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New Apartments Investor

Ecast88

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Jun 27, 2013
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Hello Fellow Real Estate Investors,

My name is Eric Castaneda from Los Angeles, CA. I'm 24 years old, turning 25 in October(damn I'm getting old! lol). My interest is investing in multi-family homes. I'm currently studying under David Lindhal who is amazing!

I'm also looking to network with fellow multi-family investors(possibly going in on deals together), commercial bankers, and commercial brokers. I have known about multi-familiy investing for a few years but now that I have learned and I'm currently learning about private money I'm moving forward and I'm excited!

I look forward to networking and sharing ideas with all the other real estate investors on here.
 
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forchunet

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Jul 6, 2013
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Start small ~ 4 units or less. Manage it for a few months and see if you can stand the landlording business. Develop systems to your operation. Optimize it. Get the 4 unit cash flowing.

Step back and look at the operation after a few months. Decide then if you want to keep going. If so, leverage properly.

Spoken from someone who has a dozen rental units and has sold a small 10 unit loft complex and other smaller ones.. Rentals is slow lane but can be fast lane if done right. Fast, btw, is 5+ years.
 

tamo42

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I totally disagree with managing multi-families and apartments yourself. Hire a management company, structure the cost into your calculations, and manage the manager.

It's the difference between working on your business and working in your business.

There is an excellent book in the rich dad advisor series on hiring and overseeing a property management company. I think it's called the abc's of property management.
 
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jtmoniii

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Oct 23, 2011
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Chattanooga, TN
If any of you guys actually own multi-family and/or apartment complexes - I would love for you guys to do a guest post on my blog.

Shoot me a PM if interested.

my blog is: realestatefinancehq.com
 

forchunet

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I totally disagree with managing multi-families and apartments yourself. Hire a management company, structure the cost into your calculations, and manage the manager.

It's the difference between working on your business and working in your business.

There is an excellent book in the rich dad advisor series on hiring and overseeing a property management company. I think it's called the abc's of property management.

I agree. The problem is if you have ZERO experience managing even a small amount of units, you will have ZERO idea how to manage the management company. And believe me, you will hire and fire a half dozen companies before you are satisfied with how they are managing your properties, and even then it's a challenge.

If you spend the few months up front learning everything yourself, you will know later the difference between a good manager and a shitty one. No book will teach you that.

In order to work ON your business such as you say, you must first work IN it to understand it. Otherwise you're just flailing in the wind.
 

tafy

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Aug 21, 2013
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I agree that he needs to work at managing the 4 rentals himself before passing the work out to a company, you can pass off the work when you hit 10 units right!
 

buwatcha

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I bought a 12 unit apartment building in June 2012. It was the first piece of real estate I ever bought.

I have a full-time job as a corporate attorney so the landlording is strictly part-time for me. As others have said - it's not fastlane. But, it is almost passive income if you set it up right.

I don't use a management company. Instead, I found a great handyman that I basically have on call. If a tenant calls with a repair request I text the handyman and he fixes it.

My main responsibilities as the landlord are to get the units rented. Advertise, show units and sign leases. I also think about ways to improve the property and units so I can raise rents. When I think of something (like repainting the decks) I call a bunch of contractors to get quotes and then hire out the job.

All of this takes less than an hour a week. Sometimes it's more, other times I do nothing for weeks on end. My tenants deposit their rent directly into the bank account of my LLC.

Biggerpockets.com is a great resource for this.
 

djs13

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I bought a 12 unit apartment building in June 2012. It was the first piece of real estate I ever bought.

I am thinking about going this route as well. I am a big fan of Steve Berges' theory on "value-play." Instead of buy and hold, investing/improving the property and then flipping for a larger one after 12-months.

I think SteveO began using a syndicate, but because I am young I'm afraid I won't be able to pull in large enough partners to secure a 50+ unit deal. I will most likely invest on my own and will be targeting an 8 to 12 unit building.

Did you invest locally? My area isn't exactly booming (the Hudson Valley in NY) and I know there are better investments out there, but since I will have to manage it myself in the early going it may be necessary to begin here.
 
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buwatcha

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Did you invest locally? My area isn't exactly booming (the Hudson Valley in NY) and I know there are better investments out there, but since I will have to manage it myself in the early going it may be necessary to begin here.

I did invest locally. If you are going to be managing it yourself I think you need to be local.

I'd love to move up to the next size (50+) but I haven't found anything that's even close to an attractive asking price.

Flipping these things can be a huge payday but to do that you have to either buy way below market which is tricky, or have a great rehab team that can fix up a rough property cheap and get it rented.

I'm currently looking at a 14 unit that is vacant and in pretty rough shape. They are asking $70,000. That's super cheap for 14 units but we could probably offer a lot less. For this deal I'm working with another team that has tons of rehab experience and can do the work cheap. If we could buy it cheap, fix cheap and get it rented this could be a good flip candidate.
 

djs13

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I did invest locally. If you are going to be managing it yourself I think you need to be local.

I'd love to move up to the next size (50+) but I haven't found anything that's even close to an attractive asking price.

Flipping these things can be a huge payday but to do that you have to either buy way below market which is tricky, or have a great rehab team that can fix up a rough property cheap and get it rented.

I'm currently looking at a 14 unit that is vacant and in pretty rough shape. They are asking $70,000. That's super cheap for 14 units but we could probably offer a lot less. For this deal I'm working with another team that has tons of rehab experience and can do the work cheap. If we could buy it cheap, fix cheap and get it rented this could be a good flip candidate.

That deal sounds very interesting. Do keep us updated!

I recommend reading Steve Berge's book "The Complete Guide to Buying and Selling Apartment Buildings." I am not a successful investor by far, but guys on the forum who've done very well live by it. I think you may find that you can flip a property and increase its value with just cosmetic repairs and increasing rents.
 
D

DeletedUser2

Guest
guys,
stop thinking so small.

there are deals out there.

this is one that came to me today.

32 units.
(no im not going to give you more info than that...)

here are some quick numbers.

buy larger, so you dont have to muck with managementTrailer park.jpg. hand that chore off fast.

:)
Z
 
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Mike Kavanagh

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@Z , I'm assuming you went with this property right?

5k/month positive cashflow might not be the best property you have but positive cashflow is positive cashflow.
52% RoI isn't bad either.

If you did go with it, are you looking into/Know ways to lower costs and raise rents?
 

djs13

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guys,
stop thinking so small.

Z,

Awesome post. Thank you for that.

I've just begun as a commercial real estate agent but I am literally starting with >$3k in the bank. My expenses are low and since I work for a well known firm I think I will do well here.

My goal is to be investing in a 50+ unit by the time I am 26/27. But my issue is where to begin. My initial plan was to flip houses until I could build enough cash for a medium size multi-family. But after reading Steve Berges I am considering the option of acquiring a 12-unit, increasing value and then 1031 exhancing to a 24-unit within 12-18 months. Then repeating the process until I am controlling a real fastlane property.

I guess another option would be to literally save the startup cash and go right into a medium sized multi-family, but in your example that would require $122,500. Not impossible but it seems there are ways to expedite this wait time.
 
D

DeletedUser2

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I guess another option would be to literally save the startup cash and go right into a medium sized multi-family, but in your example that would require $122,500. Not impossible but it seems there are ways to expedite this wait time.


SAVING THIS MONEY WOULD TAKE FOREVER

learn to raise the money.
with a deal this rich, could you afford to carve off some for an investor.

got someone with lazy money? 150K sitting around making 2-6%?

offer them 10-20%

get into a property with little to no money of your own. get cash flow. REPEAT.


Go bigger, faster. its worth it

Z
 

buwatcha

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guys,
stop thinking so small.

there are deals out there.

this is one that came to me today.

32 units.
(no im not going to give you more info than that...)

here are some quick numbers.

buy larger, so you dont have to muck with managementView attachment 6177. hand that chore off fast.

:)
Z

Is that a 30% cap rate/ $10,000 a unit at asking? If so that's a no brainer on paper. Or is that what you plan to offer?

Also, what are your thoughts on buying out of town and using a management company? I'm from a pretty small town and there's only about five or six buildings that are over 30 units. I'd like to start looking somewhere with a bigger population and more buildings. I'm a little nervous about being out of town though.
 
D

DeletedUser2

Guest
Is that a 30% cap rate/ $10,000 a unit at asking? If so that's a no brainer on paper.

YEP.

my point in this was that there are deal like this out there. don't start so small. dont think so small. I have been doing deals for years, so people bring me deals like this all the time.
its part of my deal flow network.
I dont know if i will buy it, because I am focused on my current business. but the REAL point is, starting a little larger, raising the money, and getting to deals like this, is what you should be aiming at.

Z
 
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Michael W.

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Ok City, OK
guys,
stop thinking so small.

there are deals out there.

this is one that came to me today.

32 units.
(no im not going to give you more info than that...)

here are some quick numbers.

buy larger, so you dont have to muck with management


Damn, 10 of those deals could get you from 0-50k/month pretty fast.
 

supermannpc

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Feb 27, 2012
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I am moving into the next level myself.
I bought 3 triplexes and a single home this year and just about have them all rented.

I am looking into a 24 Unit building that needs a full rehab. Still learning how to obtain financing with a construction loan.
I figure the larger building will honestly be the same amount of work but alot greater ROI.

In the mist of all that I did this year I got my Real Estate License so I double dip on my deals and have an inside edge
 
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djs13

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In the mist of all that I did this year I got my Real Estate License so I double dip on my deals and have an inside edge

I work as a commercial agent for a well known brokerage and we've definitely had some difficulty moving multi-family properties. I'm not trying to discourage you, in fact depending on where you are from (I'm in the Northeast) it may be a completely different picture. I'm just saying if you intend to value-play this property (sell in 12-24 months), you may still need to contract a listing agent because they will be able to lay this deal out in front of the major players in your area.

Congrats on the license though and definitely go for this 24-unit. Economies of scale will be on your side.
 

supermannpc

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Feb 27, 2012
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I work as a commercial agent for a well known brokerage and we've definitely had some difficulty moving multi-family properties. I'm not trying to discourage you, in fact depending on where you are from (I'm in the Northeast) it may be a completely different picture. I'm just saying if you intend to value-play this property (sell in 12-24 months), you may still need to contract a listing agent because they will be able to lay this deal out in front of the major players in your area.

Congrats on the license though and definitely go for this 24-unit. Economies of scale will be on your side.

Thanks man
I plan on keeping those units
How far Northeast are you?
 
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djs13

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Oct 3, 2007
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Thanks man
I plan on keeping those units
How far Northeast are you?

I am a little less than two hours north of NYC. The Hudson Valley region of New York used to be a booming place, so it's in this awkward stage of declining population/employment, yet property prices are still much higher than other areas that are booming.

I want to secure a 10-12 unit as my first property sometime next summer, but I am hesitant to do it here. I want to value-play it (fix some issues, increase rents, then sell in 12 months) but I'm not sure if that is feasible in this stale market. On the other hand, if I go 3+ hours away from home, every time I lease this property I will have a hell of a drive just to get there.
 

ElvnElvn

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Jan 8, 2013
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Bergen County NJ
Hey im from Hudson Valley, NY. I am starting to learn about real estate, and getting my knowledge in so I can prepare myself to
start investing! I would love to offer help/work with someone around the area in exchange for gaining knowledge and experience.
 

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