Looking for Experienced ATL Investors for Apartment Rental Advice
Atlanta, GA · Member since 2015 · 53 posts · 4 votes
Hey Everyone! I haven't been here for a while. My husband and I have been steadily expanding our little rental business. We have been focusing on single family houses, buy old ones, fix them, and rent them out. We feel pretty comfortable about this category. However, husband is thinking about mid-size apartments recently and possibly quitting his job! This is a big step for us. We've done our spreadsheet several times but still feel uncertain. We would love to have someone to look over our plan for us. Happy to buy coffee or pay consulting fees. If you know Atlanta market well, if you have experience in commercial apartment rentals, please reach out!
Welcome Emily. I will give you the advice that I give most people. Get to a REIA. Please, Please, Please, Get to a REIA. Be cautious also about who you take advice from, and how you word your post. I just don't want to see you get taken advantage of. I have met people who could easily peg you as someone to sell a deal to that isn't a deal at all on the apartment side.
Now that I have that out of the way.....
Evaluating apartments is actually easier to do than single family homes in my opinion.
This is simply because the numbers are there on I and E Statement. Apartments are valued by the amount of cash they throw off. The ROI, Cash on Cash return, and the NOI. Its that simple.
If you know your goals going in... IE...buy and hold for cash flow, force appreciation, value add, wholesaling for fast cash, syndication, sandwich lease options, etc, you will be fine. Determine that first. Pick a strategy and get the info. Then when your comfortable.... Pull the trigger. The REIA will have plenty of investors who deal in apartments. The REIA will also have people there with all the training, networking, info, and money you may need to get rolling.
When I wholesale apartments I have found that Atlanta market cap rates are all over the place. It can vary depending on the are of the city. When I don't know the area that good, I will usually go to my REIA, network, and find an agent. A CCIM, and simply ask them about rates in the area where I'm working. If they are experienced, they usually know buyers in that market. This works great because you have someone who is not only an agent, but is involved hands on with investors in one shape or form.
As far as Hubby leaving the job. Just remember that boldness is always rewarded if it has a plan, and a goal.....Notice I said Plan....and Goal...lol.
As far as someone looking at your spreadsheet, whatever it has on it.... I would suggest finding a proven and experienced mentor, recommended through someone at your REIA, that agrees with your personality, and spirit.
I have personally paid thousands over the years for different courses learning the commercial side of the business, and can honestly say that you don't need to. Find someone who is really agreeable to you that can train you right, and take massive action to achieve your goals.
If you want some first hand feedback on a few of the ones I have bought feel free to reach out.
Good Luck.
Welcome Emily. I will give you the advice that I give most people. Get to a REIA. Please, Please, Please, Get to a REIA. Be cautious also about who you take advice from, and how you word your post. I just don't want to see you get taken advantage of. I have met people who could easily peg you as someone to sell a deal to that isn't a deal at all on the apartment side.
Now that I have that out of the way.....
Evaluating apartments is actually easier to do than single family homes in my opinion.
This is simply because the numbers are there on I and E Statement. Apartments are valued by the amount of cash they throw off. The ROI, Cash on Cash return, and the NOI. Its that simple.
If you know your goals going in... IE...buy and hold for cash flow, force appreciation, value add, wholesaling for fast cash, syndication, sandwich lease options, etc, you will be fine. Determine that first. Pick a strategy and get the info. Then when your comfortable.... Pull the trigger. The REIA will have plenty of investors who deal in apartments. The REIA will also have people there with all the training, networking, info, and money you may need to get rolling.
When I wholesale apartments I have found that Atlanta market cap rates are all over the place. It can vary depending on the are of the city. When I don't know the area that good, I will usually go to my REIA, network, and find an agent. A CCIM, and simply ask them about rates in the area where I'm working. If they are experienced, they usually know buyers in that market. This works great because you have someone who is not only an agent, but is involved hands on with investors in one shape or form.
As far as Hubby leaving the job. Just remember that boldness is always rewarded if it has a plan, and a goal.....Notice I said Plan....and Goal...lol.
As far as someone looking at your spreadsheet, whatever it has on it.... I would suggest finding a proven and experienced mentor, recommended through someone at your REIA, that agrees with your personality, and spirit.
I have personally paid thousands over the years for different courses learning the commercial side of the business, and can honestly say that you don't need to. Find someone who is really agreeable to you that can train you right, and take massive action to achieve your goals.
If you want some first hand feedback on a few of the ones I have bought feel free to reach out.
Good Luck.
Emily, Apartment prices are sky high fed by easy adjustable rate financing and optimistic income and expense projections. If you have been successful with the single family market I would continue building wealth there. If you own 100 houses and there is a downturn, we are now in the 3rd longest expansion in history, you can sell 10 or 15 houses. In a 100 unit apartment give back the apartment complex. You can find a commercial property at a much better price and cap rates than apartments.
You have gotten some really good advice from @Rob Rice here. Start going to the local REI meetings. You'll be amazed how many investors you can meet there. You can find these clubs via Meetup or Facebook. I suggest you read a few books on buying apartment buildings. You can find a bunch of recommendations by searching BP on multi-family apartment investing. Also there's a significant number of MFH investors here on BP who you can reach out for advice or to hire as mentors. In addition, each geo area (a city or county or sometimes several towns together) has a local Property Owners Organization or two. Last but not least, lookup property management companies that specialize in the apartment building sizes that interest you and start a conversation with them. In addition to being knowledgeable on the local properties that can recommend or hint you on the potential property sellers in your market.
As far as your husband quitting his job, if he was able to replace his income portion through W-2 with rental income, then it's a good time. Otherwise I'd give it a bit more time until it happens.
If I can be of help, feel free to PM directly.
All the best!
Thank you so much for your insights! I'll do some research given the info you provided and reach out later.
REIA is always on the todo list... but we'll take it serious this time.
Bruce brought up a great point of keep going with Single Family. The reason we're thinking about Apartment is the hope of gaining some velocity. The rental income covers half of his w2 right now. And he wants to see more growth and a full coverage sooner. Is Apartment not really the way to go?
As you can tell from the fact that I'm posting here instead of my husband doing it himself, he is a very shy person... I don't have the extra time to do all the networking for him, although he is in charge of pretty much everything about the rentals. I'll definitely encourage him to go to REIA and find some meetups in town. If you know a group you would recommend, please definitely let us know. For someone like him it's easier to tell him a target group and say go meet with them, instead of simply telling him to explore.
Thank you all very much!
The 2 that I have belonged to over the years here in the Atlanta area are:
check out the calendars on both, and get active. If you are truly interested in the multifamily investing, the reia's will do the rest if you get involved and take action.
Good Luck.
Great advice above! I'm coming into the conversation a bit late, but definitely agree that prices are high in Atlanta. There are quite a few 'heavy hitters' coming in buying any decent deals that they could get their hands on, and the ones capable of developing are going to be building out quite a bit. I've been keeping a close eye on it as both a commercial agent and also prospective Multi-Family investor and am more than likely going to end up buying out of state instead of in our backyard here in Greater atlanta / NGa.
@Emily Allen As a purely MF investor, I found @Bruce Ailion's advice thought-provoking. It never would have occurred to me to sell off a portion of your SF portfolio as a loss-mitigation strategy, so thanks for that, Bruce!
I do think that MF properties have a lot of resiliency in a downturn, though, and the reason is that they generate income. JP Morgan Asset Management did a study in 2012, that covered 35 years of commercial real estate going back to 1977 (so including the Great Crash) and they found that if you invested $100 in commercial real estate during ONLY the worst five years during the 35 year period, you would have $110 at the end of it, because of the income.
MF properties are resilient because your vacancy risk is lower per unit. In a SFR, your vacancy risk is 100% if your tenant moves out. If you have 100 units, each unit has 1% vacancy risk. (I'm not talking about vacancy RATES, just risk.) Assuming that you buy right and your break-even occupancy is way down in the 80s or lower, and you have competent management on site, then you will have to have a pretty massive economic downturn for you to get down to your break even occupancy. Moreover, in the last recession, after an initial vacancy surge, occupancies actually surged and have never let off because so many people were forced to rent who would otherwise have lived in homes they owned. (Of course, this same phenomenon boosted SFRs too.)
The key factor is to buy the property right. If you buy a property now, at the top of the market, that is producing little to no cash flow, because you think the property will appreciate over time, then as Bruce said, you are looking foreclosure straight in the face. However, if you buy with a sufficient cushion of free cash flow after all expenses and reserves, then you ought to be able to weather a downturn.
Of course, as others have said, finding strongly cash flowing MF properties in this market is very difficult, given the competition from well-funded investors and institutions, many of whom are buying on a speculative basis (crazy, right?).