beginning with apartments?

Question

Hello;
  For those apartment experts out there, I was wondering their thoughts on 2010 and onward to get started in apartment investing.  I own a SFH and have done a few small deals but still have  a lot to learn with residential investing.  I am aware of a lot of good education out there for apartments (Dave Lindahl and others) but am a little leary to jump right in to multi familiy/apartments as a beginner.  Any thoughts or advice would be greatly appreciated!  Thanks.

Eric

William Walker · Answer

Hello Eric,

Like anything worth doing, you have to move beyond your fears and do it anyway.  Reread David Lindalh and you'll be reminded that we all go through those periods of fear and doubt, but if you perservere, you'll accomplish more than you anticipated.  I jumped into apartment buildings early and have never looked back.  Do your homework, and learn how to analyze the numbers and the area.  The extra effort will certainly be rewarded.

William

Don Konipol · Answer

Allow a much higher % for vacancies than historical average for any property you are considering.  Also, assume you will have to lower rents 10% to maintain occupancy.  If property comfortably cash flows after these two tests, you will most likely be able to maintain ownership during downturn and reap a large profit once the next phase of the economy takes shape.

Stephen Moore · Answer

I would say know each and everything that you can possibly know about apartments,know how to analyze deals,the areas to get in and not to get in,cause you can lose your shirt off your back literally,i would network and get contacts of apartment owners,lenders and whomever you can man,also apartments and sfh's are completely different,total different ball game,also learning two totally different strategies is the same as saying you dont know nothign at all,i would suggest you learn one and stick wtih it until you perfect it...and no i haven completed any deals like this but im telling u what a guy wtih mulit millions has told me

Zachary S. · Answer

I know one fellow that got started in the business by actually buying a duplex from his landlord. If you are currently renting, maybe ask some advice from your landlord and see if he/she might even be willing to sell.

Worked out well for him- he's now up to about 7 properties around Columbia.

Jason T. · Answer

Everything already said is great advice but I would add that you need to surround yourself with knowledgeable people you trust.  A good manager with experience and integrity is one of the most valuable assets you can have (other than cash).  You'll also want to develop a relationship with a good agent you can trust.  Naturally, the agent is going to make deals look a little better than they really are because they want you to buy.  There are some that don't do it as much.  In any case, that's when it's good to have that experience manager that can look at the comps, budget, and offering and give you his opinion.  We've been know to tell clients not to buy a property because we knew it wasn't a good deal, even though it looked good on paper and we would've gotten paid to manage it.

Eric Fete · Answer

Mike (and all above)
Thank you for the advice and thoughts!

Eric

Mike C · Answer

Eric,

The key to multis is to have some cash reserves and buy for cash flow. If you have some cash reserves, you can weather any short-term problems that may/will come up. Second, donâ€™t buy anything that wonâ€™t cash flow from day one. There are plenty of distressed sellers out there. They need to sell, you donâ€™t need to buy. Remember that. Do your homework, find a seller who needs to discount for whatever reason and move forward.

Every building has a price that a wise investor will purchase the building for. They may not sell this particular building for that price, but donâ€™t compromise and over pay. If you look at enough buildings, you will find one that meets your needs. When negotiating, make sure you bring up the uncertainty of the market and that you wonâ€™t take a risk and make their problem your problem. As long as you donâ€™t over pay, now is a great time to buy. Cash flow is king. Let me repeat that: Donâ€™t overpay and make their problem your problem. Talk to enough sellers and you will find a deal.

Best of luck

Mike C

Mike Haro · Answer

I would agree on educating yourself as much as possible on your particular property focus. However, just like with any formal education be it a college or trade school you can only learn so much from a class or a book. The most valuable education is the one you learn on the job.

beginning with apartments?

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