Thank you for this thread SteveO. Great stuff!
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Free registration at the forum removes this block.Do you actively handle all management yourself or did you mean that you now hire someone in house that works for your management company?
I have a management company with a crew of one manager, one leasing agent, two maintenance, myself and a part-time bookkeeper.
I do have a couple properties in another state with professional management. Those are under contract to sell and once they are gone, I don't plan to invest outside of my area.
Would you mind sharing what terms you borrowed the money at if you have?
Location, location, location. I hit a home run with my first investment. It was a fourplex in Carlsbad, CA that had an ocean view. Had a vacancy when I bought it but not another for the entire 2 years that I owned it.If you started over, and were buying your first triplex or quadplex, what would be the most important buying factors for you, and what would you be more lax on?
If you are going to buy a property, understand how much life you expect from all the major capital items. How long before you need to replace the roof, parking, appliances, a/c's, paint, etc. Either get a credit from the seller or put some money into an account for capital repairs. Then you apply $250/unit/year into the account for future capital expenses.What's the worst that can happen on a small 4 plex if you have repair skills excluding HVAC? (just assuming you need either bankroll or sweat equity if shit hits the fan... I hear people talk about water heaters exploding - exaggerate much?? , roofs leaking, etc...)
The best time it buy is when the income loss is at its highest. I have made the most money buying properties with a zero cap rate and turning them around. This process takes market knowledge and no fear on your part.
I have used investors for the past few years. This has been the most difficult part of selling to them. Most people want to see a good cap rate. A good cap rate at purchase means less forced appreciation. This is where all the money is at. But be careful... Not all properties can be turned around for a profit.In my pursuit of a first good buy, first thing I look at is a good cap.
What's the worst that can happen on a small 4 plex if you have repair skills excluding HVAC? (just assuming you need either bankroll or sweat equity if shit hits the fan... I hear people talk about water heaters exploding - exaggerate much?? , roofs leaking, etc...)
If you started over, and were buying your first triplex or quadplex, what would be the most important buying factors for you, and what would you be more lax on?
If you are going to buy a property, understand how much life you expect from all the major capital items. How long before you need to replace the roof, parking, appliances, a/c's, paint, etc. Either get a credit from the seller or put some money into an account for capital repairs. Then you apply $250/unit/year into the account for future capital expenses.
I am at the point where I don't feel that there is much short of a fire that cannot be handled internally. We do our own roof repairs. Water heaters are easy. I have had a couple of them bust loose and cause a lot of damage but this is rare. They don't cost much to purchase and are easy to install.
The problem that I least look forward to are plumbing problems under the slab. I have had to do some repairs that required jack-hammering up the slab and have also had to reroute water pipes. I have not yet had to tear up a major portion of a floor to replace drain lines. This seems like it could be the biggest issue if it ever came up. I have had a couple of times where I thought I might need to but managed to control the situation with drain tools.
Location, location, location. I hit a home run with my first investment. It was a fourplex in Carlsbad, CA that had an ocean view. Had a vacancy when I bought it but not another for the entire 2 years that I owned it.
I bought a good looking property once in a bad area. After two murders on the property in the first year, two assaults on my manager (which led to a lawsuit against me that I had to settle), and morning rounds of checking for squatters in the empty apartments, I had to get out. Did not make any money but learned a lifetime of lessons.
Make sure that you understand your income and expenses. Factor in the rent loss from people that don't pay and vacancy. If the area has move-in specials, this needs to be counted also. I have seen times where the vacancy factor was at 10 percent but the other rent losses took the total income loss to over 20%.
The best time it buy is when the income loss is at its highest. I have made the most money buying properties with a zero cap rate and turning them around. This process takes market knowledge and no fear on your part.
Matt J? Really? No way! Last time I heard from you I think Clinton was President.
You must leverage my friend. What size/price deals are you looking at?Steve, I've come to the conclusion that I need $300k cash to get started in commercial real estate, specifically apartments. Is this a fair conclusion or am I missing something?
LOL - I'm chuckling here a bit after reading your low income property experiences in the rest of this thread or another. I went to look at this yesterday, just to see what you get for pennies. Holy crack house!!! (literally, supposed to be vacant... cars out front, loitering, etc...)
http://hotpads.com/real-estate/1731...se,medium,large,garden,&dupeGrouping=building
These are just the basics. Pick up some books and read them. They will help.
I have not had a need to read any books on the topic. There is not much that I am going to learn from them. Any titles that I have are MANY years old and probably not relevant in today's market. Steve Berges had a book that I felt had some strong fundamentals. "The Complete Guide to Buying and Selling Apartment Buildings". The examples will be outdated but the fundamentals will be there.Can you throw out a few good titles?
These are your own barriers. There are a lot of creative ways to do deals. First you should consider where to start and gain experience. I always feel that a four-plex is the best way to do this. You can usually get more aggressive financing with these smaller properties. Plus, you can use this as a springboard to jump.Steve, I've come to the conclusion that I need $300k cash to get started in commercial real estate, specifically apartments. Is this a fair conclusion or am I missing something?
Most nice areas have pockets of apartments or areas that are not as nice. I prefer to find something that has more "nice" than "not so nice" around it. Especially if there are improvements that I can make that will increase the rents.Whenever you are looking for an apartment, what do you look for as far as location goes?
I forgot part. I also like to see the buildings be close to shopping and work centers. Washer/dryers, private yards, and single story add to the appeal for renters.what do you look for as far as location goes?
I forgot part. I also like to see the buildings be close to shopping and work centers. Washer/dryers, private yards, and single story add to the appeal for renters.
You must leverage my friend. What size/price deals are you looking at?
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