Closed over 100 units in the past 9 months

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

Since 2008 I have bought around 200 units - mostly 1-4 unit buildings. Since I started I wanted to buy apartment buildings, but I finally broke the ice with out of state apartment purchases. I have now purchased 108 units in the past 9 months. The next goal is to purchase a 50+ unit building.

My advice for anyone investing is to form your goal and to stick with it. I am happy with where I am at right now, but hesitated for years to jump to the next level. I am now determined to purchase a 50+ unit building within the next 6 months and I will do it!

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Susan Knight

Conway, SC · Member since 2012 · 114 posts · 44 votes

Todd Dexheimer I think you need to do a podcast ;-)

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Johnquel Jones
Wholesaler · New Orleans, LA · Member since 2016 · 77 posts · 13 votes
9y
@Todd Dexheimer Congratulations! Keep at it! I have considered out of state purchasing. But, I am still a bit unsure of where to start. When it comes to researching properties, are there certain rules and regulations f=you look up for each state?
1 Reply
Stephen Moore
Real Estate Investor · Lake Charles, LA · Member since 2009 · 271 posts · 52 votes
9y
@Todd was this 1 building?
0 Reply
Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Stephen Moore - several buildings. 6 buildings in different locations - 3 different cities
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Johnquel Jones Go for it. I hesitated for years. I researched for 2 years before finally holding my breath and diving in. I wish I would have started years ago. When researching, look for jobs coming in and the types of jobs, look for building permits - you want apartments being built, but not at record highs, look for market rental affordability, cap rates, distressed opportunities if you like that. Also be sure you're getting into markets that have good property managers. All of this can be found online with research. Don't go with the hot trendy markets.
4 Reply
Manvir G.
Toronto, Ontario · Member since 2017 · 31 posts · 1 vote
9y
@Todd Dexheimer Congratulations. I'm looking into apartment buildings as well so it's nice to hear about people succeeding and finding good deals in the current market. What sources were you using for your geographic research?
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Todd Dexheimer:
@Stephen Moore - several buildings. 6 buildings in different locations - 3 different cities
Congratulations!
How will you be managing these?
Managing these small multi family properties can be very difficult, which is why most multi family investors pass on anything under 60 units, more often 100 units.
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Jon Q. I am using a management company that focuses on under 100 unit assets. There are a lot of companies in every market that are in the 15-50 unit field, but they are often less "professional" than the companies that are focusing on 100+ units. My goal is to get to the 100+ unit deals, but right now I am finding good value add in the mid space. My desire is good NOI and value add. That is hard to find right now in the 100+ unit apartments.
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Manvir G. Internet searches. Going to loopnet to find markets with desirable NOI and then researching them to find out if they have potential. The key is to find out if there is economic growth and reason for the market to increase. Looking at city web pages, researching Biz journals and looking at big brokers web pages can be good.
2 Reply
Steven Stokes
Specialist · San Francisco, CA · Member since 2013 · 227 posts · 158 votes
9y
@Todd Dexheimer Congratulations and good job. Can you share some of the properties you have purchased? How you financed them? What resources you had before jumping into this and what challenges you had with your purchase.
So many people on here would benefit from knowing how you accomplished this and it will be helpful to many newcomers.
Thanks
And I wish you the best in your continued success.
Stephen
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Todd Dexheimer:
@Jon Q. I am using a management company that focuses on under 100 unit assets. There are a lot of companies in every market that are in the 15-50 unit field, but they are often less "professional" than the companies that are focusing on 100+ units. My goal is to get to the 100+ unit deals, but right now I am finding good value add in the mid space. My desire is good NOI and value add. That is hard to find right now in the 100+ unit apartments.
Yes. If you can buy several near each other and manage out if one office, that's another way to get access to professional managers. As you mentioned, often these smaller deals don't kickoff enough revenue to afford decent managers. Thus, returns often suffer.
I'm assuming your strategy is class C to B rehabs and/or management fixers?
What's your return target?
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Jon Q. I don't think I mentioned the small deals not kicking out enough revenue. The small deals I am buying have much higher returns even after paying a manager than the big deals do. Every deal I have purchased so far is a 10 cap + using large replacement reserves and high maintenance expenses. The larger 100+ unit building won't cash flow as well, but they are about economies of scale.
I am buying in B/C areas with management issues - so far all mom and pop type owners.
My target return varies depending on the deal, area, etc. If I have a clean deal, with little in renovation expenses, I am able to purchase at a lower ROI. If it is high risk, I will expect 35% min. My goal is to make my investors a minimum of a 15% annualized ROI.
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Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Todd Dexheimer:

@Jon Q. I don't think I mentioned the small deals not kicking out enough revenue. The small deals I am buying have much higher returns even after paying a manager than the big deals do. Every deal I have purchased so far is a 10 cap + using large replacement reserves and high maintenance expenses. The larger 100+ unit building won't cash flow as well, but they are about economies of scale.
I am buying in B/C areas with management issues - so far all mom and pop type owners.
My target return varies depending on the deal, area, etc. If I have a clean deal, with little in renovation expenses, I am able to purchase at a lower ROI. If it is high risk, I will expect 35% min. My goal is to make my investors a minimum of a 15% annualized ROI.
Often it is these small deals that don't kickoff sufficient revenue to afford a decent manager. If you're consistently locating decent deals that do, that's impressive.
Sounds like you've developed a decent strategy that's working for you. Impressive returns.
0 Reply
Kadi Ferrara
Tucson, AZ · Member since 2017 · 13 posts · 2 votes
9y
How did you get started on your path?
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Jon Q. What size buildings are you purchasing? How are you raising money for your deals?
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Ramon Jenkins
Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
9y
Congrats
1 Reply
David BarnettPro Member
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
9y
Congratulations @Todd Dexheimer. Very impressive!
1 Reply
Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Kadi Ferrara how I got started is a long story, but to make it short I was a teacher and started reading books on business and RE investing. I got lucky and started buying in 2008 and never looked back. In 2008 I bought my own live in and flip house, 1 flip and 3 rental houses in my first 6 months. I refi'd my rentals and used that money to buy more. Then in 2009 I started doing more flips and used that money to buy rental houses. During that time I was meeting people to invest in my deals and building a rental portfolio. Once the flips got too expensive and small rentals didn't make sense to buy, I decided to actually follow my dream and buy apartments. I researched markets for over a year and then started buying with my investor network.
5 Reply
Kadi Ferrara
Tucson, AZ · Member since 2017 · 13 posts · 2 votes
9y
I hope I can be this succsesful! My husband and I are trying to find lenders or cash buyers and it's been hard!
0 Reply
Alan DeRossett
Investor · Thousand Oaks, CA · Member since 2017 · 302 posts · 123 votes
9y
Your an inspiration Todd! Ive hesitated for the last twenty years while managing one 4 plex for family and multiple other companies. Our 4 plex is currently paid off and have been upgrading it to meet Sustainable Property goals for next 20 years. In our area I can increase rents by 10% and property value by 20% over identical units on same street by doing these upgrades. Want to start looking for more multi family dwellings since my operating costs per unit go down with volume. For instance the net metering of the Electric allows Roof Top Solar energy generated to reduce the tenant electric bills. A Tenants first $100 could be free but we charge a higher rent keeping it competitive. with the addition of our Networks Smart IOT systems I can now manage more properties and have basic skill based routing used to lower our overhead so will began this year to expand and buy new property.
1 Reply
Glenn Matthews
Investor · Encinitas, CA · Member since 2017 · 9 posts · 5 votes
9y
Hey Todd, very inspiring. I'm curious, did you establish a set criteria when you started your research in various states? .....like population growth, population size, median income, cap rates, cost per unit, etc? Or did you just research deals and then work backwards verifying the city/town was a viable option? Glenn
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Todd Dexheimer
OP
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Steven Stokes The properties I have purchased are all out of state. I first started researching markets in 2015 after I decided to change directions and follow my dream that I have had since 2008 (prior to that I flipped 100+ houses and owned 60ish rentals - all 1-4 family besides a 15 unit and a ski resort). After a year I finally got the courage to get on a plane and view apartments and the markets that I liked. I have been buying ever since.
The deals: I purchased a 20 unit mobile home park in South Carolina from a bank with cash- this deal I flipped immediately.
I purchased a 22 unit apartment in Ohio that was off market. I bought it on a contract for deed with 10% down and have stuck $60k into it. It's stable now and makes about $35k/year
I purchased a 21 unit apartment in Ohio that was on the mls. I bought it contract for deed with 10% down again and I am sticking $55k into that one. Once stable it will make $35k/year as well
I recently purchased a 20 unit in Ohio from a receiver. This was brought to me by a broker. This deal was a cash purchase and will require about $180k in renovation. The cap rate will be around 14% when its stable. Once it is stable I will seek financing
The 13 unit is a cash deal as well and will require $150k in renovation. This is a B/B+ class area and will be at a 9.5 cap once its completed. Once it is stable I will seek financing
The other deal is 12 units in Wisconsin that required renovation to stabilize. Cap is around 12.5 now that it's stable.
The deals all got brought to me by brokers. Most of them where off market deals. There is real value in building relationships with brokers. Anything they send you take serious and analyze. If the deal doesn't work you need to politely tell them that and explain why - be confident. They will respect you and want to find you a deal that works. Also, make offers on their deals if they are marginal. Even if you make an offer knowing that it will likely not be accepted, that is better than no action. The broker will in turn understand you are serious and will want to find you a deal (I caution that you should not blow smoke - if you want to be taken serious, be professional and serious. It's fine to make a low offer if it's justifiable, don't low ball just because).
The biggest challenge in out of state investing is that you are not close by to be sure that things are going right. That is a blessing and a curse. It's nice to have a hands off approach to investing, but it's also hard to trust everyone involved when you first start out. Interviewing your team and taking referrals is a great way to get people you can trust. Once you hear the same name over and over, you know there is a good chance they are dependable. Do your homework. Vetting your management and the rest of your team is more important that vetting your tenants!
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Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Todd Dexheimer Thanks for sharing your experience. Continued success my friend.
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Rod HanksBusiness Member
Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
9y
Congratulations on your success!
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Steven Stokes
Specialist · San Francisco, CA · Member since 2013 · 227 posts · 158 votes
9y
Those are some amazing returns and in such a small time. You should write a book on how you were able to accomplish that. Even experienced investors have trouble putting multiple deals together at this rate. You must have an awesome deal flow system and processes.
1 Reply
Rohan J.
Los Angeles, CA · Member since 2015 · 176 posts · 48 votes
9y
Do you have any links or sites to where you find accurate info on job / economic / commercial growth development? I'm aiming to buy a commercial property in Indy soon and definitely need to understand the market better first.
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