We have group of few investors wanting to expand our portfolio into owning mom & pop apartment complex that will allow us to secure the property using non-recourse loan.... we do not want to go into syndication business as there is too much of legal leg work to be done. Our goal is to have steady passive cash flow.
We are already working with lending firm on the non-recourse loan but need to find deals that maybe in the range of 1.6-2 mil.
Also referral for good apartment property management on-site recommended.
We are looking to invest in either TX, AZ or KY if a good deal is found!
Please share any thoughts or contact that maybe helpful.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
4y
You are stepping into a very competitive niche in some very competitive markets.
I can speak for AZ in that multifamily cap rates have been compressed down to around 4-4.5% in the better parts of town. People are paying as much as $400k per door around here now, which is just mind boggling.
But maybe you fall into that bucket of folks who are comfortable with these returns in the short term and if you do, the good news is that there is some turn key product available.
Shoot me a message if you want to talk more detail on the AZ market specifically the Phoenix area. Would love to help any way I can.
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
4y
@Fayez Shantanu , as @Scott E. said above, you are stepping into dangerous waters filled with sharks. Especially with the uncertainty in the economy with interest rates rising.
Unless you are really set on doing multi-family, I would recommend looking elsewhere. There are just way too many great, experienced competitors you are fighting against and it is easy to lose in those situations.
My company was faced with this decision a number of years ago and we decided to look elsewhere in fact. We began looking for asset classes with a lot of mom-and-pop operators who leave a lot of upside available for professionals to acquire and harvest. We found this in self-storage and mobile home parks, and I would highly recommend that you look at those asset types.
About 85% of America’s 43,000 mobile home parks are owned by mom-and-pop operators and they leave a lot of upside typically. About 50% of America’s 53,000 self-storage facilities are owned by single-asset operators. Often, a great operator can go in and significantly upgrade operations, increase income, and maximize value for their investors. One more asset type to consider would be RV parks though they are very labor intensive if done well. I wish you the very best in your investing journey!