All Forum Posts by: Anthony Chara

The value of 4 Unit properties and less are determined by Comps. You'll need to get an appraisal. You can also speak to several local Brokers to see if they can run some preliminary comps for you. Some people might refer to them as BPO's. Broker's Price Opinion. Do you have a relationship with a RE Broker in your area?

In most cases, the value of 4 or less units has little to nothing to do with income or expenses in a Lender's eyes. They look at Comps and the condition of the property. Some may ask their appraiser to run some rental comps to help determine value and viability with the property in that area, though. 

I don't know any lender that uses Cap Rate or GRM on 4 or less SFH units.

Some good info already posted above @Hassan Muhammad. I'll also add to it that most lenders will want to see a DSCR of 1.25 or higher. BTW, none of the answers have to be about you personally. If you don't meet one or more of the criteria above, you can always partner with someone that does meet the criteria. (In addition to the property meeting the lender's criteria.)

I think its awesome that you want to buy up to 70 apartment units and are willing to start with a smaller, 10-25 unit complex. However, I am concerned, based on the question you asked that perhaps you're not ready to buy a building just yet. I recommend you take some classes and/or find a mentor in your area that can guide you. Not knowing what you don't know can cost you tens or hundreds of thousands of dollars.

Hi @Jamon Stanton, you may want to reach out to @Richard McCray on BP. He's not only an Apartment Investor, he also runs a local REIA in Baton Rouge.

Hi @Ceasar Rosas, I agree with @Jeff Greenberg, but will add more info. First off, IMO, you should not be managing the property. To me, RE investing is about generating Passive Income. So when you say, "You'll charge a mgmt and acquisition fee", I hope you're really referring to an Asset Management Fee, not a PM Fee. Yes, this is common to make those 2 fees depending upon your level of experience.

Second, another thing to take into consideration when working with Lender's is that most lenders will require anyone that owns more than 20% of the LLC that owns the property to also sign on the loan, not just you. The lender will also take your own experience into consideration when they evaluate the loan on the property. Having good credit is awesome, but alone may not be enough when you transition from SFH's to Apartments/Commercial property.

Lastly, yes, you should read articles by @Jillian Sidoti. She's my SEC attorney and she's very good at what she does.

Hi @Andrew David, I agree with @Patrick Liska and @Hubert Washington. If your brokers aren't finding you what you're looking for, take action on your own. Find additional brokers that specialize in your target markets. Also, contact the owners directly. If you have a relationship with a local Title Company, set up a meeting with someone from their Commercial branch. Usually, the people that handle Residential Closings are not the same people that handle Commercial Closings. Many Title Companies can provide you with a list of commercial properties in your target market anywhere in the country, not just their backyard. Then, you mail the owners a letter telling them that you're actively looking for a property like theirs. If they're interested in selling, ask them to give you a call. That's it. It really is that short and simple. You should also let them know that you're not looking for a listing, because you're not a broker (assuming you not). You're looking to add to your own portfolio.

With this simple little letter/tactic, I've received anywhere from a 5%-11% response rate.

There are also Letter Campaign companies out there that will do this for you for a small fee. Just google Yellow Letter Campaign.

Good luck to you Andrew!

Hi Vincent, you're on the right path by reading some books. You need to keep your education going. If you haven't done so already, you should join a local RE club near where you live and near where you want to invest. There's a big one in Philly called DIG. Diversified Investor Group. www.DigOnline.org. Take some classes and find some experienced investors in your area to partner with on your first deal or two.

LOL! Exactly @Sean Dawson!!!  Exactly!

Hi Chuck, how far away from Detroit do you live now? I would suggest you start attending RE Club meetings in your area or in the area where the property is located to learn more about the market and how to properly evaluate Apartments. There's a group just outside of Detroit in Troy run by Wendy Patten. The website is https://www.michiganrealestateinvestors.com/ if you want to check it out.

Hi Tim, you may want to 'do the first one yourself', but that's probably the one you should partner with others on the most! Why? Because you don't know what you don't know. I suggest you partner with someone with experience and raise the money from individuals to the get the first one done. Take a small piece of the deal for finding it and putting the deal together. Then, branch out and start doing more on your own. This will also make you look better to lenders, because now you can show experience. It's not just about having the down-payment with lenders. They also want to know what experience you have operating apartments. You also need to have roughly 10%-20% of the loan balance available in liquid form AFTER you close in order to satisfy Lenders' liquidity requirements. Another reason to partner.

I wish you good fortune, Tim!!!  Be sure to post back here with your progress.

Hi Ana, close to your home is the hot market of Orlando. Lower price points than Miami. One of the things I like about Orlando, it that job growth is expected to average a 4% every year for the next 10 years!!! That's phenomenal!!!!!  Guess where I'm looking?!?!?  You still need to make sure you're buying in good quality areas though. Orlando has some rough sections you should avoid. If you know someone in that area, you should reach out to them for guidance.