OfflineHello:
I will be traveling extensively the next few weeks and will be here only a limited amount.
What I wanted to do today is talk about apartment building investments.
I own alot of these and am constantly buying more. I have recently begun doing deals in Florida and not just any part of Florida. I am going to focus on Daytona Beach, Florida to be specific.
No I am not looking for partners either, so please do not pm me, asking.
If you talk to alot of investors and lenders, many will tell you it takes money to do these investments, there is too much risk, etc. I say up yours to that mentality.
Allow me to ask this question. What is the easiest way to get into residential real estate when you have no money, no credit to bad credit, and no experience? If you just said flipping or wholesaling, then you are awake and thinking.
Now what am I getting at with that question? if you said anything other than wholesaling or flipping apartment complexes, you are just not as awake as I thought you were.
If you think that houses are the only investment property that can be flipped, your wrong.
I have to date, flipped 400 plus apartment complexes and along the way made alot of money doing nothing more than listening to what investors want and delivering on that.
Example of a deal that could be done. South Beach section of Miami Beach, Florida. 27 units on Collins Avenue. Valued at $4,560,000.00 when it is operating at it's capacity and it is a good market. seller doesn't want it but will only sell to a very experienced operator. Property rents total $30,000.00 per month, paid cash to buy but took out a hard money rehab loan and is three payments behind on $10,000.00 per month note. Lender won't foreclose and can't do a short sale. Asking price is $2,200,000.00. Down to all cash pricing and below market.
Now how many investors would line up tomorrow morning to buy this property? I can think of twenty on my own.
Do you think you could find a investor that would want this deal? do you think you could get the investor to pay $2,200,000.00 plus a assignment fee of lets say $25,000.00? you could if you know what to do.
What do you do? all you do is exactly what your doing with houses, just on a bigger scale.
With houses, you have too much competition. How much competition do you think you would have on a deal like this? not much.
Want to buy it? any hm lender will give you 60% ltv and that is $2,736,000.00. You would have $2,200,000 and about $35,000 in closing costs, so you would walk away with about $501,000.00 and you could even throw in a downpayment out of that of say $100,000.00 and walk away with $401,000.00.
There are no books and courses on this stuff. This is Donald Trump type stuff.
I am probably the foremost authority on how this is done and I have shown JimmybTx how to do this over the Thanksgiving holiday.
JimmybTX is going to put together a team of bird dogs and teach them how to do this. I think this is wonderful. I have held nothing back from him and he has seen for himself how I actually do a deal, what to say, how to find buyers, how to write up the deal, what not to say, how to fund it on the front end, etc.
Why am I not getting involved? because I am retiring from the business. My wife and our kids are all in college, the house is empty for the most part and I have been working hard for a long time. I have made alot of money and don't really need more. We want to travel and just relax, until my wife gets tired of me then I will probably find a hobby.
Any questions about this can be directed to JimmybTX.
I love Daytona Beach, FL. I always have. We will be doing some deals down there because we have investors that want deals there. Once that is done, then I will call it a career.
Mike
I will hate to see you stop, I have learned a lot over the last three months reading all your post. That last one was a great one. Hopefully you will still stop by and keep everyone in check. You have a great life and enjoy it.
Jim Kendrick
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
sorry to see you go, but i'm very happy for you.
i'll talk to jimmy because i'd like to learn more on this subject.
i've read many of your posts and you will be missed, but just because you're retiring doesn't mean you can't visit. it's not like you have to retire your journal ya know, lol.
keep moving forward, rob
whether you think you can or you think you can't, you're right.- Henry Ford
keep moving forward, rob
Paying cash and having $30k in rents available, how come he can't make a $10k monthly payment on a hard money rehab loan?
Don't know the answer to that question and don't really care why. I have heard all the bs stories in my time.
All I care about is the following:
1. Is there a deal there
2. Is there a good likelyhood that I can find an investor
3. If I have to buy this thing, can I and be bale to turn it and make money
4. Is the seller going to be able to get on board with what I am doing
5. Can the end buyer get a good deal
I don't care enough about the why's because if this is a deal I am going to flip, the end buyer deals with those issues.
Now, does that mean that I don't advise the end buyer of this issue? absolutely not. I make them aware of everything that impacts the transaction.
There is a form that is signed and added to the deal paperwork and that is a disclosure statement, called the Investment Disclosure Statement.
This is a form that I created. It essentially says that I have through my research on a transaction, has disclosed everything that I know about the deal and those issues are all identified on a second page of the form, that may impact the success of the transaction on the front end.
I do not do this for the back end, because that is something that impacts the investor I sell to. I will have already received my check by this time.
Mike,
When you say any hard money lender will lend that amount. How would you get out of this loan, through refinancing? If so, with this kind of commercial loan would a person's income and assets come into play or would it be strictly based on the cash flow of the property itself and whether or not the lender deems it to be a good deal.
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The $4.56m valuation seems a little optimistic as that would put it at a 4.7% cap rate and a GRM of 12. At $2.2m with a 10% cap rate and GRM of 6 it seems fairly reasonably priced with some upside potential, considering the avg GRM in Miami is 8 and that would put it at $2.88m and a 7.5% cap rate. What's your take on the valuation based on the numbers?
In order for you to arrive at a cap rate, you need to determine what the annual NOI is. So how you arrived at your figures is not correct.
Also, the GRA on this is 12.66. I arrived at this figure by taking the Market value, then dividing that by the annual gross income and that gave me my answer.
Mike,
I will hate to see you stop or take a break on this part of life, But on the other side I will love for you to enjoy it especially with your significant other. I have learned a lot over the last few months reading all your post. I even got your advise to contact James who is your partner, I was in touch with him prior to your recommendation.
I currently have 3 commercial Prop in Miami Fl that was thrown to me, but because of lack of Knowledge, I am still searching for advise to do the deal One is a 42 Unit Condo in a 84 unit building, the next one is a brand new hotel, the third is 24 apt in 4 blgds, I do not mind if you jump in before you go. If not I will ask James to help.
I will get in touch with him again I had a little medical set back that kept me from going further, but like everything else that's life. That last one was a great one. Hopefully you will still stop by and keep us in check.
Mike, you have a great life, enjoy life today, because, tomorrow is not promised to us. God Bless you in where ever you go and whatever else you choose.
Veronica
I arrived at the figure by approximating expenses at 40% of gross rent receipts. What percentage do you normally ball park expenses at?
I am new here: Who is JimmybTX? and where do I find him?
Thanks---Tony
Put his name (Jimmybtx) in the search/enter box on the top left of the page and hit enter. He will come up.
And welcome.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"