Is it possible to get 30-40% residual income on Apartment buildings?

General Real Estate Investing
1

Please forgive that I’m very new but want to being investing in some homes/apartments in the near future. I was curious if it is possible as everyone tell me it is not possible to make returns of up to 35% of your money with apartments.

I’d love to hear some expert opinions or direct me to someone who has answers.

Thanks in advance.

2

Except for unusual situations the most you get is about 15%.

3

It depends on your strategy. If you buy & hold the old fashioned way, its not easy. But… I know a guy who buys apartments that are run down and say at 30-50% capacity. He then fixes them up, leases them out, holds them for a couple years and then sells them for double or triple what he paid for it. You can get 30-40% yields on a deal like that easily.

4

Buy one really cheap that needs moderate repairs that is also with low occupancy. Try to do it with owner financing or private financing at the as is value, make sure not to get big mortgage on it later

5

Maybe. The higher your equity, the more of the income you will get to put into your pocket.

Probably not possible for beginners who don’t have any idea on how to begin. Also, not even vaguely possible to do without expending any work or effort.

6

I would think with a low value to an apartment and higher rent rates it would be possible.

I know a gentleman that bought a 1 million dollar 7 unit apartment building in santa monica where the rent rates can be up to 2-3k/mo.

7

To get higher than normal yields on real estate investing, I typically do smaller deals that are easy to resell for the high profits. Here are two examples:

  1. Mobile home buy for $4k (which I put on one of my mobile home parks). Sell it with owner financing for $800 down and $225/month for 4 years. Then I sell the note at 18% yield.

48 payments 6% interest $225/month payments $9580.57 loan balance to buyer.

With $4k cash price on purchase minus $800 down, I have $3200 left in the deal.

48 payments _______interest $225/month for 4 years $3,200 present value, yielding 80.66% on my money.

Sell it to an investor in their IRA at 18% for $7,659.57.

I’ve done hundreds of these and they have helped over the years to buy lots of groceries :beer

  1. You can buy a house in small mid western cities for $6k to 12k that are 2/1’s and resell them with owner financing on a 30 year note at 6%. What I do is hold the note for a year until it is seasoned, then sell it at a discount to a note buyer/bank and trigger the discount to increase my yields. Here is one of a couple that I am doing now:

Buy for $6,500 cash. Resell for $15900 with owner financing (which is cheaper than renting a 2 bedroom apartment!!).

360 months 6% interest $85.80/month payments $14, 310 note

After one year, sell note balance which is $14, 134.27 at a discount to yield 9% for $10,590. Results are 6500 minus down payment = $4910. Collect 85.80 X 12 plus proceeds of sale of $10590 totaling minus my cost of 4910 which yields $ 5680 or 137% yield on the money I left in the deal for a year on a single family home. Even if you sell the loan at 12% the yields are ‘good enough.’

If you need help, give me a call.

Rob
9Modified due to rules violation