All Forum Posts by: Chris Grenzig

Old post I'm going to tack onto. We've been owner-operators for the past 3 years in Jacksonville, FL, we've bought over 200 units and currently own and manage 51 units in Jacksonville. We moved to the Orlando area several months ago and we got licensed to take on property management clients in the Orlando area. We specialize in long-term rentals (7-12 month leases) for properties from 1 to 80 units; single-family, duplexes, triplexes, condos, townhomes, and apartment buildings, that's our bread and butter. If anyone is still searching we'd be happy to discuss your situation with you and see if we can help!

 Hey @Yona Ganz great questions, hopefully I can help a little bit!

1. This goes for any market, but it depends on what your goals are. Long term appreciation and wealth preservation you could look in areas like college park, maitland, winter park, etc. There's not too many high cash flow areas anywhere in Florida, but if you looked for more C class stuff you should get better cap rates or rent to price ratios, so could check out pockets of areas like Casselberry, Longwood, Leesburg, Deland, Deltona, Sanford, etc. Not saying those areas are bad by any means, just you might get some better pricing there. 

2. @Adrian Lammersdorf-Scioll nailed a lot of those areas that I would say as well. 

3. Another great resource is city-data.com for some stuff like that, definitely income and crime stats, I don't know if it has data on schools. 

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $1,920,000
Cash invested: $830,000

24 Unit Value-Add property in Jacksonville, FL. We bought this 6 pack of quadplexes all right next to each other through a double wholesale and we were able to close cash in 3 weeks and then refinance into an 80% LTV loan. The property appraised for $105k a door and we bought it for $80k a door. We've increased rents $350 in 12 months and should increase them $600+ once all units are renovated and brought to market rents. We should refi out 100%+ of our money inside 24 months.

What made you interested in investing in this type of deal?

Unbelievable purchase price in an area of town that was growing fast, with a large amount of upside to income and renoavtions/

How did you find this deal and how did you negotiate it?

Off-market through a double wholesale. We had to close cash in 3 weeks.

How did you finance this deal?

Hard money loan to close, then refinanced into a 80% LTV life insurance loan.

How did you add value to the deal?

We are spending $12-18k per unit on interior renovations. We've also fixed a lot of rotted wood siding, re-painted every building, and done other exterior fixes.

What was the outcome?

We have been able to raise rents $350+ inside 16 months and should continue that to $600+ inside 30 months.

Lessons learned? Challenges?

Fast contractors are better than cheap contractors.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jim Hoggat - Walker & Dunlop Mortgage Broker
Jordan Feldman - Rampart Insurance

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $1,170,000
Cash invested: $900,000

16 Unit Value-add property we significantly renovated spending $35k per unit doing interiors, exteriors, and amenities. Completely overhauling the property and significantly improving. More than 2x the in place NOI at purchase and will refi out 100%+ of initial capital and hold for cash flow.

What made you interested in investing in this type of deal?

Orange Park has had next to no new supply since the 80s/90s because of barriers to entry in the physical barriers around the submarket as well as the low allowable density for new construction. Also, the prior management had done a poor job and gave us upside in operating expenses and in rental income.

How did you find this deal and how did you negotiate it?

It was through a local broker who brought it to me off-market after he knew what types of deals we were looking for.

How did you finance this deal?

70% LTV life insurance loan

How did you add value to the deal?

Spent $35k per unit on interiors and exteriors. Re-piped the whole property, built a laundry room, expanded the pool deck and added pavers, refenced the property, re-built 2 exterior staircases, re-landscaped, and put in all new cabinets, granite, appliances, LVP flooring, lights, doors, blinds, etc.

What was the outcome?

In the process of trying to do a full cash out refi right now into long term non-recourse debt.

Lessons learned? Challenges?

Construction and heavy reno will create/reveal problems you didn't know existed, have a healthy contingency and stomach.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jim Hoggatt - Walker & Dunlop Mortgage Broker
Jordan Feldman - Rampart Insurance
George Bacon - Jacksonville/Southeast US private broker

Walkthrough video of a unit

We just closed our 2nd smaller deal we syndicated, both were 600-800k raises, legal fees were less than $5k. My closing cost percentages are higher than a 200 unit property, but you just figure out the cost and then analyze deals with those costs included. Shouldn't be a problem if you figure out your estimated costs first.

I was just talking on our podcast about this with Anthony Vicino, our tenants are our customers and too many landlords ignore customer satisfaction just because everyone NEEDS housing of some sort. It makes it very easy to find customers even with bad support.

I am leaning towards going with the click plank option as I was told, that when it clicks together it adds another substrate or "floor" basically and that with the attached underlayment does a pretty good job of reducing noise.

I looked at adding gypsum concrete (gypcrete), self leveling cementitious subfloors, wool insulation under the plywood, and another type of cement type floor, but they all have their pros and cons and doesn't seem to be worth the extra money in the end. 

I will probably test the click plank on the first 2 units and see how it goes.

I have been looking at the STC and IIC ratings for several different flooring options, underlayments, subfloors, and more. One of the things I've noticed is that the flooring and underlayment options usually give an STC rating based on their use on 8" concrete subfloors.

Part of the rating given is being attributed based on what type of subfloor it is and would be a lower rating than with the plywood subfloors. Not sure if you or your HOA were aware of that, or were just asking for the rating to be that and accounting for the difference.

That's what I had heard and would think, but trying to see if anyone has used the acoustic/sound barriers and found any success with that. Even the heavy duty stuff, most likely going to need to replace every 2-4 years whereas plank will probably cost way less going forward on turns. It's also what I see most often on 2nd+ floors on MF, but just seeing what others have experienced hopefully.

I have a 16 unit I'm renovating and looking at installing vinyl plank definitely in the downstairs units, but unsure about upstairs units due to noise. I had flooring guy recommend the plank glue down with an acoustic underlay or Clic Plank with an underlay attached to the boards. 

Aesthetically and from a maintenance standpoint, I would prefer one of the vinyl options over carpet, but I just had to deal with noise complaints that had carpet in the upstairs unit already, so I am nervous to spend the money and install either vinyl option and the sound is even louder than with the carpet. When I peeled back the carpet on a different upstairs unit, the padding underneath seemed fairly thin, but I'm no expert. Property is 2 story construction, 1965 built in Jacksonville, FL with plywood subfloors.

Anyone install vinyl in upstairs units and/or have any feedback or advice? 

@David Smith I think what everyone has failed to acknowledge is what is big money to you?

You reference after the post "or just similar return as saving in banks" and that confuses me because I don't think anyone would consider that big money.

Also, you say big money not big return % which is probably just a typo, but you can make $1 mil a year if you made 1% by investing $100 mil as an example.

The answer I think you're looking for is what are returns as compared to a savings account and thats very easy to answer, they are vastly different, but passive investing will also give you vastly different returns depending on the asset you invest in.

Most people that are quoting 15-20% returns are talking about annualized returns or IRRs which is not payouts per year like dividends or cash flow, deals like that tend to pay dividends quarterly of around 6-8% and the rest of the 15-20% per year is accrued until sale.

However, most of those assets would also C/B assets (B is even debatable) and are often using moderate/high leverage in debt from a bank which makes it significantly more risky than putting your money in a savings account. Now most people feel that the risk is worth the return considering a bank is paying <1% probably or around there, but don't be fooled it's significantly more risk.

A savings account is little to no risk in losing your investment and basically certain that you won't lose more than you put into that account.

When you invest passively, you can very realistically lose all your money, and there is a possibility you could have to invest more if the property needs a capital call.

Therefore, you need to understand what the risk is on every deal, and weigh it against the upside and decide if thats worth it for you. However for high level return expectations I think you can expect the following

Multifamily only, moderate leverage (75% LTV), in fairly populous cities (top 50 or so in the US).

C class: 14-16% IRR, 6-9% Cash flow

B class: 12-14% IRR, 5-7% cash flow

A class: 10-12% IRR, 4-6% cash flow