All Forum Posts by: Alex Forest

@Nathan Gesner This is exactly the type of situation that drives me nuts as a Landlord. And is also the reason I'd seek a PM for this property (I'm aware that's your role here). All the rest, self manage. As I'm sure you know, it will get better once they are out. I can't stand that constant messaging. Im not sure the best way to handle it with another 8 months, but the less time they are there, the quicker it passes. 

Originally posted by @Mike Dymski:

Originally posted by @Alex Forest:

@Mike Dymski excuse my ignorance here, but what's meant by "1%'ers in linear markets".  Is that reference to the property itself?

Where the monthly rent to purchase price ratio is equal to 1%...and a linear market is one in which there is little appreciation.

If I purchased 1%'ers in linear markets and used 3rd party management, I could not make a profit.  Vacancy, maintenance, and cap ex over the long-term would eat my lunch.

 Ah, that 1%, gotcha. For some reason, didnt place the reference. Thanks.

@Jonathan R McLaughlin To your last paragraph, yes agree with these points. Yes, they can be harder to sell.  Part of this original posts rationale too...why they are unloved and therefore cheaper due to less interest .

To the point about rezoning...I think this is actually one of the potential (long term) hidden value adds of some these properties. Many often come with more land, that barely factors into the sales price. People dont factor it in.  If the property is part of a rezoning or part of a Comprehensive Land use/growth plan that supports higher densities, the by right development for the parcel can go from say...1 house per 2 acres to 4 units per acre. And once it does (or if it can) fall under that higher land use, it can be subdivided, with either the sale of vacant lots (that conform to individual lot requirements) or there is the potential to build new...and more MF, if the area is seeing growth and seems healthy. 

@Jim Spatzenfeld I have one very similar. Two SFH on one lot in a rural area. Tenants have been great to date (1.75 years) and it does cash flow very well.

But, I do think this is one of the challenges with them.  Appraisers and financing. I went went through 3 appraisers over 3.5 months before it was accepted and the loan closed. The comps, particularly for a unique property like 2 houses on one lot (unless that's common in your area, here it is not) are few, and they don't know how to handle it.

I'm not familiar with what you describe though, "rural" designation and why that would be a death blow.  Is that a California thing?  if its a cash out, you could have provided a copy of the original appraisal (which apparently worked) as a go by. Tell them they can throw it in the trash if they want, but in case they find it of use, you wanted to provide a copy.  That provides them with a template and a past precedent to give some comfort. Also share recent sales that may serve as comps that fit the criteria at the same time. 

@Jim Stout thanks Jim for your feedback on verifying rental history. I have been curious how others do this, or I suppose for those that do, so note it when this comes up. Good to hear your input. Seems you are noticing a shift to SFH as well. I definitely agree and see this, and also understand, during Covid. I just wonder how long the trend holds and if things revert one day, for similar reasons to why people moved to where they did pre covid. In the case of multi, affordability. Agreed about the importance of (enough) proximity to an economic hub and jobs.

@Mike Dymski excuse my ignorance here, but what's meant by "1%'ers in linear markets".  Is that reference to the property itself?

Originally posted by @Patricia Steiner:

@Alex Forest

The "cold turkey" comment is what institutional buyers and builders are banking on.  Their focus has turned to buying/building SFHs for rental properties - and away from acquiring multi-family and commercial.  The demand for housing is greater for SFHs as shared spaces are no longer appealing, complements of Covid and the rent is higher. It's also important to know that unpaid rent is substantially higher with multi-family tenants with only 76% of those tenants paying their rent on time.  (Source: The National Multifamily Housing Council).  

Is multi-family a good investment? Of course, but it's not top shelf at this point. 

Fun, huh?  

Ah ok, I was unfamiliar with the use of the term in that way. Yes, I've seen the trend of large institutional investors snapping up SFH as rentals. I am curious as to the overall scale of those purchases as a percent of all purchases by investors.  Also, I understand the current trend of wanting more individual space including outdoor, but I guess I wonder if in time affordability will again draw some back to multi.
But yes, I follow you, one is currently preferred and more attractive over the other generally.

@Patricia Steiner Thanks for the feedback.  Further out, the rents lower, but for these the price to rent is attractive. The tenant quality issue is one I had in mind as a possible factor. Also thought for some it may be more difficult to manage, as property managers are probably few and far between in these areas, as well as identifying good handyman and repair folks.

As far as advertised rents vs collected, that is exactly what gave pause over this past year with the moratoriums in place. If that is gone,the demand for housing rentals is very strong here, (would need to verify locally as well) so that would give me enough comfort to deal with a potential situation. I always ask about rent rolls and if any tenants are behind, but verifying is a different matter...

What was meant by "there's never been a better time to go cold turkey on people." Sounds like someone moving into self storage?

I've noticed Multifamily residential in more rural areas tend to receive less interest from investors and therefore often have more attractive numbers. I'm not talking about way out in the boonies (with lots of SF but also v low rents), but rather the ones that are in a non urban or suburban region...they might be 30 or 45 min, or an hour to a more urban hub, but are rural in nature.  I wouldnt put certain subdivisions into this category, that are in small towns or part of a community, and are also 45 minutes commute to a more urban center.  The ones I'm talking about are often single structures on their own.

Often, it seems these MF offer/receive decent rents, have more units, are at more attractive price points, in turn offering great cash flow.

As an example, there was a 12 unit outside northern Virginia at $800k or $67k/unit roughly with rents at roughly $750 per unit with one vacancy while that unit was being renovated.  Its been awhile since I analyzed it, but it offered strong cash flow, (enough that even if there was no appreciation over time as a buy and hold investor, would have been fine with that). If you travel just 45 minutes to that urban center, units are 3 times that sales point. 1.25 hours to DC, and more like 8 to 12 times that for one unit.

Another example was a duplex at $175k that had rents that were comparable to other units in more urban areas that would have gone for 75% or more of this price.

I dont see a lot of these, but every once in a while they pop up, and they tend to sit on the MLS or crexi listing for awhile.  Also, this isnt a new observation, it's been the case for years.

Why are these type of MF rentals not getting the love?

,

Originally posted by @Michael Plante:

I don’t have a dog in the fight 

To anyone 

Any insight why Blackstone is buying $6,000,000,000 in single family homes vs apt complexes 

https://www.google.com/amp/s/w...

At $350k per unit too (including the staff, business and all the rest).  I find this interesting as well.  maybe a combination of seeing the current state and long term trends including inventory, demographics, builders not stepping up to capacity any time soon, as well as....wanting to diversify more away from the hot/expensive stock market equities, need to deploy capital, and seeing the opportunity of still low fixed rates and long term steady gains.  The $350 per unit seems expensive though, not sure where their units are concentrated.  Couldnt read the while article without subscription.