All Forum Posts by: Brad Sumrok

I recommend looking in markets with above average cap rates in landlord & business friendly environments with above average job and population growth.  You didn't specify the exact city in Northern CA but cap rates there are likely to be 4-5% and with financing at 4.5% the cash flow is going to be low to non-existent. In my experience, people buying in these markets are buying and hoping for appreciation which is very speculative. 

Have clients who own apartment complexes Des Moines that I am familiar with and one under contract right now.  It is a good market. 

Have owned over 3,000 units in 7 different markets including Dallas, San Antonio, Houston, Jacksonville, Oklahoma City, Colorado Springs and Columbus OH. After starting with a 32-unit property that I bought with my own money, I learned about syndicating larger deals and that is what I have done since 2008. I am still buying  and have syndicated over 1,500 doors in the past 1.5 years mostly in Dallas - Fort Worth but also a one deal each in Houston, Wichita Falls and Jacksonville.  

@Carlos Casanueva I will be on the Faculty at the RE Guys Event in Dallas so we can talk then in person. Knowing what I know now, I wish had started with larger deals. 

I started with a 32 unit and put $200k down and got an $800k recourse loan. Then I did a 250 unit as a lead syndicator with only $100k of my own money and was able to get a non-recourse loan. And the larger property was easier to manage with 3rd party mgmt and I did less work and everyone made more money. Syndication is the way to go and you also can get carried interest and help more people. But make sure you learn the ropes before syndication before you take action.

This depends ALOT on the area. In DFW for example the typical C Class property is now selling for say $60k per unit but again that still depends on the size of the units and specific location/sub-market/demographics/supply/demand/cap rates in the area. I have owned in 8 US Markets. Get to know your local market conditions, determine your acquisition criteria and learn what things are going for out there :) 

There are pro's and con's to using licensed inspectors vs contractors to walk and "inspect" units. Either way all units should be accessed during due diligence. On a small transaction say <40 units it may make sense to have a licensed inspector inspect units and also the exteriors/roofing/plumbing/electrical/foundation/etc. The con's of using licensed inspectors are that they are not going to give you cost estimates which is why I prefer using contractors. On larger deals 60+ unit I have never used a licensed inspector - only contractors that will walk all the units with me and the synidation mgmt team. Contractors I know may charge say $50 per unit and spend 5-10 min in each unit looking at over 100 different items inside each unit. In my experience to do a SF style inspection is not required for walking units. 

My first apartment building was a 32 unit and we owned the machines and made over $600 per month. The tenant base was working class families. Ifmwe Split that 50/50 would would have lost $3600 per year and also reduced the property value by $45,000 assuming an 8% cap. So on small deals unlike buying new machines and owning them directly. However many times when you buy a property you inherit the existing laundry contract so make sure you review it during due diligence so that you know what your options are. Once it expires and you give proper notice you can renegotiate a better deal possibly rig upfront signing bonuses and better splits. Or you can buy the machine yourself.

I have direct personal experience with Tom Wheelright and Provision. I qualified to work with Tom personally, and, we started our tax strategy sessions in Q4 2017 and after 3 sessions I was able to implement actions that resulted in over $150,000 of tax savings. This savings will be recurring for many many years and is way more than what I paid. Also we are still having our strategy sessions and uncovering more savings opportunities. In my experience, Tom and his company are on top of their game, care about their clients and know the tax laws inside and out.