All Forum Posts by: Brian Briscoe

So, I live in DC where things are expensive and I invest in South Carolina. In a nutshell, I looked at several metros along the east coast within an 8-hour drive. I looked at each individual market and picked my favorites based on economic and demographic projections. I then clearly defined what I was looking for. At first, it was B or C class, value-add apartment buildings from $1.5M-3M. I then started talking with brokers in each area and analyzing different properties that met my criteria. The analysis of multiple properties ended up being crucial because I got more and more familiar with each area as time went on. I asked the brokers for referrals to property managers and interviewed several. Once I started getting traction in an area, I would get in the car and drive there, meet with brokers, PMs, etc. After a few months of doing this, I got the first property under contract... There's probably better recipes for success, but I'll boil it down to this (assuming you understand the other mechanics involved). 1. Choose a market (or a few markets) and focus. 2. Determine your criteria. 3. Build your team slowly and make frequent contact with them. 4. Start putting in offers. 5. Close deals :) 6. Be patient because it's not going to happen overnight.

...adding 2 more cents. I'm a syndicator and we rely on raising private capital. In order to make an apartment deal attractive to investors, we have a minimum return on investment that helps us determine our max offer price. If our max is close to the list/whisper price, we submit an offer. So, figure out what your criteria is for returns and stick to it. Easier said than done. Talk to others to see what returns they're getting to get an idea of where to stick your number...

Justin - thanks for your service. Two forums I suggest you follow: 1. From Military to Millionaire (David Pere already posted here). 2. Active Duty Passive Income. Both have resources that are specific to Military. Both have nationwide followings and meetups at various bases. You may find one is stronger than the other where you get stationed. Both have podcasts that you should subscribe to... I house-hacked my first two rental properties. I used a VA loan on one and FHA loan on the other. Didn't cash flow a whole lot, but pocketed $250k when I sold them a decade later.

Question was how many UNITS do you need for a certain cash flow. Margins are thinner in some areas than others, so numbers in SC may not match numbers in the "really really cold" Twin Cities. My original comment was made somewhat in jest... but, since you asked... What does being "really really cold" have to do with pricing? Fewer people move in a Minnesohta winter than a Miami winter. Reduced demand on the vacant units would push pricing down to get units filled. So, all other things equal, winter pricing would be lower in the "really really cold" regions than the warmer areas. I had a rental in Salt Lake City for many years that happened to have a few winter vacancies. We had to drop the rent significantly to get it filled. My San Diego rental didn't have that problem.

@Joshua Van Every

Do you have a financing contingency? Make sure it states that YOU get to determine what suitable financing means... If so, go ahead and waive inspection contingency. You can still do an inspection, you just won’t be able to retrade or cancel because of the results. But, if you find something big in the inspection, you can always change your financing requirements and then cancel the contract if the banks can’t satisfactorily meet your need.

For example, let’s say you’re paying $200k and the lender will give you $160k... you do the inspection and find something that will cost $20k to remediate. Is this is a deal breaker for you, ask the lender for $180k and a lower rate to keep your payments the same... probably not going to happen. When the lender says no, you cancel the contract based on your financing contingency...

@Yannik Cudjoe-Virgil we’re keeping busy...

We've used and been happy with Tanner Ballew and Maloof insurance -- they can insure nationwide.

We've since moved to a broker with Assured Partners who lives in the area in which we've chosen to focus.  Not 100% sure if he'll do Huntsville.

Apparently I can't share contact info here.  Hit me up if you want it.

Do you have a plan B?  Does the deal hinge on a refinance at year 1? If so, I'd underwrite it with a range of interest rates and see where the deal breaks.  

I definitely appreciate posts from @Ryan Daigle and @Eric Johnson... very insightful and about as analyitic as you can get.  If the deal works at current rate + 100bps, you're probably safe... but see if it works at 150 or 200bps.  The higher you can go, the safer you are...

No matter what you use, I'd make sure I had flexibility built into my short-term financing.  That's just me though.

@Charles LeMaire -- loved your post.  Great to get the experienced LP point of view.  This is the first year we distributed K1s and had a hard time explaining all of the benefits.  Your post really shows how a little bit of knowledge and planning can reduce the tax burden...  Thanks a ton!!

@Kent Ritter makes a lot of good points.

I like the sailboat analogy.  Market and submarket are like the prevailing winds and currents.  If both are pointed in the same direction, you're much more likely to be successful. Population and job growth in an area generally mean you'll have higher occupancy levels and higher year-on-year rent appreciation, which are both very good for growth.  

If you really know an area, though, you can make deals work in average cities with average economies. Average cities with average economies will also have less competition, so you'll be able to buy at a higher cap rate. You may have to learn how to tack and sail upstream, but there are definitely still good deals.  His #3 is probably the most important -- what are the stabilized rents you can expect after renovations and how certain are you at achieving those rents?

Definitely do your homework on markets and submarkets.  That will help you evaluate #3 more accurately.