Jacksonville, FL · Member since 2015 · 280 posts · 53 votes
Hello everyone,
I have not focused any attention on multi-family know-how here on BP since I didn't see myself having the resources to tackle such a project as a new investor. Then someone I know mentioned there is this apartment building I know of been up for sale. I honestly don't know how else to approach this except introduce it here and see where the rabbit hole goes.
Contact me so we can go over some details to see if this even makes sense. I think it's pricey but it's Miami. Miami is fairly pricey. Vacancy is quite good is what I am been told. It is a 120 unit multi-family.
The basic thing you first need to do is to see if the numbers even justify a conversation. You need to create a proforma budget, then see what your annualized cashflow looks like. Part of that is figuring out what kind of loan you can get on the property - which will heavily drive your cash on cash return. Miami is a fairly good area for lenders to lend to, but you also need to have some creds in the industry or you won't get a loan. Having a solid local property management guy will help with the lender. that being said, you need to decide what return is appropriate. If a first timer, you need a pretty decent return to allow for the inevitable mistakes and errors. Personally, I would never pursue a property I can't comfortably expect to make 10% going in - which rules out a ton of gateway markets like LA, Miami...etc... However, I at least can sleep at night knowing if i have some vacancies i can still cover the debt service. This could be a 5-page post, but let me sum up by just saying - do the numbers. Make a budget, see what the pro-forma return is after you have factored everything you can think of in...expenses, repair reserves, average area vacancy...etc... Then if its good enough, you can think about moving forward. I toss 75% of the deals i see (about 10 a week) after that phase because some idiot is trying to sell me something with a 2% cash on cash return and is trying to persuade me that i should buy that for the "potential future value" of the property. Best of luck...120 is a bit large to be starting with. Get good local people and advisers down there!
Hi Lee, my partners and I are looking for properties in the Miami area. Yes, it can be very pricey. How long has it been on the market? Asking price? Do you have any other financial information you can share like rents, vacancy rate, annual operating expenses for Taxes, Insurance, Management, Maintenance, Utilities & Repairs/Reserves? If so, post here or you can email me directly thru BP.
I'm no seasoned investor but I know there's a ton that goes into analyzing a 120 unit complex.
The big things to think about (obviously) are financing, exit plan and management.
It might help to post at least some surface details on the post to get some better input!
Hi Simon,
Thank you for the helpful input. I am not so much looking for advise as I think honestly this is over my head, I am looking for direct help on it. So then, I want to be smart enough to know not to choke on too big of a bite (you get my point)!
Are Y O U prepared to manage such a facility? Have you managed even one rental?
You are not helping! A question for you... Are Y O U having a bad day or a bad month or something?
Please excuse me. I disdain ignorance.
Me too J Beard, as much experience as you have, you should know I don't need to have managed anything to have this opportunity. I suggest you drop your arrogance and just help here when you can... or just say nothing!
Are Y O U prepared to manage such a facility? Have you managed even one rental?
You are not helping! A question for you... Are Y O U having a bad day or a bad month or something?
Please excuse me. I disdain ignorance.
Me too J Beard, as much experience as you have, you should know I don't need to have managed anything to have this opportunity. I suggest you drop your arrogance and just help here when you can... or just say nothing!
I would have made positive suggestions aka using a PM, but you turned me off so curtly - - ALL I can say is good luck.
Lee,if you're serious about this you need to put together a team to help you.First,get a real estate agent who knows the apartment seen well in Miami.Next,get a general contractor capable of handling such a large project.Use both of them to inspect the property inside an out to see what needs to be done to modernize and repair the entire complex.After that,use their information to create a property analysis to present to financial institutions and private investors to show them the potential profits after rehab has been completed.Your best bet may be to get it under contract and wholesale it to bigger pocket investors with cash to invest in such a large project.Good luck to you.
Are Y O U prepared to manage such a facility? Have you managed even one rental?
You are not helping! A question for you... Are Y O U having a bad day or a bad month or something?
Please excuse me. I disdain ignorance.
Me too J Beard, as much experience as you have, you should know I don't need to have managed anything to have this opportunity. I suggest you drop your arrogance and just help here when you can... or just say nothing!
I would have made positive suggestions aka using a PM, but you turned me off so curtly - - ALL I can say is good luck.
Thank you J Beard, I look forward to our next interaction been all positive. Be nice to me and I will always be respectful and kind. But more importantly, I am doing my part to help this forum remain positive and clean (even as a newbie, sort of). I am not mad at you, I made my point and it's done!
Are Y O U prepared to manage such a facility? Have you managed even one rental?
You are not helping! A question for you... Are Y O U having a bad day or a bad month or something?
Please excuse me. I disdain ignorance.
Me too J Beard, as much experience as you have, you should know I don't need to have managed anything to have this opportunity. I suggest you drop your arrogance and just help here when you can... or just say nothing!
I would have made positive suggestions aka using a PM, but you turned me off so curtly - - ALL I can say is good luck.
Thank you J Beard, I look forward to our next interaction been all positive. Be nice to me and I will always be respectful and kind. But more importantly, I am doing my part to help this forum remain positive and clean (even as a newbie, sort of). I am not mad at you, I made my point and it's done!
I asked a reasonable question to steer my response . . .
Lee,if you're serious about this you need to put together a team to help you.First,get a real estate agent who knows the apartment seen well in Miami.Next,get a general contractor capable of handling such a large project.Use both of them to inspect the property inside an out to see what needs to be done to modernize and repair the entire complex.After that,use their information to create a property analysis to present to financial institutions and private investors to show them the potential profits after rehab has been completed.Your best bet may be to get it under contract and wholesale it to bigger pocket investors with cash to invest in such a large project.Good luck to you.
Awesome Brandon,
I will take notes from your post and follow your advise. However, I think my first step is to see if it makes sense at all. The owner lives oversees and I'm concerned about his asking price. So for me, it's feasibility starts with the price point!
I have not focused any attention on multi-family know-how here on BP since I didn't see myself having the resources to tackle such a project as a new investor. Then someone I know mentioned there is this apartment building I know of been up for sale. I honestly don't know how else to approach this except introduce it here and see where the rabbit hole goes.
Contact me so we can go over some details to see if this even makes sense. I think it's pricey but it's Miami. Miami is fairly pricey. Vacancy is quite good is what I am been told. It is a 120 unit multi-family.
I have not focused any attention on multi-family know-how here on BP since I didn't see myself having the resources to tackle such a project as a new investor. Then someone I know mentioned there is this apartment building I know of been up for sale. I honestly don't know how else to approach this except introduce it here and see where the rabbit hole goes.
Contact me so we can go over some details to see if this even makes sense. I think it's pricey but it's Miami. Miami is fairly pricey. Vacancy is quite good is what I am been told. It is a 120 unit multi-family.
Walk away. You're not ready yet.
Hahaha, walk away? how about all the people here on BP? If it's impossible for me, maybe it is doable for someone here. What do you think about that?
Thank you anyway, because I think you are sincere in trying to help!
The basic thing you first need to do is to see if the numbers even justify a conversation. You need to create a proforma budget, then see what your annualized cashflow looks like. Part of that is figuring out what kind of loan you can get on the property - which will heavily drive your cash on cash return. Miami is a fairly good area for lenders to lend to, but you also need to have some creds in the industry or you won't get a loan. Having a solid local property management guy will help with the lender. that being said, you need to decide what return is appropriate. If a first timer, you need a pretty decent return to allow for the inevitable mistakes and errors. Personally, I would never pursue a property I can't comfortably expect to make 10% going in - which rules out a ton of gateway markets like LA, Miami...etc... However, I at least can sleep at night knowing if i have some vacancies i can still cover the debt service. This could be a 5-page post, but let me sum up by just saying - do the numbers. Make a budget, see what the pro-forma return is after you have factored everything you can think of in...expenses, repair reserves, average area vacancy...etc... Then if its good enough, you can think about moving forward. I toss 75% of the deals i see (about 10 a week) after that phase because some idiot is trying to sell me something with a 2% cash on cash return and is trying to persuade me that i should buy that for the "potential future value" of the property. Best of luck...120 is a bit large to be starting with. Get good local people and advisers down there!
Unlike so many, I tried to frame my reply in the context of the OP. To do justice to the question and NOT jump in with assumptions, I asked for clarification and it went down hill from there. It's sad that is not self-evident.
A real friend will tell you the truth, even if it's not pleasant to hear,
Lee Scarlett honestly 120 doors is a huge under taking. I would say if the price is right def get control of the deal and maybe even look to assign. I have a spreadsheet that could be of value for you it evaluates a multi unit building and basically tells you if the deal makes sense and what scenario works best (i.e. Condo conversion, fix n flip, re-tenant, etc.)
Shoot me an email
@Lee Scarlett, just HOW pricey? Reminding us that Miami is expensive is not too helpful in helping us help you. What is the "good" vacancy rate you have been "told" about (and who is doing the telling)? Rents per month? Rehab requirements? Comps per door? How long has it been on the market? How motivated is the Seller? HOA costs? Taxes? (And the list goes on)...
Reasonable points @Brent Coombs, that's where you come in. I am basically a novice in this particular scenario so, the questions I need to ask is important for me to learn, to hear from helpful members like yourself.
Here is some info, whatever needs to be asked after you look over it all, please let me know!
120-unit apartment with address @ $9.5 million (firm). Owner turned down $9.3m already.
In the documents you will find $23,000 a month for contract labor, that is money the owner pays himself. You will also see $8,000
a month in management fees, that is also money the owner pays himself.
$23,000
$ 8,000
___
$31,000 added back
If you remove those two items from expenses the cap rate should be around 9%.
@Jeff B.Yuck. You're not being very nice at all. Persnickety and uncalled for.
Thank you so much for the needed help LaTonya. I feel this individual has not been admonished ever, or in a long, long time. He is actually quite rude , maybe downright obnoxious in many of his post that I have seen and those I've heard of. I want to continue a conversation with him however for the benefit of the forum!