individually metered. The rest is paid by owner. No idea why it hasn't sold. I went back through the past year of sold apartments in the area and this from my perspective looks to be the best investment. There's competition in the area but everything is filling pretty quickly.

Are you including the bank loan in the expense ratio? Assuming no, it's 40%. My estimates for the expenses could be very far off though.

Improvements that I know of: Hardiplank siding, roofs, parking pavement, kitchens (nothing super fancy), appliances, paint, tile flooring, bathrooms, A/C units. If I had to guess they probably put ~$500k across the buildings and are reaching for a healthy profit.

I used the NOI from from $22k monthly income vs what I think are conservative estimates for expenses ($28k management, $25k expenses -repairs/cable/exterminator, $39k property tax, and $10k insurance) and divided by the purchase price. As for why I think it's important - this is effectively purchasing a business and using cap rate across each property looked at gives a control for estimating which properties will yield the highest returns. It doesn't mean a ton without properties to compare it to, but I figured that someone will ask so I'd keep it in there.

I've spent the past couple years investing in single family homes - over the past couple months I've decided to start selling them off (along with some healthy appreciation) in favor of multi family with better rent returns. I closed on my first duplex a couple days ago.

Anyway, I've come across an apartment complex that interests me. It's been on the market about 4 months and I'd expect to close somewhere around $1.7m. This is a huge jump from anything I've closed on previously (I've done mostly around $300-500k range) and this is the first time I've felt the need to consider taking on investors. I've got people willing to get on board but I'd need to work with an attorney to figure it out. I planned to head in this direction eventually but in much smaller steps.

The place was purchased 2 years ago for $560k and heavily rehabbed both inside and out. It's 100% occupied right now. The area has a lot of demand for rent right now so this isn't very surprising. It's also very close to a large community college.

20 2/1 units ($800/month)

8 1/1 units ($650/month)

Laundry room ($800/month according to them although I would expect them to over report this)

There's also an office building and some spare land that could be better utilized.

Their numbers:

Insurance: $9468 (I actually expected this to be lower)

Utilities: $22140

Property taxes $18600 (I expect this to almost double in the near future)

Cable: $5040

Repairs and Maintenance: $5620 (This seems laughably low to me, I'd expect 4-5x this)

Contract Services: $2400

Management: $12000

Landscape: $2400

Pest Control: $1200

It's got a cap rate of 9%. On paper it looks significantly better than any of the other properties I've owned, but I have no experience with apartment complexes whatsoever. I'm happy with my property managers so far on smaller properties - not sure how difficult the transition would be for this. They've done apartment complexes before though.

I'm really open to any input on this at all. Things to look for, numbers to check, how to structure it with other investors, whether I should just run away completely... any advice is welcome.