Value add deals for small apartment building still there?

Question

New to apartment building investor and would like to employ value add strategies to build equity and wealth,cash flow should be positive.

But my main concern is to build equity and wealth.So my target should be mom and pop properties,but as far as I worked with different brokers and research different market,it seems this kind of properties are really difficult to find.

Any experienced investor can share insight here?Or anything I miss here?

Thank you

Marc C. · Answer

There are ALWAYS people who are sick of owning their own properties. And there are always slumlords who do very little maintenance, and, therefore, can't get market rents.

I do direct mail to Mom and Pops and the people who respond are usually over 65 and looking to retire...and interested in carrying seller financing.

Mike Dymski · Answer

@Andrew Elmasri

Below market rents - get the rent roll from the broker/seller and compare it to rentometer.com and your study of the market rent for that property and location

Overgrown or not maintained landscaping - easy to spot

Deferred maintenance on the exterior facade - easy to spot

No online presence or marketing (word of mouth or signage only) - google search for the property...see if vacant (or not vacant) units are marketed (usually on hotpads, trulia, zillow, web site, and many other sites where landlords market. Also ask the broker/owner about their marketing. I got an answer of "phone book" one time.

All white interior paint schemes - see this during your walk through

Dated lighting and plumbing fixtures - see during walk through

100% occupancy (can suggest below market rents) - will show on rent roll and trailing 12 month P&L

All rents in increments of $25 (a lot of money to be made in smaller increments) - on rent roll

2 - 10 year residents at rent rates below new tenants - on rent roll

No late fees in the P&L - on P&L

Self maintenance - ask owner/broker

Account Closed · Answer

Oh yeah, those opportunities are still out there. There's a guy on here that's doing exactly that, and he's really, really successful. His name is @Gino Barbaro. Nice guy, too!!

Mindy Jensen · Answer

Tagging @Gino Barbaro for you, Account Closed.

Mike Dymski · Answer

Gino literally wrote the book on mom and pop apartments....Wheelbarrow Profits.

Look for...

Below market rents

Overgrown or not maintained landscaping

Deferred maintenance on the exterior facade

No online presence or marketing (word of mouth or signage only)

All white interior paint schemes

Dated lighting and plumbing fixtures

100% occupancy (can suggest below market rents)

All rents in increments of $25 (a lot of money to be made in smaller increments)

2 - 10 year residents at rent rates below new tenants

No late fees in the P&L

Self-managing (tiring)

Self-maintenance (a lot of work)

Andrew Elmasri · Answer

@Gino Barbaro are you finding these deals via some kind of marketing technique? I would love to pick your brain.

Vincent Chen · Answer

@Gino Barbaro Thank you for your reply and I totally understand the motivated seller logic.

I just wonder other than good brokers,any other good ways to identify motivated sellers?

Thank you

Gino Barbaro · Answer

Hi Vincent,

I would go through all of the blogs that I have written for BP. Many of them focus on value -adds, creative financing, mom and pops and the multifamily space. If you have any specific questions, you can always send me a message or ask here and I will respond.

Basically, for a mom and pop property to work, you need a motivated seller. Motivation comes in many forms: retirement, health, divorce, burned out, bad partnership to name a few. These properties are all around us and come in many different sizes. We have purchased a 16 unit and a 281 unit mom and pop.

Gino

Value add deals for small apartment building still there?

Value add deals for small apartment building still there?

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