Apartment Dreamin. Open Journal

23 Replies

How’s it going BP,

To get straight to the point with this post before I backtrack, I have decided that it is the right time for me to start investing in multi families and my goal is an apartment with a minimum of 5 units (for commercial loan reasons). I have done my studying and will continue to study everyday but I don’t want to get stuck in analysis paralysis. 

A little about me: My name is Tim and I am from Queens, New York. I bought my first property in 2014 which was a personal residence in NY and then decided to start investing in 2016. Since then I have bought homes in North Carolina, Florida, 2 in Milwaukee and I manage a home in New Mexico, all while working full time in the military and currently being stationed in Yuma, Arizona . All single families. 

The reason I am posting this in the open to the BP community is for a couple of reasons. 1) I want to use this space as a journal. I want to be able to look through my notes and be able to track good or bad habits, not just for this next deal but for future deals to come. 2) If anyone does decide to read or follow this, I hope that they can learn from my successes and failures and maybe drop some advice or questions along the way. That would be greatly appreciated. 

I don’t have experience in the multi family game. I am starting this goal from scratch and I’d like to accomplish it before the holidays. A couple of key points:

Financing: I have a strong potential Partner A and B. A might be able to bring 30k to the table and B a possible 20k. I may also be able to come up with 20k. Another option that I have is a HELOC on my house in NY which is completely paid off. I might be able to pull out 100k from there. Just some options that I've floated around.

Locations: Just the baby stages of everything but I am looking into Atlanta and it’s surrounding neighborhoods as well as Cleveland for now. I’ll learn and exhaust those markets before I decide to move on. 

My goal is to make progress everyday. Whenever I make any noteworthy news, I will report it in this journal. I am excited to take this next big step in my investing journey and hopefully I can help some people to learn along the way!

T. C. 



Originally posted by @Timothy Casallas :

How’s it going BP,

To get straight to the point with this post before I backtrack, I have decided that it is the right time for me to start investing in multi families and my goal is an apartment with a minimum of 5 units (for commercial loan reasons). I have done my studying and will continue to study everyday but I don’t want to get stuck in analysis paralysis. 

A little about me: My name is Tim and I am from Queens, New York. I bought my first property in 2014 which was a personal residence in NY and then decided to start investing in 2016. Since then I have bought homes in North Carolina, Florida, 2 in Milwaukee and I manage a home in New Mexico, all while working full time in the military and currently being stationed in Yuma, Arizona . All single families. 

The reason I am posting this in the open to the BP community is for a couple of reasons. 1) I want to use this space as a journal. I want to be able to look through my notes and be able to track good or bad habits, not just for this next deal but for future deals to come. 2) If anyone does decide to read or follow this, I hope that they can learn from my successes and failures and maybe drop some advice or questions along the way. That would be greatly appreciated. 

I don’t have experience in the multi family game. I am starting this goal from scratch and I’d like to accomplish it before the holidays. A couple of key points:

Financing: I have a strong potential Partner A and B. A might be able to bring 30k to the table and B a possible 20k. I may also be able to come up with 20k. Another option that I have is a HELOC on my house in NY which is completely paid off. I might be able to pull out 100k from there. Just some options that I've floated around.

Locations: Just the baby stages of everything but I am looking into Atlanta and it’s surrounding neighborhoods as well as Cleveland for now. I’ll learn and exhaust those markets before I decide to move on. 

My goal is to make progress everyday. Whenever I make any noteworthy news, I will report it in this journal. I am excited to take this next big step in my investing journey and hopefully I can help some people to learn along the way!

T. C. 

Hello Timothy,

Thanks for sharing your thoughts, experience and aspirations on here. BiggerPockets is all about the community so having members like you really helps keep the forums interesting and informative.

Thank you for serving our country and protecting our freedom!

Being that you are getting your financing together and seem pretty motivated, I would recommend searching through forum posts that mention Atlanta and Cleveland apartment deals. If you haven't already done so, I'd also suggest setting up keyword alerts for the topics and locations you're interested in. i.e. Atlanta apartment; Cleveland multi-family; etc. This will get you in contact with active members in those markets and help you find that next deal.

Congratulations on your success to date and we look forward to reading about and following your journey!

Abel

 

Originally posted by @Timothy Casallas :

How’s it going BP,

To get straight to the point with this post before I backtrack, I have decided that it is the right time for me to start investing in multi families and my goal is an apartment with a minimum of 5 units (for commercial loan reasons). I have done my studying and will continue to study everyday but I don’t want to get stuck in analysis paralysis. 

A little about me: My name is Tim and I am from Queens, New York. I bought my first property in 2014 which was a personal residence in NY and then decided to start investing in 2016. Since then I have bought homes in North Carolina, Florida, 2 in Milwaukee and I manage a home in New Mexico, all while working full time in the military and currently being stationed in Yuma, Arizona . All single families. 

The reason I am posting this in the open to the BP community is for a couple of reasons. 1) I want to use this space as a journal. I want to be able to look through my notes and be able to track good or bad habits, not just for this next deal but for future deals to come. 2) If anyone does decide to read or follow this, I hope that they can learn from my successes and failures and maybe drop some advice or questions along the way. That would be greatly appreciated. 

I don’t have experience in the multi family game. I am starting this goal from scratch and I’d like to accomplish it before the holidays. A couple of key points:

Financing: I have a strong potential Partner A and B. A might be able to bring 30k to the table and B a possible 20k. I may also be able to come up with 20k. Another option that I have is a HELOC on my house in NY which is completely paid off. I might be able to pull out 100k from there. Just some options that I've floated around.

Locations: Just the baby stages of everything but I am looking into Atlanta and it’s surrounding neighborhoods as well as Cleveland for now. I’ll learn and exhaust those markets before I decide to move on. 

My goal is to make progress everyday. Whenever I make any noteworthy news, I will report it in this journal. I am excited to take this next big step in my investing journey and hopefully I can help some people to learn along the way!

T. C. 



Nice one Tim.

Doing this makes you accountable too.

The important thing is to take action - everyday (if you can) and capture your progress (or lack thereof) here once a week.

I have acquired over 1,000 apartment units and I started with $0.

You can read my story here:
Part 1
https://www.biggerpockets.com/forums/55/topics/690349-from-bankruptcy-to-1-000-units-part-1-thru-the-dark-tunnel

The links to Parts 2 and 3 are in the post.

Also, I shared on BP what I did to make $1M on one building (link below). Hope these posts will inspire you and give you some ideas on how to succeed with MF investing.

https://www.biggerpockets.com/forums/311/topics/644570-how-i-made-over-1-million-on-1-deal-after-6-years-of-headaches

@Matt Hershberger thanks man. Once I start putting together my plan a little more and develop some questions, I will probably contact you so I appreciate it. Great to hear about the developing neighborhoods near Atlanta. Music to you ears. 

@Taylor L. . Will do! I love being as thorough as I can, especially when going into a new market.

@Abel Curiel For sure. Keyword alerts have been very clutch for me in the past. Thanks for the advice. Also, I will be contacting you just to talk Queens. Just out of curiosity because you never know, but I would love to invest in my own backyard for once and I have some family members that have shown interest in partnering up as long as it was in NY. 

@Michael Ealy Wow! I read your whole story and I really couldn’t stop. That’s amazing and really motivating. I love how you never gave up even when it looked like you were at rock bottom. Very inspiring, thank you for sharing!

@Michael Dang Great advice to read the market analysis from the brokers and local business journals. I will for sure be doing that. Thank you!

@Brock Mogensen I love hearing that because that is my goal right now to make the jump to multi family like you did. It’s especially great because you are in Milwaukee where I also do business. Very good news!

Good evening BP,

I am here to input my weekly update into this journal. I’ve gotta say, this really does keep me honest and I love it. Every day this week, if I wasn’t learning something new or making some sort of forward progression in this goal, I made sure to get some work in because I knew I’d be giving this update and I can’t come up empty handed. Crazy also that it’s only been one week since I opened this thread with how much information I processed. So here it goes:

First of all, my resources of self education this week:

Bigger Pockets Podcast show 338

I am reading both “The ABCs of Real Estate Investing” by Ken McElroy and “Raising Private Capital” by Matt Faircloth.

BP Forums

What I’ve learned this week:

Cap Rates. I've messed with cap rates somewhat with single families but it seems like cap rates play a huge role in multi-families and I really need to learn it like the back of my hand. From what I understand, Cap Rate is the ratio of the Net Operating Income (NOI) to the Fair Market Value (FMV). The Cap Rate is the overall rate of return on the value of the asset. So if a multi-family is selling for $500k and the NOI is $65k, the calculation would be 65,000/500,000 = 0.13 or 13% Cap Rate. Thanks to "50 Real Estate Investing Calculations" by Michael Lantrip for all my real estate formula needs. Very handy book.

I need to learn what is a good Cap Rate in both the Atlanta and Cleveland area markets. I figure I’d do that just be analyzing deals and see what the average Cap Rate seems to be. If its too high, its probably too good to be true. 

I also learned about Loopnet. It seems to be the zillow for Commercial properties. I want to find more resources but this was a good start. I wore it out this week looking through all the properties that fit my criteria. 

Goals for this upcoming week:

Keep studying but that’s obvious. I need real specific goals so here they are. This week I want to make some connections. I want to call down to property managers in both the Atlanta and Cleveland areas and get an idea of which areas are booming and which areas I should stay away from.

Most importantly, I want to analyze deals. I realized that its different from single family analysis because there may be more to look into such as what expenses is the owner supposed to pay for and do I need an LLC because I never found it necessary to make one for the single families I purchased.

On that note, to conclude this post I am going to ask BP for assistance with this one. Below I will be posting a property I’ve run across and if anyone would like to share how they break it down and analyze it and what to look for, I’d greatly appreciate it.

This property is already under contract but I think it’ll be good to breakdown:

https://www.loopnet.com/Listin...

8 Unit Apartment Building in Cleveland, Ohio

12.06 % Cap Rate

All 1 bedroom, 1 bathroom units built in 1962

100% occupied

Summary says it is undervalued and you can increase rents to market value.

Tenants pay Forced air Furnace heat and Submetered Electric. 

Landlord pays for hot water and dumpster.

There Are landlord owned laundry machines.

There are storage lockers which can be used for additional income as well.

C-Class Building

These were some of the key notes that I personally took from the summary, but feel free to check the link above to see the whole picture. Thanks for reading the post guys and I look forward to any insight or advice that may come my way!

T.C.

Hey Tim, Keep up the good work! I'm an investor based in Atlanta also looking to expand into Multifamily. Let's connect and see if we can work something out.

New weekly entry in the journal for the week of 8/4- 8/11:

Not too much to report this week unfortunately. That's not to say there wasn't any progress. I continue to read and listen to podcasts. I have begun to network and have linked up with some very promising and motivated people in Ohio and Georgia. Sometimes patience is a virtue though and I have to remind myself about that.

My goals for this week:

1) Analyze 2 properties from Georgia (Atlanta and surrounding areas) and 2 properties from Ohio (Cleveland, Dayton) to work out the understandings of the differences between multifamily and single families. This also gets me more familiar with the markets. 

2) Finish both "Raising Private Capital" and "ABC's of Real Estate Investing". 

This is the preparation and learning stages and I feel confident that I'll seal the deal before this year is up.

T.C.

Good evening BP,

I haven't posted in about a week and a half but that definitely didn't mean I was not making moves. As a matter of fact, I feel like I just make a huge move. I secured a business partner that will be investing with their money and I will do all of the work for a 50/50 split. That is obviously huge because with the funding secured, I can actually move forward knowing this isn't all just wishful thinking. I've met some good people so far which is awesome. I've had to make some tough decisions such as not including other people as a part of this deal just because any way I tried to cut the pie, I ended up giving up too much when I didn't really need to. But what is interesting is that since I will not be funding any of this apartment deal, I can actually still do some smaller moves in the meantime which I think is great. Before this year I never made more than one purchase annually. So far I have already made two and I am looking to make a few more. I look forward to really learning the art of partnerships. There is a lot that goes into it just because there are so many human variables and I think it will be very beneficial for me to learn them now on smaller deals before I really scale up to the next level.

Details on my money partner is as follows. He owns a property in full in New Mexico that I help manage. He is a very passive investor and is looking to pull his money out via HELOC, home equity loan or some other means. I said I will research and help figure out the best means to do this. The deal is that I will give up my money that I receive for managing the property and give him 50 % of the apartment deal if he invests with me. He accepted. If all works well, this will be a great win/win for both parties.

Weekly goals for 8/25/19 - 8/31/19:

1) Post on the forums some questions I have about partnerships on a separate thread.

2) Book on Partnerships

3) Learn the ins and outs of HELOC and Home Equity Loans or possible means to pull money out of a property that is paid for in full.

4) Research LLC's.

T.C.

@John Casmon

John, thank you for asking this question. I say that because it is a simple question but I couldn't really answer it other than "I've heard good things from people" and I didn't want to give you that answer. So it forced me to really see why am I locking down these areas and it changed my whole perspective. 

We will start with Cleveland and why now I don't believe I want to pursue it anymore:

First of all I remember when I was looking for a reputable turnkey company, I searched all throughout the forums looking for good cash flowing markets. Cleveland came up a lot. This particular company had a little cartoon presentation that was easy on the eyes with stats on it including its largest employers like Progressive, Sherwin Williams etc as well as the 2nd Best Hospital in the US and some other things. I guess this coupled with how often I was seeing it on BP convinced me. Upon further review and after doing some reading on big things I should be looking for like Population Growth and Job Growth and Opportunities, I've had a change of heart.

Heres one article explaining it better than I can: https://www.clevescene.com/sce...

And here's a study with charts and maps: https://www.law.umn.edu/sites/...

It looks like Cleveland has been losing population for decades. The job market and unemployment doesn't look to hot neither: https://realestate.usnews.com/...

I am not trying to crap all over Cleveland and I am sure it works for many people. But after really looking into it more myself, I've decided to let Cleveland go and I am okay with it. Even @Remington Lyman came on here telling me this news about a month ago and I am seeing it. But long story short, I will be looking at other markets and really solidifying it with good numbers now that I have my money partner and the dream becomes more real.

Now Atlanta on the other hand:

https://www.focusga.com/2019/0...

https://realestate.usnews.com/...

Job growth with a declining unemployment rate pretty consistently throughout the searches.

Home to more than a dozen Fortune 500 companies, the city offers a nice diversity of jobs and opportunity. And with jobs come population growth. https://www.bizjournals.com/at...

So for me, Atlanta is most definitely locked in and my #1 go to market that I will learn and attempt to achieve my goals in. I will start a search for a solid #2 and #3 but now it'll be fueled with my own research and not just solely word of mouth. Thank you for the question John, as it really did get me thinking and I appreciate it.

Hows it going BP, here is my journal entry for the week of 9/1/19 - 9/7/19:

This post is going to be an important one that I will be looking back on often because it will include the plan of action for the near future. I finished reading "The ABCs of Real Estate Investing" and got some great tips along with a game-plan. I also started reading "The Millionaire Real Estate Investor" and its already dropping some good nuggets of information that I can incorporate. 

Business To Do List:

1) Find Your Team

2) Evaluate the market

3) Find a great Property

4) Assign a Valuation to the property

5) Establish a property plan

6) Develop a budget

7) Manage the property

I am not going to break down all the steps here and now only because I want to put full focus on the current steps that I will be working on.

Step 1) Find your team:

I found a partner already. So as of now I am good in that department.

The rest of the team will consist of an attorney, accountant, real estate broker and a property manager for Atlanta which is where I will exhaust all my options before really moving on.

So, I know what my first step of Step 1 needs to be. I need to find an attorney that can help me set up my business. Whether it is a LLC or something else, I need to start here. My knowledge of this is so minimal but I am excited to learn. I'll do my own research as I look for attorneys. I can give this step a deadline of 1 week. So by Wednesday, September 11th I'd like to have an attorney and an idea of what I'd like to do as far as setting up a business goes.

Next will be an accountant. I have someone in mind that my family has been using for years back in NY. I will contact this person and get a feel if I'd like to continue with him. I will also give this a deadline of one week from today.

Now for my property search team. I want a broker that specializes in the type of building I am looking for. I don't have experience with commercial properties or apartments so I want to choose someone that does. Good referrals and testimonials would be great for this team member as it would for the property manager. I have good experiences with property managers and not so great ones with other property managers. This one I take very seriously, as I truly feel finding an experienced, thorough property manager with great systems can really save headaches in the future. Since I'm more focused with setting up my business first, I'll give this deadline two weeks and a couple of days. So by September 20th, I want these members to have been chosen.

I believe David Greene's saying that rockstars know rockstars, so I am hoping to meet team members like contractors and the such from recommendations of my other team members like my property manager.

This is a good start I believe and writing it down really clears it up for me. Time to get some sleep and get to work first thing in the morning!

I'm born and raised in Cleveland and love the city, but understand your conclusion in regard to population and job growth. There are multiple cash-flow markets with strong or stable growth. We like Indianapolis and Cincinnati in the Midwest. Atlanta is a good market with lots of upside as well. Good luck, look forward to seeing your progress.

@John Casmon @Casey Roloff Thanks guys! Much appreciated.

Here is my update for the week of 9/8 - 9/14:

This week has been by far the most confusing, hair pulling, walk up and down the room pacing week I've had in a while. I am dealing with trying to figure out the whole business side of things with partnerships and laws and trying to make sense of all the jargon and nuances and I am pretty sure that's what drove me to drink heavier than usual this week. Yea, I'll blame that and not the group of Marines I was hanging around with this week. Speaking of which, since this is my journal, let me call myself out on my lack of real progress this week. Yes, I was away this week for training, but I had more than enough time to study and work harder than the actual output I produced. It felt like at many times I had the equivalent of writers block mixed in with a lot of excuses.

While I didn't reach my deadline goals, it also wasn't a complete loss. I met a great group of guys down in Milwaukee that I bought a couple of properties from earlier this year and they also provide some great advice and information whenever I have questions. They sent me over a template of their Joint Venture Agreement that they use. If anyone else has used this in their partnerships and would like to post some pros and cons, it would be greatly appreciated. Let me note, that the Joint Venture Agreement was for a single family home that I was looking to partner with, and not to be confused with the apartment goals. For the apartment I will be doing an LLC and I am just trying to figure out how to structure it with my partner. I've realized that I am working on multiple goals at once and I need to focus on the big one which is the apartment. My lack of focus was definitely on display to myself this week.

So, let me readjust my short term goals here so I make sure I do this right. I need to keep moving forward, but I can't rush this part. It is guaranteed to bite me in the butt if I do.

My one and only goal for this upcoming week is call an attorney in Atlanta. We will discuss:

1) opening an LLC

2) having a partner in the LLC

3) buying and selling real estate with an LLC

4) what am I liable for. how to prevent people from "piercing the corporate veil"

5) fees, pros and cons

I have confidence I will get this done this week and really take a huge step forward. I was too overzealous about thinking this was going to be simple but now I know. I anticipate the next step of finding an accountant will be just as tedious. 

On a closing note, I just want to suggest the book "How to Choose your Best Business Entity For Real Estate Investing" by Michael Lantrip. I love the way he breaks things down and to me, it was a great introduction to all the different entities I can encounter.

Finally a fresh journal entry. 22 days since my last one wow! Time flies, but I definitely wasn't slacking. A decent amount has changed in my mindset and strategy these last 3 weeks.

First of all, the biggest change has to be that I have completely changed my market and it is by far my favorite move thus far in the journey. Originally I was looking at Atlanta as well as Ohio. Two markets that I know next to nothing about but my mindset was that I could learn it and do the job long distance if I connect with the right people. I used my experience with working with great guys in Milwaukee (a city I have never been to), to buy turnkey single family homes and it has gone great. However, the more I dove into this, the more I realized that I was heavily relying on trust with people I don't know and never met in an area I've never personally explored with a lot more on the line than a single family home. It just wasn't sitting right with me anymore. I am not going to say it can't be done, but for my first apartment, I want to be more hands on. So that is why I looked no further than 2.5 hour from my current location in Yuma at Phoenix, Arizona. 

I've been to Phoenix plenty of times and it is a market I can really learn up close and personal while also networking and meeting people without relying on just phone calls. Body language goes a long way with me. 

So while I knew that this was a great mindset shift for me, I needed more action. Physical action. I took a drive to Phoenix last weekend and explored properties that were listed in Loopnet around my price range. It became painfully obvious right there that I made the good choice to do this thing somewhere nearby because the pictures did not match the actual properties one bit. One apartment was basically a shack that you could find in Slab City, which definitely looked way nicer online. I checked out three apartments in total and all were a bust so I began to think networking and off market deals is going to be my keys to success. So for the first time in my life, I will be going to a Real Estate meetup group in Phoenix on October 16th. Ben Leybovich will be there as a guest speaker which I am pretty excited about because I've heard him in podcasts and I'll definitely be taking some notes. 

So there it is, that's my next move. October 16th in Phoenix for a meetup which I really hope can jump me ahead lightyears in my apartment journey. In the meantime, I will continue to study the market and read. I have been working on my business plan. I actually just finished the rough draft, but once I polish it up I am going to post it on here for everyone to see. I did also talk to a CPA during the time between my last post. Very knowledgable guy it seems and I was impressed but a lot did go over my head, but it'll come with time I'm sure.

Well, that's it for now. Until next time BP. Thanks for reading along!

T.C.