All Forum Posts by: Benjamin Aaker

You should probably avoid getting too much into details on that first call. You should gauge interest in selling. The owners of larger apartment buildings are going to be more savvy and will want to vet you. You should be prepared with information about your company that communicates how well you close deals. You'll want to sound more professional on these calls.
At this point, I like to get a ballpark figure on what price they are thinking. They don't always want to throw this out there, so I have an expense ratio and cap rate in mind and I turn the discussion to those. If we are anywhere close on those, then we can move on to property details and financials.

Here's how I would prioritize:

• 1. Creating a savings plan
• 2. Decreasing personal expenses
• 3. Reading a lot but don't let it stop you from going forward
• 4. Generating a criteria you will use for finding properties
  
• 5. Getting in contact with a realtor in my area and Building a team to help me
• 6. Make those offers - the rest will follow

Hi @Matt S. The 1031 is great if you have found a great property to move into. On the other hand, you said you have a lot of equity. You could take out a line of credit on one or more properties and you'll be ready to purchase the next one when ready.

There are apartment buildings going up on the market right now but in my opinion are overpriced. The cap rates they are asking are down in the low 5s. We are seeing buyers come in from out of state with cash offers at or near asking, which gives confidence to sellers. These investors can make the property cash flow because they aren't using leverage and they look at it as a nice way to park their money. Those of us using leverage will quickly find ourselves underwater on these low cap rate properties. Right now I'm looking for serious value adds or off-market deals.

Hi @Matthew Boos and welcome to BP. Looks like you are already started investing in real estate. This group is happy to help with your future goals!

Landlord and physician here: It's up in the air right now about prohibiting medical marijuana in your rentals. You can prohibit guests from smoking in the units, but IM 26 (medical marijuana) didn't say anything with respect to rentals. Likely the state wouldn't have issue with banning tenants (state government is pretty anti-cannabis) and marijuana is illegal on the federal level. Will HUD take exception to your discriminating against a person with a medical condition? Unclear yet. I'm not a lawyer but I think they would have a difficult time punishing the landlord when the activity (using marijuana) is illegal federally.

The problem will be with enforcement. You'll have something banning it in your lease. When a tenant smokes and you find out, the proof will be in the smell, but local police won't have authority because it is legal in South Dakota. Federal authorities have said they would not enforce personal use so they won't help you either. Go to court with an eviction will be your only option and you'll be the first in SD to do so.

I would put a clause stating no marijuana use in the apartment, period. Politely remind your tenants about this. Move to evict if you have to but it is unclear what outcome you'll have. 

It is SD Real Estate Investors Association. 

@Carlos Feliciano II Congratulations on your first home. If you buy the rental in your name this will have an effect on your debt to income ratio. Depending on where that goes, it might have an effect. If you buy the rental and get a commercial mortgage you'll have better chances of getting a personal loan on your house. Sounds like you are already building so you are probably using a construction loan and will transition into a traditional mortgage. Once you have the rental deal, bring it to your current banker, who will be able to give you a specific answer.

This one looks like too great a risk. If you insist on going further, start by speaking to local law enforcement. Sometimes they are eager to partner with a new owner to clean up a place, sometimes not. 

Don't forget your cost of holding the land. It might be good to start earlier. If you haven't purchased the land yet, there is a risk someone else does.