hello everyone. been a while since i’ve been here.
just curious for those of you investing in apartment buildings, multi-units, etc. where are you guys currently investing (or looking) and why?
ryan
Right here in my own backyard. Where are you looking?
Mike
Mike,
Why are you looking there? Besides the fact that some investors suggest to invest close to home so homes are easily managed.
I’m not sure where you live but does it display factors of future growth? Are you looking at other factors such as building permits, historical data, etc.?
Please elaborate.
I myself am studying about apt buildings. I have not begun my research in any particular area yet, but rather building my knowledge of how to do so. Don’t mistake this for “I’m looking for an excuse not to jump in”. I just engaged in this area of REI this month, as most on here…I’ve been doing preforeclosures.
Ryan
Student Housing is where to be…Students get loan money from the gov’t so I don’t have to worry about people living paycheck to paycheck and hope they make rent payments. In the event that a student can’t pay, a simple phone call to a parent, if they’re any kind of parent, usually takes care of that.
propertymanager is in Ohio, where all those jobs have been lost in the last few years. I’d be nervous as hell renting to people there. But let’s say you were investing near Ohio State, I’d feel comfortable with that knowing that students have federal loan money to pay rent. And there is 40,000 students in a very small area that need somewhere to live.
propertymanager is in Ohio, where all those jobs have been lost in the last few years.
While it’s true that Ohio has suffered a loss of auto-related manufacturing jobs, the population in Ohio is increasing. Since I don’t see people laying homeless in the street, I can only conclude that all these people are living somewhere (and most are making money in one job or another).
Student Housing is where to be...Students get loan money from the gov't so I don't have to worry about people living paycheck to paycheck and hope they make rent payments.
I’m not arguing against student housing, but I certainly haven’t found it to be any better than normal rentals. Students are very hard on rentals. Students also tend to suddenly move out when they drop out of school or want to shack-up with their new girlfriend/boyfriend across town. I strongly suggest screening the parents and having the parents co-sign, but collecting damages can still be difficult (especially if the parents live out of state).
I invest locally because I want CASH FLOW NOW! I also get a bunch of equity at close on every deal, so future appreciation is almost irrelevant. I do not look at building permits or get out my crystal ball and try to predict future appreciation. In fact, compared to all those “hot” areas of a few years ago, Ohio’s appreciation (or lack of depreciation) is fantastic! We haven’t lost 13% of our property value in the last year like Merced California!!! OUCH! I’m sure all those investors in the bubble areas didn’t expect the market to crash, so why would I think my crystal ball is any better?
Mike
Mike,
Have you ever purchased anything off Loopnet? Just wondering…I’m scanning the website wondering if anyone ever actually makes a purchase from the site. Thanks.
No, I’ve never even been to loopnet. I get most of my deals from personal contacts. Have you bought a property from loopnet?
Mike
No I have not and from everything I read and see on sites such as this one there just are not realistic deals on that site. But it’s obviously a big site, with a ton of listings so somebody, somewhere is using the site. I signed up recently and someone from loopnet calls me daily trying to get me to upgrade to their premium service, a little annoying to say the least.
I have worked with several investors and lenders who use loopnet religiously. As someone said in another post, the trick is you have to do your own analysis. I’d never trust what was posted by the seller or his/her agent. However, I’ve run into many a seller and selling agent who won’t disclose historical data until they have a signed contract. At the least, I would expect them to give you an accurate and up-to-date rent roll. (If they won’t, that’s a big red flag for me.) From the rent roll you should be able to calculate gross income. Use market averages for the expenses if the seller won’t share.
That may give you a start.
Take care,
Steve
from what i’ve read, it’s part of due diligence. it makes sense to research an area so that you can minimize the risks. will there still be risks? of course, but this is better than throwing darts on a map.
if you don’t mind sharing mike, what is your strategy for finding deals that actually cash flow. i’m open to all types of strategies and wouldn’t want to be close minded to any of them.
ryan
Ryan,
My primary method of finding properties that cash flow is through personal contacts (telling everyone you know that you buy properties). People know that I am a serious buyer of properties at the right price. Therefore, when they need to sell one, they call me. One of the excellent ways to make these personal contacts is by joining your local REIA. Also, having a realtor that works for you is a way to get some deals (REOs, etc).
The bottom line: let everyone know that you’re in business!!!
Good Luck,
Mike
i appreciate your feedback mike.
thanks,
ryan
Hi Guys:
On different markets for apartments… If you check into the National Association Realtors Market Reports, you’ll see what areas of the country are projected to have decreasing multi-family vacancy rates. Apartments are a wonderful investment vehicle right now. Here’s why… currently the single-family housing markets are in chaos due to the turmoil in the residential mortgage industry. Apartments and other rental housing is going to become increasingly in higher demand. Two reasons, first you have to be a pretty strong borrower to get a new residential mortgage these days, thus reduced demand for homes for purchase. Secondly, as the foreclosure numbers in SFRs continues to climb, those “used to be homeowners” need somewhere to live. Thus under these tweo circumstances you will see increased demand for rental housing driving up rental rates and reducing vacancies. It is a great time to get into apartments regardless of what part of the country you live in. My best advice, look into markets with high SFR foreclosures statistics. When they come and apply to rent your apartment, don’t be afriad to rent to them. Ask them if they had an ARM adjust, which pushed their payment out of their range. Then check their credit report and look at the mortgage that went south. Make sure the amount of the rent you are charging is less than that of their previous mortgage payment. Make sure their total monthly debt obligations and the new rent is less than 40% of their total income each month. A lot of people in this country were put in harms way by residential lenders that offered loans that set them up for failure.
On Loopnet…Yes people buy stuff off of Loopnet. It is the Commercial Real Estate Brokers version of an MLS. It has public access however only to some degree. Additionally, it is a great resource if you shop different markets nationwide, to get a feel for the different markets As a Commercial Mortgage Banker, I use it as a resource to help in determining CAP rates in a market, not from the listings though, from the recent sales. I also use the recent sales for sales comps.
Tracy Helphingstine
Regional Director
Metro City Mortgage Commercial