I am a seasoned CA investor (not a wholesaler, not a flipper) looking to invest in apartments in the DFW area. I need assistance from a reputable, competent agent/broker. Can anyone make a recommendation?
I do commercial transactions.
The first thing you need to do is DEFINE what you are talking about buying.
Lot's of inventory in DFW.
When you say apartments do you mean a duplex, tri-plex, quad??
Do you mean 5+ units??
If 5+ units and managing remotely you should go with a larger size apartment building of 60,70 units or more.
How much cash do you have to put down for this investment??
Do you want a stabilized apartment building with high occupancy, a turn around at 50% occupancy, a vacant building needing to be rehabbed??
What tenant base are you looking for versus the cap rate with quality and location??
These questions are important because for example I work on larger deals. I do not handle 2 to 4 units or 10 unit buildings etc. You will find brokers specialize in certain deal sizes. I hope this helps you out some.
All the best.
My goal is to get into a large building/s. I have approximately $400,000-$600.000 to invest. I want little to none deferred maintenance, high cap rate, stabilized building, decent area. I'm not in a 10-31 so I can take my time. Im not a wholesaler, flipper, rehabber, novice. Investing in apartment buildings is how I have made my living for the last 25+ years. I have an excellent team here in CA, but it does me no good in TX. All that being said, my main objective for this particular investment is cash flow.
I have a question: you say that you've been investing in apartments for 25+ years, that interests me, did you begin with single-family or did you jump right into apartments?
(Hopefully I don't redirect your post but I am sincerely interested in hearing a bit about your story)
My intention was to begin with a SFR. The random real estate agent that I contacted (the name on the sign in the yard) redirected me. This was in the 90's when the market was flooded with REO's. With the money I had, I was able to purchase a 6U building in Gardena, CA for $395,000. I still have that building today, it is probably worth around $1.3-ish. I have refi'd it twice, pulling money out to finance my daughters college education and also to purchase another investment prop. I don't have a whole lot of equity in the building, but it's cash flowing great now (rents were $650 when I bought it and now are $1750), so it's still one of my favorites! That random RE agent that I contacted has been my go-to-guy for all these years too, he's held my hand through every CA transaction I've ever done.
I will assume you can put all of the 600,000 down and that you have reserves and equity from other properties since you have been investing that long.
Sale price max 2,400,000 at 25% down.
48 doors at 50,000 a door = 2,400,000
That size will be hard to manage from out of state. Also the loan will likely come from a local bank wanting full recourse.
I notice there are a few here in the Dallas area in the price range as Joel's mention but to get a bank to finance you will need good reserves and good personal and business credit and must personal guarantee the loan with full recourse.
Full recourse is fine. Property management would obviously be the way to go, and is what I planned.
I wouldn't anticipate a problem with any of that. Are you in a position to forward information to me?
The issue is at 48 units you may or may not be able to employ a full time repair person for the complex with the gross income that comes in.
Buildings at 50,000 a door are generally older buildings that require more maintenance and the demographic of the tenants tend to wear down the properties more and cause repair issues more frequently.
Would you suggest some other option then? Or is this endeavor still feasible in your opinion?
Is 600,000 your max??
Are you willing to partner for a larger property??
You might want to also look at retail strip centers. Lot's of opportunity there right now.
Yes, 600,000 would be my max. I am willing to consider a partnership. I've been involved with NNN in Houston (Starbucks) and didn't care to have the terms of the lease dictated to me by the lessee. This is the concern I'd have with a retail strip center, that and I don't have any experience with this type of investment. If the return wouldn't be strong, I wouldn't want to consider it.
Some Starbucks are free standing and others are in a 2 to 3 unit strip center. The developer will go along with tenants requirements to land a national tenant.
Strip centers are going anywhere from 7.5 cap to 9 cap currently depending on national tenant versus local mix.
The leases in commercial will be pre-existing and locked in which is why review is critical under due diligence. The cap rate paid with single NNN is tied into tenant quality, location, and years left on primary lease term with bumps. Multi- retail tenants have shorter lease terms that single NNN.
@Anita Oakley I can offer some advice on brokers in DFW that specialize in multifamily. I see you're in MB. I'll be in LA the next few days if you want to get together via phone or in person. Email is in my signature.
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