Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
@Frank Bonzai that was not nice of him, but I understand why. You asked him if he is selling any rainbows or unicorns and he said no. On top of that, he has inner circle clients who get first dibs on hot deals. These are guys who don't waste his time, understand what a good deal looks like and will have the means to pull it off clean.
I have done that a few times that I have offered a hot deal to a noob just because the call came in coincidentially at the right time - got a luke warm response followed by time consuming questions and back and forth and then a final "I'll think about it" and "do you have better deals?".
Real Estate Broker · Manchester, NH · Member since 2014 · 630 posts · 420 votes
7y
@Frank Bonzai Look for something more realistic than a 10 cap. 50+ unit apartment buildings don't sell at 10 caps... at least not in my market. All of my deals in that size range from a low 6 to a low 7... the only exception is a 76 unit deal I'm selling in an economically depressed town with very low property values, 150+ year old buildings, and this being a portfolio of 12 buildings spread out rather than just one (or a self-contained community). I'm selling this at a "12 cap" but that's not factoring in the extremely high capital expenditures that come with maintaining (and improving from their current condition) 150 year old buildings.
If you have a track record, brokers will call you back. If you don't have a track record, you might have more challenges getting phone calls back... but start small and work your way up. If you don't understand the basics of how these deals work, its probably best to avoid jumping into 50+ units to start.
Rental Property Investor · Cincinnati, OH · Member since 2018 · 41 posts · 19 votes
7y
@Frank Bonzai I would ignore the cap rate in an initial discussion. Ideally, you are really looking for particular cash on cash returns that are more dependent on the business plan than the specific cap rate. For example, a seller might very well sell at a 7 cap but if there are operational efficiencies you can take advantage of upon your acquisition, it might not be a 7 cap.
I would describe the property you're interested in with more specifics like size, unit mix, class etc and go from there.
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
@Frank Bonzai that was not nice of him, but I understand why. You asked him if he is selling any rainbows or unicorns and he said no. On top of that, he has inner circle clients who get first dibs on hot deals. These are guys who don't waste his time, understand what a good deal looks like and will have the means to pull it off clean.
I have done that a few times that I have offered a hot deal to a noob just because the call came in coincidentially at the right time - got a luke warm response followed by time consuming questions and back and forth and then a final "I'll think about it" and "do you have better deals?".
Rental Property Investor · Johnson City TN · Member since 2016 · 386 posts · 271 votes
7y
@Frank Bonzai - I agree with leaving the CAP rate out of the initial conversation. I'd suggest be specific with other aspects of your criteria (size, location, unit mix, etc.) but mention you need "some kind of value add component". That could include: differed maintenance, mom and pop manager, below market rents, high vacancy, etc.
Investor · Los Angeles, CA · Member since 2015 · 213 posts · 162 votes
7y
Share your criteria in a general fashion. If you said 10% cap, why did you say that?
Do your homework and research market cap rates in a region. In reality, you want to be general as others have mentioned and say I'm looking for 50-100 Units, up to $5M, with value-add potential. Something like that.
With that, you'll get deals sent to you and you can underwrite them to start getting a feel for potential values, etc.