All Forum Posts by: Chris Grenzig

@Gabriel Shapira we own/manage several MF properties in Jacksonville and also 3rd party manage for others. I lived in Jacksonville for 3+ years but recently moved to Orlando to be closer to family. We are still actively looking for properties to buy in the area and manage for other people. I have a decent network in the area too so if I can be of assistance please let me know

@Matthew Rolf Hey Matt welcome to the area, we moved here from Jacksonville about 8 months ago. We buy and hold MF and do long-term property management. Happy to connect and chat and be a resource for each other too!

@Carleton T. Shawn's advice on how to structure it is a great option, obviously have an attorney weigh in, but should be one of the better ones. 

We have bought several MF properties where we are doing extensive rehabs and re-renting at higher rates, and I have talked to other contractors about potentially partnering at cost for equity. 

From the ownership side the advantage is if we project the numbers wrong and the value is less post-renovation, my all-in cost is less which makes it less likely to lose money. 

Ex (random numbers pulled out of thin air)

$100k purchase $160k ARV

$30k reno but $20k at cost

$15k holding costs

Total Cost:

$145k cost or $135k with contractor

With the contractor at cost, I have an extra $10k of margin where I don't lose money, but obviously not ideal for the contractor since they would make less.

I think a good way to price it would be the equity would equal your profit if you did a fee construction at slightly below the projected ARV, and slightly below the projected hold time. This way there is an incentive for the contractor to work well but quickly. Then if the home sells at ARV and quicker the contractor makes a little more and the investor slightly less, but like you said less oversight on construction for them.

Also, I would expect the contractor to also sign on for the loan personally. 

@Noah Yashinsky You can definitely cash flow, but I don't think it's anything spectacular right now. You might be able to get a better yield by finding a value-add project or a BRRR type property, but the market rate stabilized is 4-6% probably.

Just be careful of insurance right now, it's been going up and seems to have stabilized, but it's still all over the map depending on the specific property and who is doing the insurance. Don't believe what anyone tells you besides your insurance agent/broker and even then verify the info they're telling you, don't go off of the owner's previous insurance numbers.

Also, be careful that in-place rents aren't already at market or above market slightly. Plenty of areas of FL have seen record levels of new supply hit the market which has impacted rental rates, either making it flat for the past 1-2 years or even dropping some. Be extra diligent on running your comps and don't rely on anyone else to tell you what it will rent for. Even if you're talking to a property manager who should be the right person to talk to and tell you what the correct rental rates are, still double check what they're telling you is accurate. 

If you can find a deal that cash flows decently now, I do think we'll start to see 3%+ per year organic rent growth again sometime in the next 2-4 years, since new construction starts have been very low the past 2 years so new supply coming online is going to drop a lot in the coming years. 

If I can ever help on the PM side let me know, but we also buy/own multifamily properties so happy to help on the ownership side too if possible. 

 @Account Closed ha be careful the next few years, syndicators ears perk up when they hear doctor for raising money. 

A couple of people recommended the white coat investor which I think is great and obviously tailored towards you. 

My differing advice/thought is if you plan on being a doctor for most of your life, and your goal isn't to replace your income with real estate in the next couple of decades, sacrifice "projected returns" and do your homework on the risk for any deals you evaluate. 

Pay close attention to the capital stack, how much debt there is, how much preferred equity there is, how much the GP is co-investing, how much they project rents to rise organically every year, what exit cap rate they're assuming, how much cash reserves the property/investment will have, how much does the deal returns change when you add 50-200 bps to the cap rate, what is your breakeven occupancy and exit cap rate, and a bunch more. 

If you're going to be able to consistently invest solid chunks of money every single year, then a big part of your focus should be on not losing money versus hitting crazy returns. 

$50k invested per year at a 10% annual compounding return is just over $9m in 30 years on $1.5m invested. Even 5% annual compounding is $3.5m in 30 years.

I don't know what you'll be able to do or plan on doing, but my main point is to focus on how deals can go wrong or how a deal can be plumped up artificially with a few small tweaks in underwriting so you can properly decide if a deal is right for you or not. 

@Charles Webb best thing you can do is work backward. Figure out what your goals are for the future (say 10 years or so), then try and figure out the best way to reach those goals. For example when I left my old company to start my own I made a 10-year plan to get to $500m AUM in 10 years. Now granted that has gone off the rails because I have decided to change our focus because my end goals changed, but doing the exercise helps create the path to walk and figure out what the next steps are. If I know I want to walk 1,000 miles by the end of the year, I can come up with a plan of how many to walk each day, week, month, quarter, etc. 

I also highly recommend finding someone to work with who knows more than you, but also figuring out how you can help that person. A lot of people decide to bring/raise investor money to the table as a foot in the door, but I also think there is options to be more creative and do the same thing. Plenty of people need help in other ways that you might be an expert in. Find someone that needs something specific and offer that to them. 

Could be SEO, admin work, investor relations, social media management, asset management, etc. Or you could get even more creative and find someone who wants to learn to play the piano or speak Spanish and you can be their teacher. 

Most people trying to find a mentor take the approach of I'll work for free just teach me. But that isn't that attractive because they then have to spend time figuring out what to give you, setting it up, teaching you things to be able to do it, and that's a lot of time and energy spent. It's way easier to find 10-15 people who you would want to be mentored by, try and find 1-3 things they currently need help with (check their podcast appearances, social media, etc.), and create a tailored offer that solves a problem for them with little energy and time required on their part. 

@Ayanna Taylor if you haven't already join the yellowbird facebook group for investors in Jacksonville. Tons of active people in there to connect with to find deals. 

If we can ever help on the property management side let me know. We currently own and operate 51 units in Jax and manage for other owners in Jacksonville and Orlando. 

$1500 is $18k per year, on equity that's 6% per year. The question is do you want to spend the time energy and money to find something that you think can do better? Do you think there is even anything better out there right now?

I'm personally choosing to wait on our 16-unit deal in Jacksonville, FL. It was always a longer-term hold (also 60s built) and I feel like we are near or at the bottom of the current cycle, and if I'm not forced to sell then why would I do it during a time that I think is closer to the bottom? The only reason would be to try and find something better, and I don't personally see anything that is, so I choose the property we have. Also, with the property we currently have, I have a much better idea of where the potential or known problems are, versus a new property which you won't know nearly as well. 

Probably not, be happy your water costs are actually lower than they used to be and use this as a win.

If you want to prevent this in the future you can tackle this one of three ways, assuming they are allowed in your area (check before you do anything)

1. Have the resident put the utilities in their name if it's per unit. If it's 1 meter for 2+ units then probably not a great option

2. Bill back for utilities on a flat rate to help recoup some of the costs

3. Bill back for utilities based on usage, need to have a specific caluction for this (is it based on per unit, per number of occupants, per SF, etc.) Here's how it works. Jul1-30 they use the water, you get the bill on Aug 2nd. You can't bill them right away so you have to wait until Sep 1 to prorate that utility bill to the residents. So you're effectively billing 2 months in arrears but on the 3rd month (month 1 July, month 2 Aug, month 3 Sep). So it takes awhile to catch up, but they're paying their actual fair share of usage. Where it gets tricky is when they move out. Since they got the first 2 months without paying anything, their last month before moving out they have to pay for 3 months all at one time. One of those months you'll know what it is, but the other 2 you'll have to take some sort of an average and tack it on. There are companies that do this for you and charge a fee, but usually it's for larger buildings. 

Personally we just do option 1 or 2, it's easy to explain and understand, and even if option 2 only recoups you 80% of the cost, that's better than 0% or the headache of trying to figure out option 3.

Again make sure this is all allowed for your area

 @Thomas T. We've bought over 200+ units in the Jacksonville, FL area and we currently own and manage 51 units. Before that I worked for a company that bought 4000+ units and I oversaw 1000+ units in Jacksonville, FL. We also 3rd party manage in the Orlando area.

"Cap Rates" are 4.5-6.5 % depending on location, asset type, etc at least for long-term rental residential. I can't really speak to commercials as I don't know or have any experience there. 

Find a good insurance person that specializes in what you're looking to do and have them look at deals before you buy them, it's a crap shoot right now. 

40% isn't too crazy for the exp ratio without mortgage or replacement reserves, I definitely wouldn't go below that. Florida reassesses taxes every time a property is purchased, every county should have a property tax calculator you can use to get a rough idea or call the county and ask them how it's done. A lot of times it's 80-85% of the purchase price multiplied by the millage rate which you can find on the tax records for that property. You get a 4% discount for paying in Nov of every year versus March, technically every month you pay early is 1% but caps at 4%. 

If you're going to self-manage Heist Weiss and Wolk is a great landlord-tenant attorney and they've helped write a lot of the leases and laws for FL NAA and other FL stuff. They have a ton of free videos on the laws here too. Their website is evict.com (which is hysterical to me). 

If you're going cash and being conservative I think you'll be fine. We've had an oversupply in housing the past 2 years or so and will probably continue for the next 1-2 years, but everything I'm seeing has shown next construction starts have dropped substantially in the past 1-2 years so good chance we have an undersupply again in about 2-4 years once everything still being completed does finish and gets leased up. However, I'm also seeing some studies suggest our population growth might drop from about 350k to 250k to the state per year due to a lot of the growth being from boomers and they are continuing to age and the boomer population dwindles every day. So still 1% state-wide population growth per year, but possibly less. 

Happy to give more general thoughts on stuff if you want to chat or answer specific questions. I don't know the west coast FL cities beyond generalities so I won't speak to them too much.