Multi family investing ( apartment or mobile home )

Member since 2020 · 51 posts · 9 votes

Hey everyone , I could use some tips and pointers on where to go . I have a good amount of resources , I'm looking for apartment complexes 20-40 units , or mobile home parks 30+ pads . I can't seem to find many off market deals , and the ones listed return average 4-5% on your money with somewhat conservative underwriting ( 45% operating expense ) what should I do , or how do I find good deals , I own 6 mixed use properties and have resources to fund myself , just can't find any good deals worth injecting 300-500k and making 12-20% CoC . Ima buy and hold kinda guy .

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Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

To find deals, you need to build relationships. If you're not getting off-market deals, then you haven't established relationships with the top brokers, property managers, lenders, appraisers, etc in the area.

Two additional comments:

45% expense ratio may be ok, but in general would not be considered conservative for MF

If you're looking for those returns, then you need to wait and see how things shake out.

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Michael DangPro Member
Rental Property Investor · Houston, TX · Member since 2015 · 454 posts · 273 votes
6y
Finding multifamily deals with a 12-20% CoC is rare in today's markets. I'm seeking returns of high single digit CoC. Maybe you can find those CoC returns deals in small tertiary markets where there is more risk. I question if 45% operating expense is conservative underwriting as we don't have enough details if that's the right % for what you are searching for.
Are you building relationships with brokers and wholesalers to find deals?
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
6y
Mike what you are wanting is almost a Unicorn. You are talking about numbers of a decade ago at the bottom of cycles. You are going to have to put in a ton of work to look for a 1 in 10,000 property to find that these days.
Even if a broker/agent had a pocket listing like that they are selling to existing operators that are very seasoned and a known commodity in that asset class.
Try to pick a specific area you like and find out who are the top brokers for those areas in that deal size. Once you hear what on and off market properties are trading for you might have to reformulate your plan, look in another area, or go after a different asset class.
Some mobile home parks might offer higher returns than multifamily but you have a really active yield versus passive yield to generate return on your money.
Brandon Turner is focusing on mobile homes. Might want to connect up with him to see what numbers they are hitting.
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Ryan Daigle
Investor · Apex, NC · Member since 2018 · 253 posts · 215 votes
6y
Hey @Mike B., I think you have an asset class problem. You’re wanting high yield returns from an asset class (multifamily) that is more of a balance between appreciation and yield.
If CoC is your investment goal, then you should probably focus on MHP and maybe hotels (once we're out of the COVID mess)? Those asset classes offer higher yields.
Getting 12-20% will still be quite challenging, but at least you’ll be looking in the right place.
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Mike B.
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Member since 2020 · 51 posts · 9 votes
6y
Fair points from everyone . My backbone has been retail Commercial and I've been around the 15-18 % CoC on those deals so Maybe my projections for multi-family may be a bit off but they are attainable , not 20% but I've talked to a few investors where they are getting 12 % + but i know they wont spill the beans on where they get the deals , we are in a smaller market ( 120k population ) I want to focus on Multi-family and really get educated as best as possible on it , I dont want to touch any other asset class .
Michael Dang- do you think 45 % is too low for operating expenses ? I know there is too may variables but just as an overall gauge. I have called about every broker with a multi-family listing of 4+ units
Joel Owens- Good point , I should ask what the average returns are in this asset class. But this is the class i would like to be in . Im moving away from retail commercial .
Ryan Daigle- CoC is one of my main goals , I would like to retire with a solid Passive income , not necessarily looking to be worth 1 billion .
General question for all of you , What has been the general return on your Multi-family deals ( 20+ Units ) Do you focus on Turn Key Deals or Value-add deals ?
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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
6y
To find deals, you need to build relationships. If you're not getting off-market deals, then you haven't established relationships with the top brokers, property managers, lenders, appraisers, etc in the area.
Two additional comments:
45% expense ratio may be ok, but in general would not be considered conservative for MF
If you're looking for those returns, then you need to wait and see how things shake out.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Todd Dexheimer
Fair points , I Appreciate the info , I’ll get back to calling and communicating with the above mentioned .
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Erik Hatch
Rental Property Investor · USA · Member since 2018 · 325 posts · 222 votes
6y
@Mike B. , over what time horizon? I think you can increase your cash on cash returns with a good purchase and forced appreciation plan, then refi sell strategy.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Erik Hatch
Good question Erik ! I don’t have a set time horizon , I’m a buy and hold for good unless my cpa recommends me to sell . I know with a good deal , and over 4-7 years you can refi and get most of not all your money back and do it again . That’s basically what My structure of investing would be . I don’t necessarily need to refinance , I have Retail business that yield me 300k + a year so I could theoretically buy a property every year self funded
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Erik Hatch
Rental Property Investor · USA · Member since 2018 · 325 posts · 222 votes
6y
@Mike B. that time horizon can really change your numbers, so as time goes on the return can come down, but equity builds. So I think its all in your plan. Make a plan you like then execute!
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Erik Hatch
I agree , I appreciate it Erik ! Just have to find deals and we should be good , just gotta take the recommendations listed above and make it happen.
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Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
6y
@Mike B.

To add to @Todd Dexheimer point about building the relationships, the best way to your expected returns is to build the relationships with the owners directly. It is a lot harder and may take a lot longer than going through brokers, but you will have better results. But again, patience is a virtue here!
My best!
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Alina Trigub
Great point , I’ve been driving around and writing address of properties to contact but it is a time consuming job and having a stream of brokers present you good deals may be a better strategy but you do have a great point as well , and your right , patience is key . Thank you .
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
This may not be the best question , but is there software or apps or Local gov applications( besides county tax records ) that locate parcels for owners classified as multi-family properties or something similar , it may narrow down the search a little for the properties in the asset class id be looking for . Im sure there is Something along these lines that may help investors locate properties / owners .
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Greg Dickerson
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y
Originally posted by @Mike B.:
Hey everyone , I could use some tips and pointers on where to go . I have a good amount of resources , I'm looking for apartment complexes 20-40 units , or mobile home parks 30+ pads . I can't seem to find many off market deals , and the ones listed return average 4-5% on your money with somewhat conservative underwriting ( 45% operating expense ) what should I do , or how do I find good deals , I own 6 mixed use properties and have resources to fund myself , just can't find any good deals worth injecting 300-500k and making 12-20% CoC . Ima buy and hold kinda guy .

A lot depends o the markets you are in but CAP rates have been very compressed the past couple of years. Mobile home parks can be good but you need a lot of units to generate a significant cashflow. Commercial is a work in progress right now and depending on how bad the damage form the shutdown may present some great opportunities in the future. Storage generally offers a better return profile but you also need to go big there as well.
One area that will generate the best returns overall is ground up development or adaptive reuse. You can generate high double digit returns if you know what you're doing.

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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
6y
Originally posted by @Mike B.:
@Alina Trigub
Great point , I’ve been driving around and writing address of properties to contact but it is a time consuming job and having a stream of brokers present you good deals may be a better strategy but you do have a great point as well , and your right , patience is key . Thank you .

The internet is a quicker way. You buy lists through the internet or get a subscription to CoStar or Yardi Matrix and set up a search criteria.

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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Greg Dickerson - i agree , we are at 5-8% cap depending on the property so its not the worst but its getting worse. Ive been reading up on self storage , just need to do more reading and see if its a field i can get in , if theres oppourtunity left in our local market here . Ive heard too many awful stories about developing but i assume thats not speaking to right group of people , and Re-use of un-utilized properties does seem to be the thing now , how would you get your feet wet there ? talk to bankers , builders , scan empty buildings ?
Todd Dexheimer- thanks Todd , i will check them out and see what happens . what kind of lending team do rely on ? Big banks , Credit unions , Small banks , Fanny Mae / Freddy mac ?
Not sure if you guys invest out of state or local to where you reside ,but What charts , data , info do you tend to research or rely on before entering a market and knowing its good ?
Also for Fanne Mae and Freddy Mac lending , do you have a local mortgage broker who handles that or do you go online to find them ? Sorry , i could ask a million questions
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Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
6y
Mike,

There're various paid apps like MelisaData and Listsource and many others.

Originally posted by @Mike B.:
This may not be the best question , but is there software or apps or Local gov applications( besides county tax records ) that locate parcels for owners classified as multi-family properties or something similar , it may narrow down the search a little for the properties in the asset class id be looking for . Im sure there is Something along these lines that may help investors locate properties / owners .

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Todd S.
Investor · Redwood City, CA · Member since 2014 · 10 posts · 3 votes
6y
Hey Mike, we should connect. I'm in the MHP space and sometimes come across off market deals through my property manager. Not sure if you'll get to 20%, but in some of the turnaround parks I'm underwriting, you can get to the high-teens after the park is stabilized.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
I’m all ears Todd S . I believe it’s doable , and yes , I would appreciate any deals you send my way . The resources are ready , just need the deals now . Thanks Todd
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Multi family investing ( apartment or mobile home )

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19 Replies

Michael Dang- do you think 45 % is too low for operating expenses ? I know there is too may variables but just as an overall gauge. I have called about every broker with a multi-family listing of 4+ units

Joel Owens- Good point , I should ask what the average returns are in this asset class. But this is the class i would like to be in . Im moving away from retail commercial .

Ryan Daigle- CoC is one of my main goals , I would like to retire with a solid Passive income , not necessarily looking to be worth 1 billion .

Todd Dexheimer- thanks Todd , i will check them out and see what happens . what kind of lending team do rely on ? Big banks , Credit unions , Small banks , Fanny Mae / Freddy mac ?